Annual Report and
Financial Statements
2019
Worldwide World Class Protection
MANAGED SERVICES / SECURITY TECHNOLOGY
The Westminster Group Plc is a
trusted global brand delivering strategic
security solutions, managed services
and best in class equipment to keep
people safe, secure assets and
maximise prosperity in high growth and
emerging markets around the world.
Contents
Mission Statement
Westminster believes all citizens of the world
have the right to personal safety and security
and to be free from the threats of crime and
terrorism particularly when travelling.
The Mission of Westminster Group Plc. is
therefore to improve security and the quality
of life for people throughout the world,
regardless of race, colour or creed and will
do so by the provision of advanced security
solutions and long-term managed services.
Westminster will endeavour to achieve
this goal by acting in a professional and
responsible manner, treating our employees,
customers, suppliers and partners with
equal courtesy and respect at all times.
Vision Statement
Our vision is to build a global business with
strong brand recognition delivering advanced
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
enhancing shareholder value.
Highlights
About Westminster
Strategic Report
Chairman’s Statement
Chief Executive Officer’s Report
Chief Financial Officer’s Report
Risk Management
Stakeholder Engagement
Governance Report
Board of Directors
Corporate Governance Report
Audit Committee Report
Nomination Committee Report
Remuneration Committee Report
Directors’ Report
Statement of Directors’ Responsibilities
Financial Statements
Independent Auditor’s Report
Consolidated Statement of
Comprehensive Income
Consolidated and Company
Statements of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Cash Flow Statement
Company Cash Flow Statement
Notes to the Financial Statements
02
04
06
08
18
22
28
32
34
44
50
52
58
60
62
65
66
67
68
69
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Company Information
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Highlights
63%
80%
growth in revenue
technology revenue increase
115%
50%
improvement in EBITDA^
managed services revenue increase
46%
261
increase in recurring revenue^
staff worldwide
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Operational
Financial
• EBITDA^ profit of £0.1m from underlying continuing
and discontinued operations (2018 restated* loss
of £0.4m)
• Strong performance by both Managed Services
and Technology Divisions
• Revenues up by 63% to £10.9m (2018: £6.7m)
• Recurring Revenue^ (such as Managed Service
contracts) in the year up by 46% to £5.6m
(2018: £3.8m)
• Fourth consecutive year of double-digit revenue
• Secured new Managed Services project in
growth
Tema Port, Ghana
• Secured a $3.48m USD contract for the provision
of advanced container screening solutions to two
separate ports in an Asian country
• EBITDA^ profit from underlying continuing and
discontinued operations of £0.1m (2018: restated*
loss £0.4m)
• Total Equity / Net Assets grows from £1.1m
• West Africa airport operations performed at
in 2018 to £1.9m in 2019
record levels
• Acquired French security and support services
Post Period End
company, Euro Ops
• Successfully delivered the remainder of the $4.5m
USD vehicle screening contract in the Middle East,
that the Company secured in 2018
• Significant progress with several large-scale
project opportunities
• Supplied products and solutions to 66 countries
across the world
• Formed Strategic Joint Venture, Westminster Arabia,
in Saudi Arabia
• Entered into strategic alliance with the Gulf Aviation
Academy in Bahrain
• Entered into strategic alliance with the Tunisian
Academy for Civil Aviation Safety and Security Training
• Provided training throughout 2019 to various airports,
including several major hubs, across the Middle East,
Africa and Asia
• Board strengthened in terms of skills and experience
with the appointment of two new Non-Executive
Directors Charles Cattaneo in January 2019 and
Mawuli Ababio in November 2019
• 2020 commenced on a strong and profitable note
with Q1 orders and revenues ahead of budget
• Q1 2020 revenues increased by 22% to over
£4.5m (Q1 2019: £3.7m) and profitable both before
and after tax
• Q1 2020 passenger numbers for our West Africa
airport operations at record levels before airport
closed end of March due to Coronavirus
• 5-year main contract signed relating to Ghana port
managed services project awarded in June 2019
• Completed balance of $3.48m USD of advanced
container screening solutions for two ports in Asia
secured in 2018
• Reduced the Group’s convertible loan notes by
£561,250 to £1,683,750, maturity date for the
balance extended to 1 May 2021
• Coronavirus (COVID-19) Pandemic causing disruption
to airport security and training operations but effect
mitigated by significant increase in fever screening
product sales
* restated as a result of the implementation of IFRS16
^ This is an Alternative Performance Measure refer to Note 2 for further details
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3
Who We Are
Westminster Group Plc is a British security and defence
organisation with international offices, agents and partner
companies in over 50 countries. We solve security,
safety and defence problems for governments, military,
non-governmental organisations (NGOs), air and
seaports, critical infrastructure and major organisations
and corporations worldwide.
The Group’s principal activity is the design, supply and
on-going 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 Group’s various operating companies are
structured into two vertically integrated operating
divisions, Managed Services and Technology all
focussed on deliver products, services and solutions
to our three key market sectors - LAND - SEA – AIR.
Divisional Revenue Split (£’000)
Managed Services
(5,525)
Technology Services
(5,364)
66 50+
countries in 2019
agents and offices
Geographical Revenue Split (£’000)
UK & Europe
(1,957)
Africa
(4,899)
Middle East
(2,397)
Rest of World
(1,636)
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Westminster
Around the world
Worldwide
world class protection
France
Euro Ops International
3 rue de Bischwihr
68280 Andolsheim
France
Ghana
Administration Office
Tema Port
Accra
Ghana
Germany
GLIS
Gesellschaft für Luftfahrt- und
Infrastruktur-Sicherheit GmbH
Chiemsestr. 25
D – 83233
Bernau am Chiemsee
Germany
Sierra Leone
60 Wellington Street
Freetown
Sierra Leone
Regional Offices
UK
Westminster Group Plc
Westminster House
Blacklocks Hill
Banbury
Oxfordshire OX17 2BS
United Kingdom
KSA
Westminster Arabia
Building No. 482
Al Orouba Road
Olaya Street
Riyadh 11531
Saudi Arabia
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Strategic Report
Chairman’s
Statement
Rt. Hon Sir Tony Baldry DL
Chairman
Overview
I am pleased to present the Westminster Group plc.
Final Results for the year ended 31 December 2019
which was a record year for the Group both in terms
of revenue and growth.
I am also pleased to report we achieved a record 63%
growth in revenues to £10.9m, an increase of £4.2m
over the £6.7m reported in 2018. This is the fourth
consecutive year of double-digit revenue growth and
the highest growth rate since Westminster’s shares
were admitted to trading on AIM in 2007. Encouragingly
our recurring revenue^ also rose strongly, up by 46% to
£5.6m (2018: £3.8m). Accordingly, we have delivered an
improved financial position with an EBITDA^ profit from
underlying continuing and discontinued operations of
£0.1m (2018: loss £0.4m restated). This bodes well for
our future trading and demonstrates what the Group
is capable of. Q1 2020 has already commenced on a
strong footing ahead of budget with revenues of over
£4m, being around 30% up on Q1 2019 (£3.1m).
A key achievement in the year was that within only two
weeks from receiving a letter of intent in June 2019
and our being appointed as technical partner running
the container screening operations in the new $1.5bn
container port in Ghana, we mobilised, set up and were
running a complex screening operation in time for the
port opening. As Chairman I was impressed by our
team’s ability to deliver such a complex operation in
a short timescale.
Both our operating divisions are performing well. Enquiry
levels remain healthy and levels of interest in the Group’s
services are growing. Both divisions are developing
and pursuing sizeable business opportunities and it is
encouraging to see our Technology division securing
important contracts such as $3.48m USD contract
announced in April 2019. More detail on the strategic
developments, projects and opportunities we are
undertaking is covered in the CEO’s Strategic Report.
During the year the Group raised £1.55m gross from
the issue of new equity to support the development
of the Group. In January 2020 we announced we had
secured a flexible financing facility consisting of a £3.0m
mezzanine loan supported by a £1.75m Equity Placing
and Sharing Agreement and elected to draw down an
^ This is an Alternative Performance Measure refer to Note 2 for further details
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initial £1.5m to commence a redemption programme of
the Company’s £2.245m Convertible Loan Notes. This
was due to be completed before 30 June 2020 but due
to the Coronavirus pandemic this was extended with
the support and consent of noteholders to 1 May 2021.
With the option to draw down further funds at our
discretion, this financing facility provides us with the
necessary flexibility needed to support the continued
growth of the business.
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 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.
Social Responsibility
As a Group, we take our corporate social responsibilities
very seriously, particularly as we operate in emerging
markets and in some cases in areas of poverty and
deprivation. I am proud of the support and assistance
we as a company 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
It is with great sadness that in 2019 we marked the
passing of Lt Col Sir Malcolm Ross GCVO, OBE,
GCStJ, DL. Sir Malcolm was Westminster’s Chairman
from 2007 and was an inspirational and supportive
leader. Sir Malcolm was a true Gentleman in every sense
of the word and a hard-working public servant. In 2017
Sir Malcolm moved to Deputy Chairman in order to allow
more time for his public duties and yet he continued to
devote considerable support to the Company.
Sir Malcolm was a former member of the Royal
Household of the Sovereign of the United Kingdom,
and from 2006, that of the Prince of Wales (retired
March 2008). He was made an OBE in 1988 and joined
the Royal Victorian Order in 1994 as a CVO. He was
knighted as a KCVO in 1999, and advanced to GCVO
in 2005. He had been a member of the Royal Company
of Archers since 1981, and a Freeman of the City of
London since 1994. In 2006, he was made Her Majesty’s
Lord Lieutenant of the Stewartry of Kirkcudbright. Until
recently Sir Malcolm was also the Lord Prior of The
Order of St John. He was a wonderful man and will be
greatly missed by a great many people, not least all at
Westminster.
The vacancy left by Sir Malcolm’s passing was filled
in November 2019 by Mawuli Ababio stepping up from
our international advisory board to Non-Executive
Director. Mawuli is based in Accra, Ghana and has
extensive board and corporate governance experience
having served on several listed and unlisted boards
over the last 20 years, both as an Executive and
Non-Executive Director. His experience across the
whole of sub-Saharan Africa is already proving to be
invaluable to the Group. Mawuli has taken over the
chair of the Remuneration Committee.
In January 2019 Charles Cattaneo joined the board as a
Non-Executive Director. 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.
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.
We continue to work closely with and receive excellent
support from the Foreign Office and UK Diplomatic
Missions around the world and I am very grateful for the
support these and other governmental departments
provide to our teams and our operations worldwide.
Revenue Growth
0
0
0
£
’
5,396
4,406
3,359
10,889
6,668
2015
2016
2017
2018
2019
At the time of writing we are in the midst of the global
Coronavirus (COVID-19) pandemic which, in addition to
the tragic loss of life, has major implications for the global
economy creating material uncertainty and challenges.
The duration and full impact of this pandemic is difficult
to predict at the present time although we are seeing
encouraging signs that the worst now appears to be over
in some parts of the world with some countries looking
to gradually relax restrictions. As a company operating
globally the pandemic has affected parts of our business
in various ways. Some parts of our business have been
adversely affected, others have seen little impact, whilst
some have seen significant growth. The Chief Executive
Officer’s Report provides some detail on the challenges
this pandemic has created and how we have responded
to the situation.
Meeting with the Group’s ever-expanding team of
consummate professionals is one of the Board’s
more pleasurable responsibilities. As a service-
based business, our employees are key to delivering
success. On behalf of the Board, I want to congratulate
Westminster’s management and employees around the
globe for their achievements and the vital contribution
they have made to our success in 2019 and the way in
which they have risen to the challenges and opportunities
presented by COVID-19.
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
13 May 2020
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Strategic Report
Chief Executive Officer’s
Report
Peter Fowler
Chief Executive Officer
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;
Managed Services and Technology; both primarily
focused on international business as follows:
Managed 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 Managed
Services division. This reduces both supplier exposure
and cost and provides us with increasing purchasing
power. Our Managed 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 and our worldwide
^ This is an Alternative Performance Measure refer to Note 2 for further details
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deployments can be seen on pages 4 & 5. 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.
Business Review
As highlighted in the Chairman’s Statement, 2019 was
a record year for the Group with 63% (£4.2m) year on
year increase in revenues to £10.9m (2018: £6.7m), our
fourth year of double-digit revenue growth and shows the
momentum we are building. We are greatly encouraged
that within this revenue growth, recurring revenue^ from
our managed services, guarding and maintenance
contracts (including 6 months of contribution from our
Ghana operations and 8 months of Euro Ops) grew by
46% (£1.8m) to £5.6m (2018: £3.8m). This is significant
as our growing base of contracted recurring revenue is
what underpins the future growth of the business.
2019 was a record year for the
Group with 63% (£4.2m) year
on year increase in revenues
to £10.9m (2018: £6.7m).
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. Operating in frontier markets
is time consuming, complex and costly but the potential
rewards are substantial. Despite the cost of business
development, the set up costs for our Ghana project
and the costs associated with setting up our various
strategic alliances and joint ventures around the world,
we are pleased to report a greatly improved EBITDA^
performance for the full year with a profit from
underlying continuing and discontinued operations
of £0.1m as compared with 2018 which was a £0.4m
(restated) EBITDA^ loss from underlying continuing
and discontinued operations. As a business we are
operationally geared in that we have relatively fixed
operating costs and as our revenues continue to
grow our profitability will grow proportionally faster.
In this respect we believe we are now approaching
an inflection point.
Both the Managed Services and Technology divisions
delivered an impressive performance during the year,
both financially and operationally. Financially our
Managed Services Division achieved a 50% increase in
revenues to £5.5m (2018: £3.7m) whilst our Technology
Division achieved an impressive 80% increase in
revenues to £5.4m (2018: £3.0m). Operationally both
Divisions had a busy year and made excellent progress
on a number of fronts.
Enquiry levels remain healthy and levels of interest in
the Group’s services continues to grow across both
Divisions. However, whilst our Technology Division
provides the technological resources and platform to
expand our operations around the world and is capable
of delivering large scale projects, it is our Managed
Services Division, with its potential for delivering large
scale, long term, recurring revenue and transformational
growth, which is increasingly our core focus, particularly
within the transportation security sector.
Passenger numbers for our West Africa airport
operations for the year are at record levels and the
last few months of 2019 were consistently some of the
highest monthly traffic numbers experienced since we
commenced operations there.
Building on the growing success of our aviation training
business we have constructed a training facility at our
UK Headquarters in Banbury so that we can conduct
specialist technical and operational training courses for
airline and airport delegates from around the world. The
facility was completed and opened in early 2019 and has
undertaken numerous training courses including for one
of the largest airlines in Europe.
In February we delivered the remainder of the $4.5m
USD vehicle screening contract in the Middle East,
which the Company secured in 2018.
In March 2019 we had entered into a Technical
Partnership Agreement with a Ghanaian company,
Scanport Ltd. In June 2019, we announced a letter of
intent had been received acknowledging Westminster
as the Technical Partner and setting out the preliminary
terms regarding the appointment and scope of work
relating to a container screening project at the new
container port, Terminal 3 at Tema, Ghana.
Terminal 3 is a new $1.5 billion investment project by
Meridian Port Services (‘MPS’) which is creating one of
the most advanced port operations in Africa, if not the
world. The first two berths opened on 28 June 2019 and
^ This is an Alternative Performance Measure refer to Note 2 for further details
the first commercial vessel successfully docked on 3 July
2019. The third berth became operational in Q1 2020 and
the fourth berth is due for completion at the end of 2020.
When complete it will expand the port’s capacity from
around 1 million Twenty-foot Equivalent Units (‘TEU’)
p.a. to over 3.5 million p.a.
Despite not having formal contracts in place due to
unrelated issues within the port, Scanport–Westminster
were officially appointed and have been successfully
running the container screening and secondary search
operations since the port opened on 28 June 2019, with
Westminster providing the technical management and
operations and Scanport responsible for local costs,
management and employment.
The formal contract confirming the appointment for a
renewable 5-year term was eventually signed in March
2020 naming Westminster as the designated Technical
Partner for the duration of the contract. Revenues are
based on a percentage of the relevant port tariffs which
Terminal 3 is a new $1.5 billion
investment project by Meridian
Port Services (‘MPS’) which
is creating one of the most
advanced port operations in
Africa, if not the world.
are shared between Scanport and Westminster and
are driven by container traffic volumes passing through
the Port. Westminster’s share of revenues during the
soft opening and start-up phase of operations in 2019
amounted to several hundred thousand USD and we
look forward to the operation producing a meaningful
contribution to our revenues in 2020 as the port
continues to expand, the new berths come on stream,
capacity and throughput increases, and new tariffs
come into operation.
We are excited by the prospects of this long-term
managed services project and we expect Ghana to
be an important and growing part of our business.
In April 2019, our Technology division announced the
award of a $3.48m USD contract for the provision of
advanced container screening solutions to two separate
ports in an Asian country. Following manufacture and
site preparation works the first of these was delivered in
November 2019 and the second unit was dispatched in
January 2020.
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Strategic Report
Chief Executive Officer’s
Report
In May 2019, we announced we had acquired Euro Ops,
a French based aviation security and support services
company which, through its sister company, Euro Ops
International (also trading as ICare), provides aviation
support services such as Airport Security, Aircrew
Management, Humanitarian Logistics, Operations &
Dispatch, Ground Handling etc. Euro Ops has been fully
integrated into the Group and is developing meaningful
business and opportunities within Francophone
territories. Our new French operation joins our existing
German subsidiary, which is also developing a number
of sizeable business opportunities, in providing us with a
European footprint. Whilst Westminster is not likely to be
materially affected by Brexit, having European operating
companies will be beneficial.
In June 2019, we announced we will be forming a joint
venture in Saudi Arabia, under the name Westminster
Arabia. Our JV partners are Hazar International who,
under their impressive Chairman, Sheikh Salman Bin
Mohammed Bin Khalid Bin Hethlain, are strong and
influential partners.
An experienced business development team is now in
place within the country and is already involved in several
large-scale project opportunities in the Kingdom. One of
several projects already being pursued in the Kingdom is
Saudi ports and in 2019 at the request of the authorities
we conducted detailed operational and vulnerability
assessments at certain ports following which, the
Westminster team met with the port authorities in
February 2020 for more detailed discussions regarding
port security solutions. The follow up activity from these
meetings and discussions have been delayed due to
the COVID-19 effects and the travel restrictions in the
Kingdom however these will resume once restrictions
are lifted. The business opportunities for Westminster’s
products and services within Saudi Arabia are substantial
and the formation of Westminster Arabia represents an
important strategic development for the Group.
Westminster’s international reputation and expertise
in the field of aviation security continues to grow and,
in addition to our direct contracts with airports and
governmental bodies around the world, and the opening
of the training centre in the UK in 2019, we have entered
into two important Strategic Alliances. In July 2019, we
announced we had signed a strategic alliance agreement
with the Gulf Aviation Academy (‘GAA’), a leading
provider of professional aviation training in Bahrain and
the wider Middle East and North Africa (‘MENA’) region.
This alliance has already produced tens of thousands
USD in new business and in January 2020 GAA secured
an important new contract with the Bahrain Airport
Company (‘BAC’), the operator and managing body
of Bahrain International Airport (‘BIA’) to provide civil
aviation security training to hundreds of airport-stationed
Ministry of Interior (‘MOI’) personnel each year and which
will involve Westminster in the delivery of this service.
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In November 2019, Euro Ops entered into a strategic
alliance with the Tunisian Academy for Civil Aviation
Safety and Security Training (‘AFSAC’). From its
impressive training centre in Tunisia AFSAC provides
certified aviation security training workshops on behalf
of the International Civil Aviation Organization (ICAO)
and is an AACO Approved Training Centre (Organization
of Arab Air Carriers) and an AFRAA Approved Training
Centre (African Airlines Associations). This strategic
alliance is a major step forward in the delivery of aviation
security training and will allow each party to offer,
collaborate, market and deliver an expanded certified
training program.
In December 2019, we finalised the sale of the Sierra
Queen which had a book value of £170,000. The vessel
has been sold. As at December total consideration was
$643,000 over 36 instalments and subsequently after the
year end the consideration was significantly improved to
$676,500 over 38 instalments. Under the sale agreement
the Company agreed to ship the vessel at its own cost
to the purchaser in Greece and the vessel left Sierra
Leone waters in February 2020 and was delivered to the
purchasers on 6 March 2020. The vessel will be secured
by a mortgage charge over the vessel until final payment
has been received.
In June 2019, we
announced we will be
forming a joint venture in
Saudi Arabia, under the
name Westminster Arabia.
Keyguard U.K Ltd, the UK based security and risk
management company we acquired in November 2018,
was fully integrated into the Group during 2019 and is
now operating from our corporate HQ in Oxfordshire.
Whilst Keyguard performed below budget during the year
the integration into the Group has opened up a number
of new business opportunities which will lead to improved
performance and higher margins particularly within the
aviation and critical infrastructure market where we now
have joint marketing and sales activities with other parts
of the business underway.
In May 2019, we announced we
had acquired Euro Ops, a French
based aviation security and
support services company.
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Strategic Report
Chief Executive Officer’s
Report
In 2019 our Technology Division supplied a wide and
diverse range of products and services to numerous
clients in 66 countries around the world, including in
the UK, Middle East, Africa, Europe, Asia, the Americas
and the Caribbean. By way of example of the diverse
range of contracts secured by the Group in 2019 we
delivered Westminster’s unique diver communication
system for a middle Eastern navy, vehicle screening
solutions to a customs organisation in the Caribbean,
bomb disposal equipment in Europe, body scanners to
a prison service in Latin America, advanced screening
equipment to an Iconic building in the UK. Explosive and
Narcotic Detection solutions saw an increase in sales
across various geographies. As in previous years we
continued to supply security equipment and services to
Government facilities across the UK.
On a wider front we continue to progress various
existing and new large-scale managed services project
opportunities around the world. 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. It is however
precisely because of such challenges that competition
is limited and the opportunities offer transformational
growth opportunities.
We operate in a market that requires strict confidentiality
and we are not able to provide detailed updates or
explanations for delays which, if made public, may cause
issues with our clients and be prejudicial to discussions.
However, 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, 2019 was a busy year and a year of growth
during which we have made significant strides forward.
Strategy
Our vision is to build a global business with strong
brand recognition delivering advanced security solutions
and long-term managed services 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 is able to maintain and grow certain
revenues mitigating reductions in its airport business.
^ This is an Alternative Performance Measure refer to Note 2 for further details
12
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Redefining our diverse
businesses in line with our
“One Company, One Vision”
approach.
To deliver on this vision the Company has in place a
5-year Strategic Growth Plan which is reviewed annually,
and which includes a number of strategies to be pursued
to achieve our goals. As part of that strategy for growth
we 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 airport security operations, it is essential we have the
right strategies, people, processes and systems in place
to successfully deliver such growth.
We have a growing number of companies within the
Group as we expand our international operations and
offices around the world which together with recent
acquisitions such as Keyguard and Euro Ops, both of
which are now consolidated into our Group operations,
means we are operating under a range of business
identities and with a number of different websites etc.
A key strategy commenced in 2019 and running into
2020 is redefining our diverse businesses in line with our
“One Company, One Vision” approach. This will involve
rebranding parts of our business to better reflect the
Westminster brand and regardless of what company or
division or what product or service is involved it will be
undertaken and recognised as Westminster. As part of
this exercise we are undertaking a complete overhaul
of our extensive web presence bringing all our various
websites into a new and expanded Westminster Group
website. Our extensive portfolio of products and services
will all be brought together into one large but easily
navigable site and categorised in three key focus sectors
– Land, Sea and Air.
Whilst we continue to pursue our many organic growth
opportunities the expansion strategy, we commenced in
2019 of targeted acquisitions and strategic joint ventures
(JVs) in key markets and regions continues and we
believe this strategy will enable the Company to expand
its sphere of operations in a controlled and effective way.
We entered 2020 with our business in a stronger position
than it has been for some time and with renewed
optimism for the future and as part of our growth strategy
the Board has set 10 priority goals to be delivered
although we accept the unpredictability of the present
COVID-19 pandemic and the uncertainty of its duration
may impact the delivery of some of these goals:
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. Secure at least one more long-term managed
services contract;
4. Enter into at least one more strategic alliance/
joint venture in key markets;
5. Deliver another year of double-digit revenue
growth;
6. Deliver another year of significant recurring
revenue^ growth;
7. Deliver a material improvement in profitability;
8. Deliver a sustained and material improvement
in our share price;
9.
Instigate an Investors in People programme;
10. Deliver a companywide ‘One Vision, One
Company’ ethos and our new website focussed
on Land, Sea and Air business activities.
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. Days sales outstanding is
used to measure as to the cash conversion of revenue
and identifies debtor aging issues.
The Managed 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.
Group
Revenue
Gross Margin
Recurring Revenues^
Days Sales Outstanding
Number of Employees
Average Employee Cost Per Head
Managed Services
Passengers Served (‘000)
Vehicles/Containers Served (‘000)
Training Hours Delivered
Guarding Hours Delivered
Technology Division
Average Enquiries Per Month
2019
£10.9m
41%
£5.6m
38
261
£16,843
2019
121
309
4,040
70,671
2019
185
Average Number of Orders Per Month
41
Number of Countries Supplied
Number of Return Customers
66
96
2018
£6.7m
55%
£3.8m
41
233
£14,738
2018
113
-
3,808
9,081
2018
174
37
53
71
^ This is an Alternative Performance Measure refer to Note 2 for further details
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
13
Strategic Report
Chief Executive Officer’s
Report
Current Trading & Business Outlook
The Coronavirus (COVID-19) outbreak was declared a
Public Health Emergency of international Concern on
30 January 2020 and on the 11 March 2020 the World
Health Organisation (WHO) elevated the outbreak to a
global pandemic. In just a few weeks the COVID-19 virus
had spread from a single city in China right across the
globe, creating a worldwide healthcare crisis with millions
of citizens infected and a tragic toll of life. Governments
around the world reacted in various ways with many
closing borders, some putting large parts of their
populations on lockdown and imposed travel restrictions.
This has had a profound impact on the global economy
and businesses across the globe, the like of which has
not been experienced in a generation.
At the time of writing, the duration and full extent of the
impact on the global economy cannot be determined
with any accuracy although there are green shoots of
optimism with some countries appearing to be over
the worst of the disruption and some, including the UK,
easing lockdowns. The expectation is that the global
economy will begin to recover from the second half of
2020 although it is suspected the virus will be with us
for some time and that some countries may yet face
renewed outbreaks.
In the current business climate COVID-19 pandemic does
therefore create some uncertainty and has impacted our
business in varying ways, as explained more fully below.
We are a business which operates internationally with
staff around the world and we are heavily involved in
international travel. We therefore carefully monitor global
events for anything that could be a threat to, or an
opportunity for, our business. We identified the COVID-19
as one such event and began to take early action in
January before the WHO had declared it a Public Health
Emergency. We undertook risk assessments of our
various operations and prepared plans for repatriation
of overseas staff if necessary. We increased our stocks
of fever screening and safety equipment and began to
look for alternative sources of supply in case of supply
chain issues, as well as new products we could add to
our portfolio of safety equipment. We also instigated a
marketing campaign, increased the prominence of our
fever screening capabilities on our website and used our
international network and reach to begin promoting ways
in which we could assist governments and organisations
protect against the pandemic.
We have been closely monitoring the situation and as
the outbreak developed, we continued to update our
risk assessments and began implementing logistical
and organisational changes. We reduced costs and put
planned capital expenditure on hold. We worked with
^ This is an Alternative Performance Measure refer to Note 2 for further details
14
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Whist the COVID-19 crisis is
likely have an impact on our
airport security operations
for some months our sales of
screening and safety equipment
have risen significantly.
our loan note holders to defer the planed redemption
programme and extend the maturity date to May 2021.
We worked with our suppliers and supply chains to
ensure we can continue to supply our clients and the
early action we had taken in this respect has proved
invaluable. We instigated safe working practices
including social distancing, provision of Personal
Protective Equipment (PPE) and home working for a
number of staff.
We have put in place new procedures for deliveries
and despatch of goods and we have reorganised our
engineering teams so that they have no direct personal
contact with each other to limit any disruption should any
of them develop the virus. These measures and others,
including utilisation of governmental support schemes,
has meant that our business has so far managed to
maintain operations, keep our employees safe and
successfully trade through this global crisis.
Westminster is fortunate in that the business model
we have been developing is based on multiple revenue
streams, many of which are from long term or recurring
contracts, from diverse sources in varying parts of the
world. As such Westminster is in a better position than
many companies to weather the impact of the crisis.
Whist the COVID-19 crisis is likely have an impact on our
airport security operations for some months our sales of
screening and safety equipment have risen significantly.
In this respect in Q1 2020 we saw over $2.1m USD of
online product orders of which $1.7m USD were in March
2020 and over $1.2m USD of that was the last two weeks
of March demonstrating the benefit of multiple revenue
streams, mitigating the reductions elsewhere in our
airport business. We have seen no reduction in demand
for our services in this respect and we believe that the
significant increase in our fever detection and safety
equipment will continue for quite some time yet and is a
real opportunity for the business. We are already seeing
businesses and organisations planning to introduce
more permanent screening systems into their operations
and the aviation industry, which has been hard hit by
the global restrictions on air travel, are now looking at
introducing fever screening and testing as a means to get
air travel operational, with Westminster’s experience in
the aviation screening sector and our market reach
we believe this represents a significant opportunity for
our business.
The impact of COVID-19 on the aviation industry is
expected to last for some time and will almost certainly
lead to changes in the way air travel is conducted
however we believe airports in emerging markets, which
is where we are focussed, are likely return to more
normal passenger volumes much quicker due to the
essential nature of air travel in such regions.
As reported, passenger numbers for our West Africa
airport operations were at record levels for 2019 and this
trend had continued into 2020 with passenger numbers
continuing at the highest levels since we commenced
operations until the COVID-19 impact caused the
government to suspend flights for a period of 90 days
commencing 22 March 2020. The government is
currently still working to reopen the airport towards the
end of June. Whilst this will have an inevitable impact on
our revenues from this part of our business for much of
the remainder of 2020. Providing the contagion is under
control we expect that passenger numbers will begin
to recover in the second half of the year regaining more
normal levels by year end. We are carrying out regular
local risk assessments and have put in place social
distancing and procedural processes to protect staff
and others using the airport. We do however believe
it is important that we also support our staff and the
local community through these challenging times for the
country, as we did during the Ebola epidemic a few years
ago. In this respect we are maintaining employment of
our local staff to preserve security at the airport and will
be using time between flights to undertake additional
training for staff and to carry out comprehensive
servicing and maintenance of all equipment. This is not
only the right and moral thing to do but it will enable us
to ramp up operations at very short notice once flights
recommence.
Our aviation training business has been adversely
affected by COVID-19 and currently all planned courses
have been put on hold due to social distancing and
travel bans. We expect our training business to begin
to recover as airports recommence operations and
travel restrictions are eased. One of our important
governmental framework agreements relating to
international aviation training programmes we run
around the world has now been extended and is due
to run to September 2021 with a provision to extend
for a further year.
^ This is an Alternative Performance Measure refer to Note 2 for further details
Container volumes and revenues relating to our container
screening operations in Ghana continued to increase into
2020 with the daily averages in Q1 2020 being a 56%
increase on the 2019 daily average. We did see a slight
reduction in volume during the 3-week lockdown period
in Ghana which ended on 20 April 2020 but volumes
since then have risen back to the 2020 daily averages
and whilst we may yet see further disruption during the
COVID-19 crisis, we expect volumes overall to increase
further during 2020 as the port continues to expand and
new berths become operational.
Our Managed Services division not only has more large-
scale project opportunities under discussions than ever
before but we are also securing an increasing number of
smaller contracts to assist airport authorities around the
world with their equipment and security needs, and this
enhances our future prospects for our large scale, long
term airport opportunities post COVID-19 and are hopeful
of securing at least one more major contract in the year.
Our guarding business has been affected by some site
closures during the COVID-19 shutdowns although
there is a likelihood that some guarding requirements
may increase during site closures to ensure sites remain
secure and in this respect we have secured an important
new guarding contract since the COVID-19 shutdown
occurred.
Our operations in Saudi Arabia have been restricted
whilst the country is on COVID-19 lockdown and curfew,
but we anticipate this will resume after Ramadan towards
the end of May and we are excited by the prospects from
this venture.
We have achieved impressive
year on year revenue growth
over the past few years and we
expect this to continue albeit
impacted in the short term.
We have achieved impressive year on year revenue
growth over the past few years and we expect this to
continue albeit impacted in the short term depending
on how long the COVID-19 pandemic lasts. Both our
Managed Services and Technology divisions continue to
have a healthy and active enquiry bank and given on our
expected annual recurring revenue^ base and our current
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
15
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.
Over the next few months and years, we have an
opportunity to achieve unprecedented growth from the
prospects we are pursuing, and the Board and I remain
committed to delivering on this potential.
Peter Fowler
Chief Executive Officer
13 May 2020
Strategic Report
Chief Executive Officer’s
Report
order book, together with the improvement in our airport
passenger numbers and our run rate business,
we expect 2020 to be another successful year.
In view of the COVID-19 crisis we continue to investigate
new opportunities to expand our online and non-contact
sales opportunities. We believe that there will now be a
growing demand for more permanent fever screening
systems to be installed not just at major facilities such
as airports, ports, stadiums and shopping malls etc.
but we are seeing increasing demand for such systems
from factories, offices, mines and other commercial
organisations and we believe this is likely to be a growing
part of our business in the future.
One such development is an extension of our COVID-19
PPE sales through medical vending machines. We have
recently secured exclusive rights to specialised medical
vending machines for use in the UK to be used for
dispensing packs of face coverings, sanitiser and other
safety equipment for deployment at key locations around
the and transport hubs country and we are already in
discussions with major transport organisations. With the
drive to now have the travelling public wear protective
face covering on public transport etc this initiative could
greatly increase our distribution of PPE and safety
equipment.
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 reduction and are undertaking
regular risk assessments for all areas of our business.
Notwithstanding the impact of COVID-19 trading for
2020 has started on a positive note, building on the
success of 2019 with both order intake and revenues
ahead of budget. Q1 delivered revenues of over £4.5m,
an increase of more than 22% over the same period in
2019 (Q1 2019: £3.7m), and I am pleased to report we
made a healthy profit in the quarter both before and after
tax as we begin to benefit from new contracts and the
investment we have been making in our business and we
have a healthy order book going forward.
We are also fortunate in that much of our revenues
are generated from long-term and recurring revenue^
contracts (we entered 2020 with visibility of over £8m
of annual recurring revenue^ for the year from long term
managed services, guarding and maintenance contracts)
and because of the nature of our long term contracts,
where we have experienced reductions in such revenue
streams during the COVID-19 disruption these are
expected to resume quickly once the pandemic passes.
^ This is an Alternative Performance Measure refer to Note 2 for further details
16
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
17
Strategic Report
Chief Financial Officer’s
Report
Mark L W Hughes
Chief Financial Officer
Revenue
Operating Cost Base
Revenues of £10.9m were 63% higher than the
£6.7m reported in 2018.
Managed Services has moved forward strongly in
the year to £5.5m (2018: £3.7m) an increase of 50%.
This is primarily a combination of three factors, record
passenger numbers at our West African Airport, a full
year of Keyguard and initial revenues from our new
Tema Port Ghana operation.
We have also reported on Euro-Ops for the first time.
Further information on this is contained in Note 30.
Technology revenues increased by 80% to £5.4m
(2018: £3.0m). This is continuing a focus on, and
success at, obtaining larger sized contracts such as
the $3.48m USD contract for the provision of advanced
container screening solutions to two separate ports
in an Asian country mentioned in the Chief Executive
Officer’s statement.
Gross Margin
A significant amount of the increase in turnover was
from the increase in lower margin Technology Solutions
sales; typically, at about 15%. Because of this mix
effect the headline Gross Margin decreased to 42%
(2018: 55%).
Demonstrating how operationally geared the Group is,
despite a 63% increase in sales, Group administrative
costs only rose by 12% to £5.3m (2018: £4.7m) in total.
However, excluding share-based payments (increasing
due to accounting for warrants issued) and discontinued
items, the costs only rose by 3%. This is was primarily
due to inflation.
Exceptional Items
The exceptional item of £0.1m (2018: £0.4) is the pre
contract costs on a Middle East airport project. This
project was fully shelved in the first half of 2019. The
costs relate to the period up to 30 June 2019.
Operational EBITDA^ from underlying continuing
and discontinued operations
The Group loss from operations was £0.8m (2018
Restated: £1.0m). When adjusted for the exceptional
and non-cash items set out below and depreciation and
amortisation, the Group recorded an EBITDA^ profit from
underlying continuing and discontinued operations of
£0.1m (2018: £0.4m loss restated).
Finance Costs
Total finance costs of £0.6m (2018: £0.3m) increased
from the prior year as the coupon on the Secured
Convertible Loan Note (SCLN) rose from 12% to 15%.
Reconciliation to EBITDA^ from underlying continuing
and discontinued operations
Loss from operations
Depreciation, amortisation and impairment charges
Write back of impairment of the Sierra Queen
Reported EBITDA
Share based expense
Exceptional items
EBITDA^ profit / (loss) from underlying continuing and discontinued operations
This is a significant improvement on 2018 and prior years.
^ This is an Alternative Performance Measure refer to Note 2 for further details
18
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
2019
£,000
(823)
215
-
(608)
556
106
54
2018
restated
£,000
(1,035)
169
(170)
(1,036)
281
401
(354)
Plus, a calculated interest adjustment following the
extension of the SCLN. There was an underlying cash
charge of £0.5m (2018: £0.4m).
Restatement of 2018 Accounts
The 2018 comparative figures have been restated to
take into account the application of the new accounting
standard on Leases – IFRS 16. There are further details
in Note 2 and the financial effect of introducing this
standard is demonstrated in Note 12.
Result for the Year
The Group loss before taxation was £1.4m (2018
Restated: £1.4m) and the loss per share was 1.02p
(2018 Restated: 0.39p). The main reason for the
difference in earnings per share was that in 2018 a
deferred tax credit of £0.9m was recognised, but in
2019 this was only £0.02m.
Statement of Financial Position
Total Group assets amounted to £7.0m at 31 December
2019 compared with £8.8m (restated) at 31 December
2018. The main movement was a reduction in debtors at
the year end.
Net Group current assets amounted to £0.7m at
31 December 2019 compared to Net Group current
liabilities of £0.2m (restated) at 31 December 2018.
The Group trade and other receivables balance as at
31 December 2019 was £2.6m (2018: £4.6m). Average
days sales outstanding at the year-end were 38 (2018:
41). The 2018 figure had a significant amount for the
Middle East contract in progress at that time. This also
explains a drop in contract liabilities.
Cash and cash equivalents of £0.6m at 31 December
2019 compared with £0.3m at 31 December 2018.
Assets of disposal groups classified as held for sale were
£0.17m (2018: £0.17m) this is the Sierra Queen, see Note
29 and Note 32.
Trade and other payables were £2.5m (2018 Restated:
£2.6m) and average creditor days were 66 (2018: 27).
The year-end increase in creditor days was influenced by
the Asia Port contract.
A deferred tax asset of £0.91m (2018: £0.89m) was held
at the year end.
Total equity at 31 December 2018 stood at a surplus of
£1.9m (2018 restated: £1.1m).
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 on page 13.
Convertible Loan Notes (CLN) and Convertible Unsecured Loan Notes (CULN)
Summary of movements in loan notes
at principal value £’000
At 1 January
New issue
At 31 December
2019
CULN
2019
CLN
171
2,245
2019
Total
2,416
2018
CULN
2018
CLN
-
2,245
-
171
-
-
171
-
2,245
2,416
171
2,245
2018
Total
2,245
171
2,416
At 31 December 2019, the secured CLN carried a
coupon of 15% payable quarterly in arrears, had a
conversion price of 12.5p (10p from 1 January 2020)
and, following an extension after the year end,
matures on 1 May 2021.
At 31 December 2019, the unsecured CLN carried
a coupon of 5% payable quarterly in arrears, had a
conversion price of 10p and matures on 31 July 2021.
Equity Issues
Equity Issues
Allotment 8 February 2019
Allotment 25 July 2019
Allotment 19 December 2019
Number of Shares
Price per share (p)
Funds Raised £’000
5,000,000
10,000,000
375,000
15.375,000
10.0
10.0
12.5
500
1,000
47
1,547
^ This is an Alternative Performance Measure refer to Note 2 for further details
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
19
Strategic Report
Chief Financial Officer’s
Report
Summary of Warrants
Number
Holder and Description
Strike Price (p)
Life (years)
Vesting Criteria
589,330
170,455
Yaron Bull, February 2016
S P Angel, January 2018
9,625,000
Various Holders, July 2019
20.15
22.00
12.50
4
5
2
At grant: - detachable
At grant
At grant: - detachable
The S P Angel Warrants were inadvertently omitted from
the 2018 accounts but have been accounted for in 2019.
The omission of a charge of £27,000 from the 2018
accounts was not material.
In July 2019 10,000,000 warrants were issued to various
holders alongside the equity issue. On 19 December
2019 375,000 of these warrants were converted to
ordinary shares.
Cash Flow Statement
During the year the Group had an operating cash
outflow of £0.4m (2018: outflow £1.2m) which arose
primarily from an unfavourable working capital
movement of £0.6m (2018: £0.2m) offset by the
£0.1m EBITDA^ from underlying continuing and
discontinued operations result.
During the year, the Group raised £1.55m gross from
the issue of new equity. In 2018, £1.34m was raised
from new equity, with a further £0.2m of proceeds
from the issue of convertible loan notes.
Reconciliation from EBITDA^ from underlying continuing and
discontinued operations to normalised operating cash flow
EBITDA^ from underlying continuing and discontinued operations
(Loss) / profit on asset disposal
Net changes in working capital
Movement on tax
Net cash used in underlying operating activities
During the year, the
Group raised £1.55m
gross from the issue
of new equity.
2019
£,000
54
(9)
(552)
(26)
(533)
2018
restated
£,000
(354)
2
(192)
(872)
(1,416)
Net cash used in underlying operating activities is
presented excluding exceptional items, share options
expense, and depreciation and amortisation.
Events after the Reporting Period
These are fully set out in note 32 on pages 100 - 101.
Principle risks and uncertainties
The principle risk and uncertainties facing the group
are outlined on pages 24 - 27.
Mark L W Hughes
Chief Financial Officer
13 May 2020
Going Concern
The assessment of Going Concern is summarised
in the Directors Report on page 59.
^ This is an Alternative Performance Measure refer to Note 2 for further details
20
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
21
Strategic Report
Risk
Management
Westminster, as a specialist security and managed
services group operating in an international environment,
primarily emerging markets, is exposed to a variety
of risks and uncertainties which are monitored and
controlled by the Group’s internal risk management
framework.
Overall responsibility for risk management lies with
the Board who ensure that risk awareness is set at
an appropriate level.
To ensure that risk awareness is set at an appropriate
level the Board has delegated responsibility for the risk
identification and assessment to a Risk Committee
comprising of Executive Directors and Senior
Management.
The Risk Committee is responsible for identifying risks,
defining the Group’s risk management strategy and
maintaining the Group’s Risk Register.
The Risk Committee liaises with Divisional Management
to help identify operational and commercial risks and
to ensure Divisional Management undertake agreed
mitigation strategies.
The Risk Committee reports to the Audit Committee
and the Audit Committee is responsible for reviewing
the adequacy and effectiveness of the Group’s risk
management systems and the Risk Register.
The Chairman of the Audit Committee reports to the
Board on risks and risk management.
The Board reviews the Audit Committee reports
on a regular basis and considers whether the Risk
Management Committee has appropriately identified
the principal risks and mitigation strategies to which
the Group is exposed.
The Board monitors the Group’s risk management
systems through this consultation and also through
the Group’s divisional monthly management meetings,
where at least two executive Directors are present. The
risks and trends are a focus of each division’s monthly
management meeting, where their performance is
also assessed against budget, forecast and prior year.
In addition, key performance indicators are used to
benchmark operational performance for all operations.
22
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Risk Management Responsibilities
and Reporting Structure
The Board
Overall Responsibility for Risk Management
Audit Committee
Reviews the effectiveness of the Group’s Risk
Management System, the Risk Register and audit
arrangements
Risk Management Committee
Identifies risks, defines risk management strategy
and maintains the Group’s Risk Register
Divisional Management
Assist the Risk Management Committee identify
risks and implements mitigation strategies
While it is acknowledged that the Group faces a variety
of risks, the Board, through the processes set out above,
has identified the principal risks and uncertainties that
could potentially impact upon the Group’s short to
medium term strategic goals and these are shown
on the page opposite, together with how we manage
or mitigate them.
Risk Management Committee
The Committee’s Terms of Reference were last reviewed
and approved by the Board on 31 March 2020 and can
be viewed on the Corporate Governance section of the
Company’s website (www.wsg-corporate.com).
The Terms of Reference are reviewed by the Board
annually and amended where appropriate.
The Committee will be appointed by the Board and
should be a balance of executive directors and senior
management.
The purpose of the Risk Management Committee
(the “Committee”) is to perform centralised oversight
and policy setting of risk management activities and
to provide communication to the Audit and Risk
Committee who communicates with the Board of
Directors (the Board) of the Westminster Group (the
Company) regarding important risks and related risk
management activities. The Committee’s key areas
of responsibility are:
• Oversight of risk;
Overall responsibility for
risk management lies with
the Board.
2019 was a record year for the
Group with 63% (£4.2m) year
on year increase in revenues
to £10.9m (2018: £6.7m).
• Adherence to internal risk management policies
Committee Membership
and procedures;
The current Risk Management Committee members are:
• Compliance with risk-related regulatory
requirements;
•
External risk assessments in relation to the
Company’s international business; and
• Peter Fowler (Group CEO) (Chair)
• Mark Hughes (Group CFO)
• Stuart Fowler (Group COO)
• Maintenance of the Group’s Risk Register.
• Roger Worrall (Group Company Secretary)
The Committee monitors the Group’s risk management
and internal control processes through detailed
discussions with management and executive directors,
the review and approval of the reports and position
papers which focus on the areas of greatest risk to
the Group.
As part of its standing schedule of business, the
committee carried out an annual risk assessment of
the business to formally identify the key risks facing the
Group. Full details of this risk assessment and the key
risks identified are set out in the Risk & Risk Management
section of this Annual Report on pages 24 to 27.
• Stuart Gilbert (Head of Technology Division)
•
Joanna Fowler (Head of Managed Services Division)
• Hamish Russell (General Manager)
The Board considers that the committee as a whole
has an appropriate and experienced blend of
commercial, financial and industry expertise to
enable it to fulfil its duties.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
23
Strategic Report
Risk
Management
The principal risks and uncertainties which could
have a material impact on the Group’s business,
performance or reputation are set out below.
The principal risks are identified by the Risk
Management Committee based on the likelihood
of occurrence and the potential impact on the
Group as a whole.
In addition to the risks disclosed below, the Risk
Management Committee monitors and manages a
wide range of other risks to which the Group may
be exposed.
Risk Flags
Likelihood
Impact
Unlikely
Will have an impact but easily
dealt with
Possible
Impact will be moderate but
may cause some difficulties
Expected
Major impact which could
result in a material adverse
effect on the Group and / or
its stakeholders
Macro-economic Risks
Material Government Action
Likelihood
Impact
Risk
Mitigation Strategy
The Group operates in emerging and frontier markets and
could be exposed to the political, geographic and economic
risks of such territories:
• Arbitrary action by governments or governmental entities
disrupting operations, cancelling contracts, unfair calling of
bonds or other direct interference.
• Changes in governmental policy around environment, trade,
investment or foreign policy could adversely affect the
Groups operations.
• Develop strong relationships with trade bodies and industry
partners.
• Use local advisors and partners where possible.
• Use insurances where possible to provide cover.
• Work to ensure that the Group’s activities are not significantly
concentrated in any one individual customer or territory.
War & Terrorism
Risk
Mitigation Strategy
Likelihood
Impact
There is an ever-present risk of war or terrorism around the
world which is both an opportunity and risk for the Group:
• Ensure staff are adequately trained for and informed of the risks
surrounding their role in the Group’s operations.
• Terrorist explosives planted in luggage or smuggled
• Ensure regular risk assessments are undertaken for major
through Airport/Port secured by Westminster.
projects and that mitigation actions are in place.
• War or Terrorist event anywhere around the world can
have adverse effects on global trade and travel and
which would therefore affect the Groups operations.
• Maintain an incident response plan for all major projects.
Physical / Staff Risks
Staff Incident
Risk
Mitigation Strategy
Likelihood
Impact
We operate in often physically challenging locations that
present a range of risk for our staff:
• Adopt a code of conduct for staff in relation to their actions
whilst at work and on deployment overseas.
• Medical Emergencies such as Typhoid and Malaria etc.
• Maintain insurance cover including medical evacuation
• Accidents at work or whilst on assignment in a country.
and other risks.
• Personal Security from the threats of theft,
attack or kidnap etc.
•
Incidents whilst travelling.
• Carry out staff training and provide country briefings prior
to any deployment overseas.
• Maintain emergency response plans.
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| WESTMINSTER GROUP PLC
Financial Risks
Material Government Action
Risk
As a growing company there are financial risks which must
be carefully managed:
Likelihood
Impact
Mitigation Strategy
• Regular cash flow management.
• Manage & minimise cash need of projects where possible by
• Lack of available cash flow to undertake or complete
matching supplier and customer payment terms.
projects.
• Changes in Tax regimes could have a negative effect
on the Groups results.
• A material bad debt could have a significant effect on
the Groups results and cash flows.
• Breaches of financial covenants could have a material
impact on the Group.
• Forex & exchange control risks on international
transactions.
Increased Cost of Capital
Risk
Some of the larger opportunities which the Group are working
towards have a significant requirement for financing. Should
this financing come with a higher than expected cost this may
adversely affect the financial expectations of these projects.
• Undertake regular active debtor management.
• Closely monitor large debtors, undertake credit checks and use
credit insurance where possible.
• Regularly review any financial covenants and requirements
against short and long range forecasts.
• Where possible match purchases and sales in same currency.
• Hedging where appropriate.
Likelihood
Impact
Mitigation Strategy
• Maintain regular dialogue with multiple funding sources, put in
place project finance facility.
Legal & Compliance Risks
Breach of Legislation
Risk
Mitigation Strategy
Likelihood
Impact
The Group is exposed to regulations and legislation in the UK
and in the countries in which the Group operates or purchases
from. Risks could include:
• Maintain strict policies for all compliance risks and regularly
review policies against best practice.
• Ensure regular staff training is undertaken.
• Breach of corruption or anti bribery legislation.
• Breach of sanctions or export controls.
• Breach of stock market regulations.
Change in Sanctions
Risk
• Ensure any business partner contractually commit to obligations
regarding compliance and undertake background checks
ahead of business partner appointment.
• Use software tools where possible to monitor and ensure
compliance with regulations.
Likelihood
Impact
Mitigation Strategy
Some of the countries in which the Group operates could
be affected by sanctions:
• Maintain sanctions list within CRM system to flag potential
sanctioned enquiries.
• Change in sanctions status of operational country could
• Regularly check sanctions for high risk projects.
prevent the continuation of a project.
• Change in sanctions status in supplier country may
increase project costs and require resourcing.
Corporate Criminal Offence
Likelihood
Impact
Risk
Mitigation Strategy
The Group operates across multiple tax jurisdictions and needs
to ensure its various businesses and all employees operate in
accordance with relevant tax laws. The UK’s 2017 Corporate
Criminal Offence covers two areas:
• The evasion of UK tax; and
• The evasion of foreign tax.
• Operate in compliance with taxation legislation in areas
of operation.
• Seek professional advice where appropriate.
• Monitor and audit the Group’s financial operations and HR.
• Maintain a Corporate Criminal Offence Policy.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
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25
Strategic Report
Risk
Management
Information Technology Risks
Failure of Major IT Equipment
Likelihood
Impact
Risk
Mitigation Strategy
The Group’s systems and data are subject to security and
availability risks, particularly in some of the territories the
Group operates in:
• Loss of hardware systems and data.
• Loss of phone or email communications.
• Loss of cloud-based software and data.
•
Implement redundant systems where possible.
• Ensure regular backups of company data.
• Where possible provide dual internet connectivity options.
• Ensure fail over services are provided where possible.
Cyber Attack
Risk
Mitigation Strategy
Likelihood
Impact
The Group’s profile around the world and sectors within which
it operates heightens the risks of cyber-attack:
•
Implement industry standard protection software for all Company
equipment and websites.
• Cyber-attack to the website reduces selling opportunities
• Provide staff training and updates on the latest potential
and/or damages the Group’s reputation.
threats and vulnerabilities.
• The loss of customer data through a cyber-attack causing
• Where possible segregate project services and data in
reputational damage.
unconnected systems.
• A ransomware or similar attack restricting the Groups
• Move to cloud storage and maintain back up data.
access to Company data hindering the Groups operations.
• Risk committee to review IT policy against evolving threats.
• Cyber-attack on corporate and financial system.
Contractual Risks
Major Project Failure
Risk
The failure to deliver a project to the required standard
could result in a major incident and significantly damage
the reputation of the Group.
Material Contract Failure
Risk
Failure to deliver a contract in a timely manner, according
to an agreed specification could lead to higher costs,
penalties and reputational damage:
• Material breach of contractual terms.
• Unable to fulfil contractual obligations.
• A contract becomes onerous.
Likelihood
Impact
Mitigation Strategy
• Recruitment of appropriate qualified and experienced staff,
internal audits against international standards.
• Contractual liability limited (such as no airside liability taken)
and implement adequate insurances.
Likelihood
Impact
Mitigation Strategy
• Ensure employees are aware of contract terms for project on
which they are working.
• Carry out regular monitoring of employee’s progress on projects
• Regularly rotate employees where complacency or fatigue
may develop.
• Where possible ensure alternative sources are available for
project requirements.
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| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Business Disruption
Loss of Key Staff
Risk
Mitigation Strategy
Likelihood
Impact
The loss of key personnel or the failure to have an adequate
succession plan could have an impact on the Group’s
overall performance.
• Restrict travel for multiple key staff on a single trip.
• Maintain up to date job descriptions and recruitment plans.
• Ensure competitive remuneration packages.
Hostile Action
Risk
Mitigation Strategy
Likelihood
Impact
The effects of outside hostile interference in contracts and
operations could have a significant effect on the Group.
• Ensure we have good professional advisors and that our
contract information is sound.
Global Events
Risk
Mitigation Strategy
Likelihood
Impact
As a worldwide business global events such as SARS
in 2008, the Ebola crisis in 2014 or the Coronavirus COVID 19
pandemic of 2020 can have serious consequences for the
Group’s operations and results.
• Build the business with multiple revenue streams coming from
multiple customers in multiple regions to help limit impact.
• Maintain cash reserves as buffer to unforeseen events.
• Seek government support where available.
Failure of Infrastructure
Risk
Mitigation Strategy
Likelihood
Impact
Westminster’s performance is dependent on the availability and
quality of its physical infrastructure, its information technology.
•
Implement a disaster recovery plan.
• Maintain disaster recovery insurance.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
27
Strategic Report
Stakeholder
Engagement
Section 172 Statement
The Directors are well aware of their duty under s.172
of the Companies Act 2006 to act in the way which
they consider, in good faith, would be most likely to
promote the success of the Company for the benefit
of its members as a whole and, in doing so, to have
regard (amongst other matters) to:
• the likely consequences of any decision in the
long term;
Stakeholders
Our People
Our People are our most valuable asset and are critical to the
delivery of our strategy and the future growth of our business. We
now employ directly 261 and indirectly many more people around
the world. We are fortunate to have a great team of talented and
motivated people in our Group and it is important to retain and
develop them and that we can attract and inspire new people to
join us as we grow our operations worldwide.
• the interests of the Company’s employees;
How we engage
• the need to foster the Company’s business
relationships with suppliers, customers and others;
• the impact of the Company’s operations on the
community and the environment;
• the desirability of the Company maintaining a
reputation for high standards of business conduct;
and
• Whilst we have reporting structures in place with line country
and divisional management teams, we operate an open-door
policy and employees can speak to senior management or
Board Directors about issues or ideas.
• The Board and senior management engage with employees
through a range of formal and informal channels, including
regular meetings and team briefings, and in certain territories
involving trade unions.
• We have formal induction and appraisal systems in place for
• the need to act fairly between members of the
new and existing employees.
Company.
The Board recognises that the long-
term success of the Westminster
Group requires positive interaction
with its stakeholders.
The Board recognises that the long-term success of the
Westminster Group requires positive interaction with its
stakeholders. Positive engagement with stakeholders
will enable our stakeholders to better understand the
activities, needs and challenges of the business and
enable the Board to better understand and address
relevant stakeholder views which will assist the Board’s
in its decision making and to discharge its duties under
Section 172 of the Companies Act 2006.
In the following section we identify our key stakeholders,
how we engage with them and key activities we have
undertaken during the period in question.
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| ANNUAL REPORT 2019
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• We operate a companywide intranet system with useful
information for our people and we utilise Microsoft Teams for
collaboration amongst our diverse teams and businesses.
• We hold social events in different jurisdictions for our people in
various locations.
• The Group CEO provides updates and presentations to our
people on important Company developments.
• The Group Chairman regularly meets individual employees.
• We encourage our people to have a culture of respect and
integrity and operate a whistle blowing policy.
Key Activity During 2019
• We expanded our employee appraisal system throughout
our business.
• We expanded our workforce with excellent new people in
the UK and overseas.
• We welcomed two important and experienced members to
our Board, Charles Cattaneo and Mawuli Ababio.
• We held several employee awards ceremonies in the year
recognising individual achievements.
• We held an employee strategy and activity day at which
the CEO made a presentation on our Corporate Goals,
achievements and strategies followed by team
building activities.
• The Board held its annual off-site Strategy Day meeting
(including activities) on 23 April 2019 and refreshed its
5-year Strategy Plan.
261
staff worldwide
People are our most valuable asset and are
critical to the delivery of our strategy and
the future growth of our business.
Our Strategic Partners
In our 2018 Annual Report we stated that, in addition to our
organic growth, one of the growth strategies we had instigated
was to look at targeted strategic alliances and joint ventures
in key markets and regions, which would enable the Company
to expand its sphere of operations in a controlled and cost-
effective way. Our network of agents around the world also
remain important part of our global footprint and we need to
ensure our Agents are kept informed and motivated.
How we engage
• We identify regions and markets where the added strength
and local knowledge of a strategic partners would enable
us to better penetrate that market.
• We analyse the suitability of such markets including legal
and financial implications of entering into agreements etc.
• We enter into dialogue and if appropriate confidential
commercial and contractual negotiations led by our
CEO and CFO.
• We liaise with our agent network around the world on
new products, services and opportunities.
Key Activity During 2019
• We negotiated a speculative Technical Partnership Agreement
with Scanport in Ghana which eventually led to the long-term
container screening contract at Tema Port in Ghana.
• We negotiated a Joint Venture company with powerful
partners, Hazar, in the Kingdom of Saudi Arabia leading to
the formation of Westminster Arabia with considerable
business prospects for our Group in this important region.
• We negotiated and signed a Strategic Alliance with Gulf
Aviation Academy in Bahrain greatly expanding the scope
of our aviation training capabilities.
• Through our French business Euro Ops, we negotiated and
signed a Strategic Alliance with the Tunisian Academy for
Civil Aviation, further expanding our scope and range of
services and adding French language certified training to
our portfolio of services.
• We held regular meetings and dialogues with all our
Strategic Partners.
• We began a review and re-engagement programme with
our network of agents.
Our Shareholders
The support of shareholders is vital to the long-term success of
the Group. We are fortunate to have many supportive individual
and strategic investors however the Board is committed to
expanding its institutional investor base. The Board recognises
that maintaining good communication and having constructive
dialogue with its shareholders, providing them with access to
relevant information, is important although this must be balanced
against the confidential and commercially sensitive nature of what
we do. A list of substantial shareholders holding 3% or more of
the Company’s shares are set out on page 58 of this report.
How we engage
• Our investor website (www.wsg-corporate.com) provides
all required regulatory information as well as additional
information shareholders may find helpful including: share
services, information on Board members, advisors and
significant shareholdings, a historical list of the Company’s
announcements, its financial calendar, corporate governance
information, the Company’s publications including historic
Annual Reports and Notices of Annual General Meetings,
together with share price information and interactive charting
facilities to assist shareholders analyse performance.
• We provide Market Announcements on all regulatory matters.
• Our websites provide regular news of non-regulatory activities.
• The Company issues the market with and interim and annual
reports with detailed information on the business. These
reports are also listed on our website.
• The CEO and CFO are available to meet with institutional
and substantial shareholders for briefings and presentations
when appropriate.
• We engage with private investors whenever possible and
investor correspondence is handled by the Company’s IR/
PR advisors, Wallbrook. The CEO often responds to individual
correspondence where appropriate.
• All Directors are required to attend and make themselves
available to take questions from shareholders or address
any concerns at the Annual General Meeting, the date of
which is published on our website.
Key Activity During 2019
• We engaged with investors on topics of strategy, governance,
developments and performance.
• We issued our 2018 Annual Report on 24 May 2019 and our
2019 Interim Report on 15 August 2019.
• We held our AGM in London on 18 June 2019 and welcomed
a number of investors who were able to have one to one
discussions with Directors.
• We raised £1.55m in equity from investors against a difficult
market which enabled an important business development
and acceleration of the first stage of the $3.48m USD contract
for container screening solutions to two ports in Asia. Whilst
dilutive the funding was done in the best interests of the
Company and its shareholders.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
29
Strategic Report
Stakeholder
Engagement
Capital Providers
Access to capital is of vital importance to the long-term success
of our business, to fund growth and finance our large-scale
Build-Operate-Transfer (BOT) & Build-Maintain-Transfer (BMT)
projects which operate similar to a SaaS model with heavy
investment early in the life of a project but generating predictable,
quantifiable and growing revenues and returns over many years.
The Board’s goal is to have access to a range of capital sources
weighted towards non-dilutive capital such as pure debt, bank
finance and vendor financing, and away from dilutive capital such
as equity and convertible loan notes etc.
How we engage
• Regular discussions and updates with our existing
Convertible Loan Notes (CLNs) managers.
• Meetings, discussions & presentations to banks and
financial institutions.
• Meetings and discussions with UK Export Finance and
similar organisations.
Our Customers
Customers are central to the success of all businesses. The
majority of our customer base, by value, comprises governments
and government agencies, non-governmental organisations
(NGO’s) and blue-chip commercial organisations worldwide.
Our business is focused on providing innovative and turn-key
solutions that meet our customer requirements efficiently and
on time. Understanding the needs of our customers is crucial to
the delivery of reliable and effective products and services, which
underpins the performance and success of our business.
How we engage
Through our sales and business development teams we
endeavour to provide our customers with:
• A solutions-driven solution.
• Knowledgeable advice.
• A discrete and confidential service.
• A prompt response to enquiries and queries.
• A quality and regulatory support service.
• A technical service offering with training and maintenance
support.
• We interact with our customer base as required and for larger
customers and/or where required we engage at director level.
• Where possible we travel to engage with our customers; and
• We participate in industry forums and events. We also
exhibit at selected trade shows which facilitate a high-level
of interaction with a wide range of customers and provide an
opportunity for us to brief.
Key Activity During 2019
• We achieved an impressive 63% increase in revenues,
our 4th year of double-digit revenue growth.
^ This is an Alternative Performance Measure refer to Note 2 for further details
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| WESTMINSTER GROUP PLC
Key Activity During 2019
• We agreed with the holders of the Company’s £2.245m
CLNs to extend the maturity date by 1 year to 30 June 2020
In order to allow the Company time to put a structured and
cost-effective redemption programme in place. This was
extended to 1 May 2021 after the balance sheet date to
ensure we had the flexibility needed to react to issues
caused by the Coronavirus.
• We took measures to ensure that our Iranian project, which
we put on hold in 2018 following the US withdrawal from
the JCPOA, no longer posed a barrier to banks and lenders
sensitive to the issue.
• We held a number of exploratory and positive meetings with
various banks and lending institutions.
• We explored working with UK Export Finance on some of
our large-scale project opportunities.
• We achieved 46% increase in recurring revenues^.
• We achieved a 35% increase in repeat customers (excluding
those from our managed services and recurring revenue^
contracts who by nature are repeating customers).
• We were appointed as the Technical Partner for the long-
term container screening project at the new $1.5 billion
port development in Tema, Ghana. Despite the contract not
being signed we helped enable the port to open on time by
mobilising a full scanning operation in just a few weeks based
on a letter of intent. This was the right decision and the port
operator appreciated our dedication and professionalism and
the contract was later signed in March 2020. The Directors
view this long-term managed services contract as providing
strong revenue streams for many years.
• We engaged with our customers around the world and our
business development teams and Directors made numerous
overseas visits for meetings and presentations.
• We undertook regular internal sales meetings and discuss
customer activity, opportunities and threats, which were
reviewed at Board meetings.
• We continued to undertake our regular customer satisfaction
feedback exercise following delivery of any product or service
with a high positive response rate.
• We were a sponsor and keynote speaker at the Sierra Leone
Investment forum held in London in June jointly organised by
the UK Department for International Development.
• We attended and spoke at the Airports Council International
(ACI) Security Council Meetings in Latin America and Europe
on the topic of behavioural analysis, employment screening
and policy decisions.
• We exhibited at the International Security Expo in London.
Our Suppliers
We are a solutions provider not a manufacturer and are product
agnostic. We work with around 140 suppliers and look to choose
the best products that meet our customer requirements for any
given application. Whilst large manufacturers will have their own
outlets and routes to market many smaller manufacturers of
niche and interesting security equipment do not have established
or easy routes to market particularly in emerging markets. Our
extensive web site and market presence is therefore a useful
route to market for some manufacturers and an opportunity
for us. We rely on our suppliers to provide us with products
and services which meet our quality, performance and delivery
requirements, which in turn allows us to fulfil our commitments
to our customers. Effective management of our supply chain
is critical to ensuring the continuity of our business and reliable
operational performance.
How we engage
• Our businesses engage with a broad range of suppliers
on a day-to-day basis, to ensure that our expectations are
met from a quality and delivery perspective, and to ensure
that our suppliers are conducting their business in line with
our own standards.
Our Communities
Our business, particularly our long-term managed services
operations, operate predominantly in emerging markets and
we recognise that we have an important role to play in the
communities in which we operate.
How we engage
• We engage with our communities in a wide variety of
ways from charitable giving to general support.
• We operate the Westminster Group Foundation
www.wg-foundation.org.
• We work with local partners and other established charities
to provide goods or services for the relief of poverty and
Governments and Regulators
We operate in a sector which is sensitive and regulated. Many
of our larger projects and opportunities involve governments
and governmental bodies as well as regulators such as the
International Civil Aviation Organisation (ICAO) or the International
Maritime Organization (IMO) and it is important we understand
the current rules and regulations for all our operations. Some
of the equipment and services we provide may be subject to
export restrictions and may require government approved export
licencing. As a company whose shares are admitted to trading on
AIM. We are subject to various regulations under the AIM Rules
of the London Stock Exchange, the Market Abuse Regulations of
the FCA as well as other regulatory requirements.
How we engage
• We maintain a regular dialogue with government bodies and
regulators in respect to our operations and opportunities in
order to assess opportunities and risks.
• We maintain a dialogue with the UK government and our
various British Embassies and High Commissions in the
countries we are involved in or targeting.
• We monitor international sanctions lists and our customer
relationship management systems are used to identify
customers, countries or projects that may be subject to
sanctions or that require export licences.
• Where appropriate we endeavour to enter into exclusive
supply arrangements for specific products in order to
protect our business development activities without
committing to specific annual spend.
• We have advantageous supply arrangements with a number
of leading suppliers of security equipment.
• We are regularly contacted by manufacturers of security
equipment requesting that we market their products.
Key Activity During 2019
• We regularly interacted with our various suppliers.
• We engaged with 20 new suppliers.
• Our engineers attended technical training courses at
manufactures sites in various countries.
• We attended a major manufacturer sales conference
in Prague.
advancement of education or healthcare making a difference
to the lives of the local communities in which we operate.
Key Activity During 2019
• We have funded the building of new classrooms at Sanaya
school in Sierra Leone as well as providing sportswear,
children’s clothing and other essentials within West Africa
and assisted with gravity water fed systems to provide
flushing toilets in communities.
• To view the many community support projects we are
undertaking visit www.wg-foundation.org.
• We have a comprehensive anti-bribery policy and
procedure in place which all staff have to commit to.
• We liaise regularly with our Nominated Advisor and
corporate lawyers in relation to our public share
trading requirements.
• The Board reviews compliance activities at each
Board meeting.
Key Activity During 2019
• We applied for and were granted 12 export control
licences during the year.
• We hosted a dinner in London for the President and
governmental delegation from Sierra Leone during an
official visit.
• Our West African airport operations were subject to an
ICAO audit and were highly praised for effectiveness.
• We liaised with a number of Ambassadors and High
Commissioners from our overseas missions around
the world.
• All Directors and new staff undertake an
antibribery webinar.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
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31
Governance Report
Board of
Directors
Peter Fowler
Chief Executive Officer
Mark Hughes BSc MBA FCA
Chief Financial Officer
Mark is an experienced Group Chief
Financial Officer with over 30 years’
experience in leading financial
organisations, banking and corporate
finance teams worldwide including in
high growth and emerging markets.
Mark is a fellow of the Institute of
Chartered Accountants, holds an
MBA from the University of Warwick
and has an honours degree in Banking
and International Finance.
Peter has over 40 years’ experience
operating within the security
industry, with particular reference
to the electronic protection sector.
Peter started his career in the
security industry in 1970, quickly
progressing into senior management
roles and has a long history of
running successful companies
having built and sold two security
businesses, successfully carried out
acquisitions and disposals and has
held several senior positions in listed
companies.
Peter joined Westminster as
Managing Director in 1996, carried
out an MBO of the business in
1998 and led the IPO on AIM in
2007. He is widely travelled and has
developed an extensive network of
contacts around the world, having
met numerous senior governmental
and military personnel in many of
the countries in which Westminster
operate.
Rt. Hon. Sir Tony Baldry
DL
Executive Chairman
Sir Tony has had a long a prestigious
Parliamentary career. He was
Personal Aide to Margaret Thatcher
in the 1974 General Election and
subsequently remained in her private
office when she became Leader of
the Opposition.
Sir Tony served as MP for North
Oxfordshire from 1983 to 2015.
He held various ministerial posts
during the 1990s, serving as
Minister of State in the Ministry of
Agriculture, Fisheries and Food
and as Parliamentary Under
Secretary of State in the Foreign and
Commonwealth Office, with a range
of responsibilities including South
Asia, Africa, North America and the
West Indies.
Sir Tony, a practicing barrister, was
awarded the Robert Schumann
Silver Medal for contribution to
European politics in 1975. He
takes a keen interest in foreign
affairs and was a Governor of
the Commonwealth Institute
and a member of the Overseas
Development Institute. Tony was
Chairman of the House of Commons
Select Committee on International
Development in the 2010 Parliament.
32
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| WESTMINSTER GROUP PLC
Stuart Fowler BEng (Hons)
Chief Operations Director
J Mawuli Ababio
Independent Non-Executive Director
Stuart has many years’ experience of the security
industry and has been particularly involved in many
of the more complex integrated security systems.
Stuart studied computing and business studies
at university obtaining a Bachelor of Engineering
Honours degree in 1996. After university Stuart
successfully implemented several software
development projects for listed companies before
joining Westminster in 1998. Since that time
Stuart has been instrumental in the design and
implementation of many larger complex systems
installed by Westminster and is now responsible
for the Group’s operations and technical
implementation worldwide.
Mr John Mawuli Ababio is an accomplished
Corporate Financier/Investment Banker with over
30 years’ experience in structuring private equity
and project financing transactions in Africa.
He is currently Vice-Chairman/Managing Partner of
PCM Capital Advisors a regional private equity fund
with a diversified investment portfolio in several
countries in the West Africa sub-region.
Mawuli has extensive board and corporate
governance experience having served on several
listed and unlisted boards over the last 20 years,
both as an Executive and Non-Executive Director.
He is bilingual, speaking fluent English and French.
Charles Cattaneo BCom MBA FCA
FCSI CF
Independent Non-Executive Director
Charles is a Fellow of the Institute of Chartered
Accountants in England and Wales, a Fellow of the
Securities and Investment Institute and has over
30 years’ corporate finance experience gained in
investment banking, industry and the accounting
profession. He has been a director of a number of
public and private companies and is the founder of
Cattaneo LLP a firm which specialises in providing
corporate finance advice to companies. He is
Chairman of the Midlands Regional Advisory Group
of the London Stock Exchange.
Lady Patricia Lewis (Patsy Baker)
Independent Non-Executive Director
Patsy Baker is well-known and respected within
the City and has considerable public relations and
marketing experience, having spent over 20 years
as the Group Business Development Director
with Bell Pottinger. In November 2017 she joined
Huntsworth PLC as Senior Group Advisor.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
33
Governance Report
Corporate Governance
Report
The Directors are committed to delivering high standards
of corporate governance to the Group’s shareholders
and other stakeholders including employees, suppliers
and the wider community. As an AIM company, full
compliance with the UK Corporate Governance Code
2016 (“the Code”) or the Quoted Companies Alliance
Corporate Governance Code, is not a formal obligation.
The Directors recognise the importance of sound
corporate governance and the Group has sought to
adopt the provisions of the Quoted Companies Alliance
Code that are appropriate to its size and organisation
and establish frameworks for the achievement of this
objective. The Board of Directors operates within the
framework described below.
Governance Framework
The Board is responsible for ensuring leadership of
the Group through effective oversight and review and
aims to deliver the long-term sustainable success
of the business. The Board discharges some of its
responsibilities directly in accordance with the formal
schedule of matters reserved for it to approve, and
discharges others through Board committees and the
executive management.
The key responsibilities of the Board, its committees
and the executive management are set out below.
Executive Chairman
Responsible for: leadership of the Board and the Board’s effectiveness; ensuring board composition
and skills meet the needs of the business; and for Board and Committee reviews.
Responsible for: the long-term success of the Group, providing leadership, direction and strategy; promoting the core
values of the business & oversight of financial management; ensuring the business has effective internal control and
risk management systems; and ensuring effective stakeholder engagement.
The Board
Audit Committee
Responsible for oversight of the
Group’s financial and risk reports
and statements and external and
internal audit processes.
See page 44 - 48
(Audit Committee Report)
Nomination
Committee
Responsible for ensuring the
Board and its committees have
appropriate leadershipand
succession planning in place.
See page 50 - 51
(Nomination Committee Report)
Remuneration
Committee
Responsible for the setting of
‘Directors’ and senior leadership
remuneration package policy, to
attract and retain key individuals.
See page 52 - 56
(Remuneration
Committee Report)
Chief Executive Officer
Responsible for: leadership and day-to-day management of the business; for developing strategy and new business
opportunities; and ensuring the Board are kept informed of all relevant information.
Risk Committee
Responsible for the Group’s
risk management and internal
control processes.
See page 23
(Risk Management Committee)
Operational Board
Responsible for management
and governance of Group’s
divisions and business.
See page 37
(Board Structure)
Disclosure
Committee
Responsible for oversight
of the Group’s disclosure
obligations and MAR.
See page 41
(Disclosure Committee)
34
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
35
Governance Report
Corporate Governance
Report
The Board
The Board sets the Group’s strategic aims and ensures
that necessary resources are in place for the Group
to meet its objectives. All members of the Board
take collective responsibility for the performance of
the Group, the Group’s Corporate Governance and
all decisions are taken in the interests of the Group.
Whilst the Board has delegated the normal operational
management of the Group to the Executive Directors
and other senior management, there are detailed
specific matters subject to decision by the Board of
Directors. These include acquisitions and disposals,
joint ventures and investments, projects of a capital
nature and all significant contracts. The Non-Executive
Directors have a responsibility to challenge constructively
the strategy proposed by the Executive Directors;
to scrutinise and challenge performance; to ensure
appropriate remuneration and that succession planning
arrangements are in place in relation to Executive
Directors and other senior members of the management
team. The senior executives enjoy open access to the
Non-Executive Directors.
The Chairman is responsible for leadership of the Board
and ensuring its effectiveness on all aspects of its role
including Corporate Governance. The Chairman sets
the Board’s agenda and ensures that adequate time is
available for discussion of all agenda items, especially
strategic issues. The Chairman promotes a culture
of openness and debate by facilitating the effective
contribution of Non-Executive Directors and ensuring
constructive relations between Executive and Non-
Executive Directors. The Chairman is also responsible
for ensuring that the Directors receive accurate, timely
and clear information. The Chairman ensures effective
communication with shareholders.
All Directors allocate sufficient time to the Group to
discharge their duties. There is a formal, rigorous and
transparent procedure for the appointment of new
Directors to the Board. The search for Board candidates
is conducted, and appointments made, on merit, against
objective criteria and with due regard for the benefits of
diversity on the Board.
The Board is responsible for ensuring that a sound
system of internal control exists to safeguard
shareholders’ interests and the Group’s assets. It is
responsible for the regular review of the effectiveness
of the systems of internal control. Internal controls are
designed to manage rather than eliminate risk and
therefore even the most effective system cannot provide
assurance that every risk, present and future, has been
addressed. The key features of the system that operated
during the year are described below.
Board Meetings and Attendance
The Board of Directors holds at least six scheduled
meetings a year to review the performance of the
Group. In addition, ad hoc Board meetings are
convened to deal with matters arising between
scheduled meetings. The Board seeks to foster a
strong ethical culture across the Group. There are
clearly defined lines of responsibility and delegation of
authority from the Board to the operating subsidiaries.
The Operational Board meet weekly to review any key
or current issues and hold monthly Operational Board
meetings with Divisional Heads.
Name
Board
Meetings
Disclosure
Committee
Audit
Committee
Nomination
Committee
Remuneration
Committee
Appointment
Sir Tony Baldry
Lt. Col. Sir Malcolm Ross
Peter Fowler
Mark Hughes
Stuart Fowler
Charles Cattaneo
Lady Patricia Lewis
Mawuli Ababio
H
6
5
6
6
6
6
6
1
A
6
5
6
6
6
6
5
1
H
-
26
30
30
25
30
30
4
A
-
25
30
30
24
29
29
4
H
-
3
-
-
-
4
4
1
A
-
3
-
-
-
4
3
1
H
-
-
1
-
-
1
1
-
A
-
-
1
-
-
1
1
-
H
-
1
-
-
-
2
2
1
A
-
1
-
-
-
2
2
1
Until 28 October 2019
From 18 January 2019
From 21 November 2019
Key
H = Maximum number of scheduled meetings held a director could have attended A = Number of meetings actually attended in person or remotely
36
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Board Structure
The Company operates in complex and challenging
technological and geographical areas and as such has
put in place a board structure that can best provide the
strategic advice and leadership required. The board
structure consists of a PLC Board, and Operational
Board and an International Advisory Board. The current
members of each board may be found on our website
here https://www.wsg-corporate.com/investor-relations/
board-members.
The PLC Board contains a balance of Executive and
Non-Executive Directors, including an Executive
Chairman who is responsible for dealing with the
strategic direction and long-term success of the
Company. The Board will meet every two months or
at any other time deemed necessary for the good
management of the business and at a location agreed
between the Board members. The Non-Executive
Directors, Mawuli Ababio, Charles Cattaneo and Lady
Patricia Lewis along with Sir Malcolm Ross during his
time in office not-with-standing his length of service
and former role as Chairman, are all considered
independent Directors.
The Operational Board comprises of Executive Directors,
Divisional Heads and other senior management as
deemed appropriate and is responsible management and
governance of Group’s divisions and business activities.
The Operational Board will meet weekly or at any other
time deemed necessary for the good management of
the business and at a location agreed between the Board
members. The Operational Board will hold a Divisional
Board meeting once a month. The Operational Board
reports to the PLC Board.
The International Advisory Board assists and advises the
Company and its subsidiaries on various international
issues including governmental and client liaison, cultural,
ethnic and religious sensitivities, compliance with legal
issues, financing and general business development.
For further details see the Group’s corporate website.
All members of the Board take
collective responsibility for the
performance of the Group, the
Group’s Corporate Governance
and all decisions are taken in
the interests of the Group.
Board Composition, Experience and Dynamics
The Company operates in complex and challenging
technological and geographical areas and the Board
is mindful that in order to deal effectively with the
challenges of the business and to maximise its growth
opportunities it has to incorporate a broad range of skills
and diversity. The Board maintains a skills, diversity and
experience matrix which will be periodically reviewed
at Board meetings to evaluate current and future
requirements. The Board and its committees will also
seek external expertise and advice where required.
Board members undertake continuing professional
development as an when appropriate. The composition
of the board with the members skills and experience is
set out on pages 32 to 33.
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A
&
M
Name
Position
Age
Sir Tony Baldry
Chairman
Peter Fowler
Mark Hughes
Stuart Fowler
Charles Cattaneo
CEO
CFO
COO
NED
Lady Patricia Lewis
NED
Mawuli Ababio
NED
60+
60+
60+
40-50
50-60
60+
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ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
37
Governance Report
Corporate Governance
Report
Board Evaluation
Internal control
The Board considers evaluation of its performance and
that of its committees and individual Directors to be an
integral part of corporate governance to ensure it has
the necessary skills, experience and abilities to fulfil its
responsibilities. The goal of the Board evaluation process
is to identify and address opportunities for improving the
performance of the Board and to solicit honest, genuine
and constructive feedback.
The Board considers the evaluation process is best
carried out internally at the Company’s current size,
However, the Board will keep this under review and
may consider independent external evaluation reviews
in due course as the Company grows.
The Board will, as a whole or in part as appropriate,
undertake the evaluation process aided by the Chairman,
CEO and independent Non-Executive Directors or
external advisors as necessary. The Chairman is
responsible in ensuring the evaluation process is ‘fit for
purpose’, as well as dealing with matters raised during
the process. The Chairman will keep under review the
frequency, scope and mechanisms for the evaluation
process and amend the process as required.
Where deficiencies are identified these will be
addressed in a constructive manner. Where necessary
individual Directors will be offered mentoring and
training. If deficiencies are identified within the Board
as a whole, then changes or additions to the Board
will be considered in conjunction with the Nomination
Committee.
The evaluation process will be focused on the
improvement of Board performance, through open
and constructive dialogue and the development and
implementation of action plans. The Board will report
on its evaluation and actions in its Annual Report.
Any recommendations raised in relation to the Audit
Committee are acted upon in a formal and structured
manner. No issues were identified for the year ending
31 December 2019.
Succession planning is a vital task for boards and the
management of succession planning represents a key
measure of the effectiveness of the Board and a key
responsibility of both the Nomination Committee and
wider Board.
The key procedures which the Directors have established
with a view to providing effective internal control are as
follows:
• Regular Board meetings to consider the schedule of
matters reserved for Directors’ consideration;
• A risk management process;
• An established organisational structure with clearly
defined lines of responsibility and delegation of
authority;
• Appointment of staff of the necessary calibre to fulfil
their allotted responsibilities; Comprehensive budgets,
forecasts and business plans approved by the Board,
reviewed on a regular basis, with performance
monitored against them and explanations obtained
for material variances; and
• An Audit Committee of the Board, comprising Non-
Executive Directors, which considers significant
financial control and risk matters as appropriate.
Business Model
Business Description
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, 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.
Our business has evolved from a traditional UK focused
security business to what can be described today as a
truly international business. Furthermore, our evolution
continues as we expand our operations into new areas
and new territories creating additional opportunities
around the world in the provision of long-term managed
security services and security products.
^ This is an Alternative Performance Measure refer to Note 2 for further details
38
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Key Board Activity and Focus in 2019
Leadership
Financial
• Evaluated Board effectiveness.
• Monitored performance of the businesses against the
• Approved nomination and new appointments to the Board.
2019 budget.
• Reviewed senior management performance.
• Approved capital raises and issue of equity.
• Approved extension to existing CLNs to June 2020.
• Approved the half year results, and the annual report
and accounts.
• Approved the 2020 budget.
• Reviewed tax issues across operational jurisdictions.
• Approved the implementation of a major accounts and
CRM upgrade to Microsoft Dynamics / Business Central.
Strategy
People and Culture
• Attended off-site Strategy Day.
• Appointed Charles Cattaneo as a new non-executive director.
• Approved the updated five-year strategy plan for the Group.
• Appointed Mawuli Ababio as a new non-executive director.
• Approved the acquisition of Euro Ops in France.
• Agreed on ‘One Company, One Vision’ culture across the
Financing
business.
Operations
• Approved appointment of SVS as joint brokers.
• Approved entering into a technical partnership with Scanport
• Approved raising of £500k with SVS in February.
• Approved raising of £1m with SVS in July and issue
of warrants.
in Ghana, leading to the Ghana port project.
• Approved the decision to form a joint venture in KSA.
• Approved formation of Westminster Arabia.
• Held a number of exploratory meetings with various
• Approved sale of the Sierra Queen vessel.
banks and institutions.
• Explored working with UK Export Finance.
• Approved the development of a training centre at head office.
• Approved formation of a strategic alliance with the Gulf
Aviation Academy in Bahrain.
• Approved formation of a strategic alliance with Tunisian
Academy for Civil Aviation.
Shareholders
Governance
• Held investor meetings.
• Responded to investor enquiries.
• Met Shareholders at AGM in June 2019.
• Approved issue of warrants.
• Reviewed the Group’s compliance with the adopted QCA
governance code.
• Reviewed and updated the Group’s risk register and
management systems.
• Considered potential impact of Brexit on the Group’s activities.
• Received updates on key legal issues and regulatory matters
impacting the Group.
• All Directors undertook and passed the Group’s anti-bribery
webinar.
• As part of the policy review programme approved the
following updated Group policies; Export Control,
Flexible Working, Vehicle, Equal Opportunities, Grievance,
Holidays, IT, Joining & Leaving. Code of Ethics, Smoking,
Sickness, Pensions.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
39
Governance Report
Corporate Governance
Report
We deliver our wide range of solutions and services
through a number of operating companies that are
currently structured into two operating divisions;
Managed Services and Technology; both primarily
focused on international business as follows:
Managed 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.
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 Managed Services division. This
reduces both supplier exposure and cost and provides
us with increasing purchasing power. Our Managed
Services division provides a long-term business platform
to deliver other cost-effective incremental services from
the Company. Together these two divisions provide
an opportunity to deliver long term, recurring revenue^
growth underpinned by a corporate infrastructure based
on core values and risk mitigation through geographical
spread and multiple revenue streams.
Strategy
In accordance with our vision, we operate world-wide
with a focus on high growth and emerging markets
where our expertise and technological reach can make
a significant difference. Our client base is predominantly
governments and governmental bodies, transportation
organisations, non-governmental organisations (NGOs)
and commercial & multi-national corporations worldwide.
Operating in emerging markets does present particular
challenges with language and logistics, religious and
cultural considerations and ethics. Doing business with
governments and large corporations, particularly where
large scale nationally important contracts are involved,
can be a time-consuming process and this can all the
more so in emerging markets where processes can be
slow and bureaucratic due to the nature of governments
and the inherent complexities of doing business in such
markets.However, despite such challenges and is some
^ This is an Alternative Performance Measure refer to Note 2 for further details
40
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
cases because of them, emerging markets offer huge
growth opportunities for our Company.
Over the years we have built up an extensive international
network of agents and partners, some of whom have
become strategic investors, who provide business
development assistance to our sales team, in-country
knowledge and logistical support together with arranging
meetings, translations where required and assisting with
client negotiations. This network provides us with a cost
effective, scalable global footprint in our chosen markets.
This network together with the support we receive
from the British Government and in-country diplomatic
missions around the world means Westminster is well
placed and structurally organised to benefit from the
many opportunities we are developing within these
markets.
We are not a manufacturer and are product agnostic
which enables us to provide the most appropriate
product or solution to address our clients’ needs. We do
however have strong working relationships with a great
many leading and niche product manufacturers around
the world enabling us to offer a broad and extensive
range of solutions. We continually monitor market and
technology advancements and regularly review our
supplier and manufacturer base.
Strategy
Our corporate strategy is outlined on pages 12 - 13.
Corporate Culture
The Board recognises that a corporate culture based
on sound ethical values and behaviours is an asset
and provides competitive advantages. The Company
operates in international markets and is mindful that
respect of individual cultures is critical to corporate
success. In accordance with the Company’s stated
mission it endeavours to conduct its business in an
ethical, professional and responsible manner, treating
our employees, customers, suppliers and partners with
equal courtesy and respect at all times.
We recognise ISO 26000 as a reference document that
provides guidance for integration / implementation of
social responsibility / socially responsible behaviour.
The Company is also independently certified to and
operates an ISO 9001 Quality Assurance programme
and is working towards ISO 14001 – Environmental
Management.
The Company also supports the local communities in
which it operates indirectly through various charities and
organisations and directly through the its own registered
charity the Westminster Group Foundation.
Stakeholder Communication
The Board is committed to maintaining good
communication and having constructive dialogue with
all of its stakeholders, including shareholders, providing
them with access to information to enable them to come
to informed decisions about the Company. The Investor
Relations section of the Company’s website provides
all required regulatory information as well as additional
information shareholders may find helpful including:
Share Services, information on Board Members, Advisors
and Significant Shareholdings, a historical list of the
Company’s Announcements, its Financial Calendar,
Corporate Governance information, the Company’s
publications including historic Annual Reports and
Notices of Annual General Meetings, together with Share
Price information and interactive Charting facilities to
assist shareholders analyse performance.
Results of shareholder meetings and details of votes cast
will be publicly announced through the regulatory system
and displayed on the Company’s website with suitable
explanations of any actions undertaken as a result of any
significant votes against resolutions.
Further information on the Group’s Stakeholder
Engagement can be found on pages 28-31.
Market Abuse Regulations
We are required to comply with Article 18(2) of the
Market Abuse Regulation (EU) No. 596/2014 (“MAR”)
with reference to insider dealing and unlawful disclosure
of inside information. The London Stock Exchange
requires traded companies to maintain insider lists as set
out in the Market Abuse Regulation (“MAR”) that came
into effect on 3 July 2016.
The Board have put in place a MAR compliance process
and this and the Company’s regulatory announcements
are overseen by the Disclosure Committee.
The Company’s MAR Policy may be found on its website
(www.wsg-corporate.com).
Disclosure Committee
The Committee’s Terms of Reference were last reviewed
and approved by the Board on 31 March 2020 and can
be viewed on the Corporate Governance section of the
Company’s website (www.wsg-corporate.com).
The Terms of Reference are reviewed by the Board
annually and amended where appropriate.
The Committee will be appointed by the Board and
should be a balance of executive and non-executive
Directors.
It oversees and regulates the Company’s disclosure
obligations and to ensure compliance with Market Abuse
Regulations (MAR) and London Stock Exchange rules.
Meetings shall be held as necessary for the purposes of
approving regulatory announcements at such other times
as shall be necessary or appropriate, as determined by
the Chairman.
The Group Company Secretary, Roger Worrall, acts as
Secretary to the Committee and minutes of meetings are
circulated to all Committee members.
Committee Membership
The current Disclosure Committee members are:
• Lady Patricia Lewis (Chair)
• Charles Cattaneo (appointed 18 January 2019) (NED)
• J Mawuli Ababio (appointed 21 November 2019) (NED)
• Peter Fowler (Group CEO)
• Mark Hughes (Group CFO)
• Stuart Fowler (Group COO)
Risk management
As an entrepreneurial business operating in emerging
markets there is clearly an elevated risk which is
balanced by potentially greater rewards. The Board is
mindful of and monitors both its corporate risks and
individual project risks. Risks are categorised by both
probability and impact and appropriate measures
identified to monitor and mitigate any potential impact.
Project risks are dealt with on a case by case basis
and monitored through the life cycle of the project as
risks change and new risks appear. Project risks and
mitigation will be part of regular project management
meetings. The project manager for any given project will
have responsibility for maintaining the project risk register.
The Company’s corporate risks, risk monitoring, and risk
management procedures are regularly reviewed by the
Risk Management Committee and the Company’s risk
register updated as necessary. The Company Secretary
will have responsibility for maintaining the corporate
risk register. The Risk Committee Chairman will be
responsible for ensuring the risk register is regularly
reviewed and the Audit Committee Chairman will report
on status and updates at Board meetings. The Company
provides a risk report in its Annual Report each year.
The Board has the primary responsibility for identifying
the major risks facing the Group. The Board has adopted
a schedule of matters which are required to be brought to
it for decision, ensuring that it maintains full and effective
control over appropriate strategic, financial, organisational
and compliance issues. The Board has identified a
number of key areas which are subject to regular
reporting to the Board. The policies include defined
procedures for seeking and obtaining approval for major
transactions and organisational changes.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
41
Governance Report
Corporate Governance
Report
In addition to risk assessment, the Board believes that
the management structure within the Group facilitates
free and rapid communication across the subsidiaries
and between the Group Board and those subsidiaries
and consequently allows a consistent approach to
managing risks. Certain key functions are centralised,
enabling the Group to address risks to the business
present in those functions quickly and efficiently. The key
risks and mitigation strategies of the business are set out
on pages 24 to 27 of this report.
Corporate responsibility
The Board is very aware of the importance of its
corporate responsibilities, particularly in terms of
ensuring that high standards of behaviour are maintained
wherever the Group is operating. The following principles
and processes have been established for that purpose:
• Only supply goods and services that improve people’s
safety and security – no offensive activities;
• Protecting the health and safety of all employees
is paramount;
• ISO 9001:2008 certified;
• ISO 14001:2004 environmental management
system certification;
• Members of ADS Aerospace, Defence & Security
Association;
• Operate a strict ethical policy with both employees
and agents within the principles of CIS (Common
Industry Standard) produced by the Aerospace
and Defence Organisation of Europe;
• Comply with UK and International Export
Controls criteria – key employees have attended
required courses;
Anti-bribery and corruption
The Group has well-established anti-corruption policy
in place which covers bribery and corruption, gifts
and hospitality, and facilitation payments. This policy
is reviewed by the Board annually and updated as
necessary. All new employees and Directors are required
to undertake and pass the Group’s anti-corruption
webinar and assessment. All employees are required to
retake the anti-corruption webinar test annually. A copy
of the Group’s anti-corruption policies can be found on
the Group’s website at www.wg-plc.com/policy.
Human rights
The Group is committed to respecting human rights in
the countries in which we do business. We ensure, as
far as we are able, that there is no slavery or human
trafficking in any part of our supply chain. All suppliers,
agents and sub-contractors are required to adhere to
our ethical standards. A copy of the Group’s compliance
with the Modern Slavery Act 2015 can be found on the
Group’s website at www.wg-plc.com/policy.
In support of our Corporate Responsibility we have a
comprehensive range of policies which the Board review
annually and update as necessary. Policies include:
• Quality Policy
• Health & Safety Policy
• Environmental Policy
• Anti-Bribery & Corruption Policy (including
Gifts & Hospitality)
• Anti-Slavery and Human Trafficking Policy
• Company IT & Security Policy
• Money Laundering Policy
• Providing valuable employment and investment
• CSR (Corporate Social Responsibility) Policy
opportunities in third world areas;
• Promoting environmental solutions – e.g. solar
street lighting, oil leak detection etc;
• Providing speakers at conferences & seminars,
referenced by press & media;
• Supporting and assisting local and international
charities; and
• Data Protection Policy
• Equal Opportunities Policy
• Whistle-blower Policy
• Code of Ethics
• Sanctions Policy
• Export Control Policy
• The Group maintains a stringent anti-bribery policy
and complies with both UK and local statutes.
• Market Abuse Regulations (MAR) Policy
42
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Financial planning, budgeting and monitoring
The Group operates a planning and budgeting system
with an annual budget approved by the Board. There is
a financial reporting system which compares results with
the budget and the previous year each month to identify
any variances from approved plans. Monthly rolling
cash flow forecasts form part of the reporting system.
The Group remains alert to react to other business
opportunities as they arise.
Capital management policies and procedures
The Group’s capital management objectives are:
• To ensure the Group’s ability to continue as a going
concern; and
• provide an adequate return to shareholders.
The Group monitors capital on the basis of the carrying
amount of equity plus its convertible loan, less cash
and cash equivalents as presented on the face of the
statement of financial position.
The Group sets the amount of capital in proportion to
its overall financing structure, i.e. equity and financial
liabilities other than its convertible loan. The Group
manages the capital structure and adjusts to it in the
light of changes in economic conditions and the risk
characteristics of the underlying assets. In order to
maintain or adjust the capital structure, the Group may
review any dividends paid to shareholders, return capital
to shareholders, issue new shares, or sell assets to
reduce debt.
There is no requirement for the Group to maintain a
strong capital base for each of its UK subsidiaries and
therefore each subsidiary is financed by inter-company
debt from the Company. These policies have not
changed in the year. The Directors believe that they have
been able to meet their objectives in managing the capital
of the Group.
Non-Executive Directors
The Non-Executive Directors are considered by the
Board to be independent in character and judgement
and there are not considered to be any circumstances
that are likely to affect their judgement as Directors of
the Group. Their interests in the share capital of the
Company are not considered to be likely to affect their
judgement as Directors of the Group.
Annual report
The Directors consider the annual report and financial
statements, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Company’s performance,
business model and strategy.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
43
Governance Report
Audit Committee
Report
Audit Committee
Charles Cattaneo (Chair) (appointed 18 January 2019)
Lt. Col. Sir Malcolm Ross (until 28 October 2019)
Lady Patricia Lewis
J Mawuli Ababio (appointed 21 November 2019)
As Chairman of the Audit Committee, I am pleased to
present the report of the Audit Committee for the year
ended 31 December 2019.
There is currently no internal audit function as this would
not be cost effective given the size of the Group, although
this is kept under annual review.
The Committee’s Terms of Reference were last reviewed
and approved by the Board on 31 March 2020 and can
be viewed on the Corporate Governance section of the
Company’s website (www.wsg-corporate.com).
The Terms of Reference are reviewed by the Board
annually and amended where appropriate.
This report details how the Audit Committee has
met its responsibilities over the last twelve months
under its Terms of Reference and under the Quoted
Companies Alliance Corporate Governance Code
since September 2018.
The Audit Committee focused particularly on the
appropriateness of the Group’s financial statements.
The committee has satisfied itself, and has advised
the Board accordingly, that the 2019 Annual Report
and financial statements are fair, balanced and
understandable, and provide the information
necessary for shareholders to assess the Company’s
performance, business model and strategy.
It oversees and reviews the Group’s financial reporting
and internal control processes, its relationship with
external auditors and the conduct of the audit process
together with its process for ensuring compliance with
laws, regulations and corporate governance. The Audit
Committee also oversee and report to the Board on the
Group’s Risk Management requirements.
Committee Membership
The Audit Committee is composed entirely of
independent Non-Executive Directors but other
individuals such as the Company’s CFO and CEO and
representatives of the finance team may be invited to
attend all or any part of any meeting when deemed
appropriate. The Company’s external auditors are invited
to attend meetings of the Committee on a regular basis.
The Group Company Secretary, Roger Worrall, acts as
Secretary to the Committee and minutes of meetings
are circulated to all Committee members.
The biographies of current members can be found on
page 33. The Board considers that the committee as
a whole has an appropriate and experienced blend of
commercial, financial and industry expertise to enable
it to fulfil its duties, and that the committee chairman,
Charles Cattaneo, has appropriate recent and relevant
financial experience.
Role and Responsibilities
The Board has established an Audit Committee
to monitor the integrity of the Company’s financial
statements and the effectiveness of the Group’s internal
financial controls. One of the Audit Committee’s key
responsibilities is to review the Group’s financial risk
management and internal controls systems, including
in particular internal financial controls. During the year,
the committee carried out a robust assessment of
44
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
the principal financial risks facing the company and
monitored the internal control system on an on-going
basis. The committee also reviewed the effectiveness
of the external audit process as part of the continuous
improvement of financial reporting and risk management
across the Group
The committee’s role and responsibilities are set out in
the committee’s terms of reference which are available
from the Company. The Terms of Reference are reviewed
annually and amended where appropriate. During the
year the committee worked with executives, the external
auditors and other members of the senior management
team in fulfilling these responsibilities.
Meetings
The Audit Committee met four times during the year
ended 31 December 2019 to review the 2018 Financial
Statements, the 2019 half-year results, to consider and
accept the External Auditors plan for the 2019 audit and
in January 2019 to consider and accept the External
Auditors plan for the 2018 audit.
Audit Committee activities
Financial reporting
Review and approve preliminary & half-year results
Consider key audit and accounting issues and judgements
Approve going concern and viability statements
Consider accounting policies and the impact of new accounting
standards Review management letter from auditors
Review any related party matters and intended disclosures
Review Annual Report and confirm if fair, balanced and understandable
External auditors
Plan for year-end audit
Approval of audit engagement letter and audit fees
Confirm auditor independence, materiality of fees, and
non-audit services
Internal audit and risk management controls
Review of internal audit within Westminster
Review of financial, IT and general controls
Monitor Group whistleblowing procedures
Assessment of the principal risks and effectiveness of
internal control systems
Governance
Assurances as to corporate governance and Corporate Governance
Code Compliance Accounting standards update
Corporate governance update
Evaluation of external audit functions
Policy on the engagement of external auditors
The Board has established an
Audit Committee to monitor
the integrity of the Company’s
financial statements and the
effectiveness of the Group’s
internal financial controls.
Jan
May
Aug
Nov
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
45
Governance Report
Audit Committee
Report
Committee Evaluation
• considered key areas in which estimates and
As outlined on pages 36 and 38 within the Corporate
Governance Statement, the performance of the
Board also includes a review of the committees.
Any recommendations raised in relation to the Audit
Committee are acted upon in a formal and structured
manner. No issues were identified for the year ending
31 December 2019.
Financial Reporting
The committee is responsible for monitoring the integrity
of the Group’s financial statements and reviewing the
financial reporting judgements contained therein. The
financial statements are prepared by a finance team
with the appropriate qualifications and expertise. The
committee confirmed to the Board that the annual report,
taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders
to assess the Group’s position and performance,
business model and strategy.
In respect of the year to 31 December 2019, the
committee reviewed:
• the Group’s Half-year Report for the six months to
30 June 2019; and
• the Annual Report for the year ended
31 December 2019.
In carrying out these reviews, the committee:
• reviewed the appropriateness of Group accounting
policies and monitored changes to and compliance
with accounting standards on an on-going basis;
• discussed with management and the external auditor
the critical accounting policies and judgements that
had been applied;
• discussed a report from the external auditor
identifying the significant accounting and judgemental
issues that arose in the course of the audit;
• considered the management representation letter
requested by the auditor for any non-standard issues;
• monitored action taken by management as a result of
any recommendations made by the external auditor;
• discussed with management future accounting
developments which are likely to affect the financial
statements;
• reviewed the budgets and strategic plans of the Group
in order to ensure that all forward-looking statements
made within the Annual Report reflect the actual
position of the Group; and
judgement had been applied in preparation of the
financial statements including, but not limited to,
a review of fair values on acquisition, the carrying
amount of goodwill, intangible assets and property,
plant and equipment, litigation and warranty
provisions, recoverability of trade receivables,
valuation of inventory, hedge accounting treatments,
treasury matters and tax matters.
The primary areas of judgement considered by the
committee in relation to the Group’s 2019 financial
statements, and how they were addressed by the
committee are set out on page 47.
Each of these areas received particular focus from
the external auditor, who provided detailed analysis
and assessment of the matter in their report to the
committee.
External Auditor
The Audit Committee has responsibility for overseeing
the Group’s relationship with the external auditor
including reviewing the quality and effectiveness of their
performance, their external audit plan and process, their
independence from the Group, their appointment and
their audit fee proposals.
Performance and audit plan following the completion
of the 2018 year-end audit, the committee carried out a
review of the effectiveness of the external auditor and the
audit process. This review involved discussions with both
Group management and feedback provided by accounts.
The committee continues to monitor the performance
and objectivity of the external auditors and takes this
into consideration when making its recommendations
to the Board on the remuneration, the terms of
engagement and the re-appointment, or otherwise,
of the external auditors.
Prior to commencement of the 2019 year-end audit,
the committee approved the external auditor’s work
plan and resources and agreed with the auditor’s various
key areas of focus, including accounting for acquisitions,
impairments, as well as a particular focus on certain
higher risk jurisdictions.
During the year the committee met with the external
auditor without management being present. This
meeting provided the opportunity for direct dialogue
and feedback between the committee and the auditor,
where they discussed inter alia some of the key audit
management letter points.
The committee received confirmation from the auditor
that they are independent of the Group under the
requirements of the Financial Reporting Council’s Ethical
46
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Primary areas of Judgement
Committee activity
Going concern
Goodwill
The financial statements are prepared on a going concern basis. In assessing whether the
going concern assumption is appropriate. The Committee have considered all relevant
available information about the future. As part of its assessment, the Committee reviewed
and considered appropriate management’s profit and cash forecasts, the likely continued
support of the shareholders and loan note holders and the Directors and management’s
contingency plans should further cost reductions be required. The Committee reviewed
Directors’ stress tests of revenue and utilisation assumptions included in the Group’s
cash projections for a period of at least 12 months from the date of approval of these
financial statements. The Committee acknowledged the material uncertainty generated
by COVID-19 and reviewed and considered appropriate the action the Director’s and
management are implementing relating to 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 Committee also acknowledged the Group’s range
of fever screening and safety equipment represented an opportunity for the Group. The
COVID-19 situation has been discussed further in the Chief Executive Officer’s report on
pages 14 to 16 The Committee considered the Board’s view that it believed the Group
will generate sufficient working capital and cash flows to continue in operational existence
and in addition to utilisation of governmental support schemes it will have the support of
lenders and shareholders, if required. The Committee reviewed the Group’s resources at the
date of approving the financial statements, management’s contingency planning and their
projections for future trading, which together 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, taking into account all of the above factors, the Committee agrees with
the Director’s decision to continue to adopt the going concern basis of accounting in the
preparing the financial statements.
The committee considered the annual impairment assessment of goodwill prepared by
management for each Cash Generating Unit using a discounted cash flow analysis based
on the strategic plans approved by the Board, including a sensitivity analysis on key
assumptions. The primary judgement areas were the achievability of the long-term business
plans and the key macroeconomic and business specific assumptions. In considering
the matter, the committee discussed with management the judgements made and the
sensitivities performed. Further detail of the methodology is set out in Notes 2 and 10
to the financial statements.
Management override of
controls
As with any SME we have reviewed the processes and systems in place during the audits
including carrying out a review of board minutes of the Group and other management
minutes in order to document the consideration and approval of all major decisions.
We also reviewed journals processed, management estimates and judgements applied.
Revenue recognition
The committee reviewed the judgements applied by management in determining the
recognition of revenue for the period to 31 December 2019. The Committee was satisfied
that such judgements were appropriate, and any risk had been adequately addressed.
Business combination
Westminster completed the acquisition of Euro Ops in the year. The amounts involved
were not material to the Group.
Deferred tax assets
Leases IFRS 16
The committee reviewed the judgements applied by management in determining the
recognition of revenue for the period to 31 December 2019, The Committee was satisfied
that considering the expected level of future profits such judgements were appropriate,
and any risk had been adequately addressed.
The committee considered a paper on the introduction of IFRS16. 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 changes are
considered immaterial.
Standards for Auditors. The auditor also confirmed that
they were not aware of any relationships between the
Group and the firm or between the firm and any persons
in financial reporting oversight roles in the Group that
may affect its independence.
Non-audit services
In order to further ensure independence, the committee
has a policy on the provision of non-audit services by the
external auditor that seeks to ensure that the services
provided by the external auditor are not, or are not
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
47
Governance Report
Audit Committee
Report
Audit v Non-Audit Services
’
0
0
0
£
P
B
G
120
100
80
60
40
20
0
8
14
21
70
7
21
53
12
17
53
18
20
80
2016
2017
2018
2019
Other services
Tax
Overseas Audit
UK Audit
perceived to be, in conflict with auditor independence.
By obtaining an account of all relationships between
the external auditor and the Group, and by reviewing
the economic importance of the Group to the external
auditor by monitoring the audit fees as a percentage of
total income generated from the relationship with the
Group, the committee ensured that the independence
of the external audit was not compromised. During 2019
the committee reviewed and updated its policy on the
engagement of external auditors and the provision of
non-audit services in order to bring it into full compliance
with the EU audit reform legislation. An analysis of fees
paid to the external auditor, including the non-audit fees,
is set out in Note 6 and detailed above.
Internal Audit
The committee reviewed the need for an internal function
and concluded that the given size and profitability of the
Group an internal audit function was not cost effective.
However, the committee is keeping this under review
and at an appropriate moment will look to establish an
internal audit function.
Internal Control
The Audit Committee has been delegated, from the
Board, the responsibility for monitoring the effectiveness
of the Group’s system of internal control.
The Audit Committee monitors the Group’s risk
management and internal control processes through
detailed discussions with management and Executive
Directors, the review of the and the external audit reports,
as part of the year-end audit, all of which highlight the key
areas of control weakness in the Group. All weaknesses
identified by either internal or external audit are discussed
by the committee with Group management and an
implementation plan for the targeted improvements to
these systems is put in place.
The Group’s system of risk management and internal
control were in place throughout the accounting period
and remain in place up to the date of approval of this
Annual Report.
The main features of the Group’s internal control and
risk management systems that specifically relate to the
Group’s financial reporting and accounts consolidation
process are set out in the Corporate Governance Report
on page 38.
On behalf of the Board
Charles Cattaneo
Chairman of the Audit Committee
13 May 2020
48
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
49
Governance Report
Nomination Committee
Report
Nomination Committee
Lady Patricia Lewis (Chair)
Lt. Col. Sir Malcolm Ross – Non-Executive (until 28 October 2019)
Charles Cattaneo – Non-Executive (appointed 18 January 2019)
J Mawuli Ababio – Non-Executive (appointed 21 November 2019)
Peter Fowler – Group Chief Executive Officer
As Chairman of the Nomination Committee, I am pleased
to present the report of the committee for the year ended
31 December 2019.
Company, both executive and non-executive, with a
view to ensuring the continued ability of the Company
to compete effectively in the marketplace;
The Committee’s Terms of Reference were last reviewed
and approved by the Board on 31 March 2020 and can
be viewed on the Corporate Governance section of the
Company’s website (www.wsg-corporate.com).
The Terms of Reference are reviewed by the Board
annually and amended where appropriate.
Committee Membership
The Nominations Committee is composed of
independent Non-Executive Directors with the
exception of the Group CEO but other individuals
such as other Board directors or the HR manager
may be invited to attend all or any part of any
meeting when deemed appropriate.
The Group Company Secretary, Roger Worrall, acts as
Secretary to the Committee and minutes of meetings
are circulated to all Committee members.
The key responsibilities of the Nomination Committee
are:
• To under review the structure, size and composition
(including skills, knowledge, experience and diversity)
of the Board as well as the leadership needs of the
• To review the balance of the Board and its
committees, and consider Non-Executive Directors’
independence, whether the balance between
Non-Executive and Executive Directors remains
appropriate, and whether the Board has the requisite
skills and experience to oversee delivery of the agreed
strategy for the Group;
• Identify any training needs of Executive Directors and
Non-Executive Directors;
• Identify and nominate for the approval of the Board,
candidates to fill board vacancies as and when
they arise;
• Review annually the time required from a Non-
Executive Director. Performance evaluation should be
used to assess whether the Non-Executive Director is
spending enough time to fulfil their duties; and
• Review the Company’s succession plans and make
recommendations as appropriate.
Members of the Committee do not participate in any
discussions relating to their own reappointment or
replacement.
50
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
2019 Activity
During the year the Committee undertook the
following activities:
In January 2019, following the decision for
Mr James Sutcliffe to move from being a
Non-Executive Director to Chairman of the
International Advisor Committee, we selected
and nominated to the Board an excellent
candidate to fulfil the vacancy for non-executive
director and chair of Audit Committee – Mr
Charles Cattaneo, who is well qualified for both
roles. I am delighted that Charles has also
joined this committee.
In November 2019, following the sad passing of
Sir Malcolm Ross, we selected and nominated
to the Board an excellent candidate to fulfil the
vacancy for non-executive director and chair of
Remuneration Committee – Mr John Maynard
Mawuli Ababio. Mawuli has extensive board
and corporate governance experience, having
served on several listed and unlisted boards
over the last 20 years, both as an Executive
and Non-Executive Director. He lives in Ghana
but has extensive business experience across
Africa, is bilingual, speaking fluent English and
French, and is proving an excellent addition to
our Board. Once again, I am delighted Mawuli
has joined this committee.
We reviewed the skills, knowledge, experience
and diversity of the Board and its committees
and considered it appropriate for our size and
current activities. The diversity of our Board,
our senior management and the Group as a
whole are shown in the charts opposite. The
skills matrix for the Board can be found on
page 37.
We considered succession planning and
discussed this at our Board Strategy Day on
29 April 2019. At our stage of development,
we feel our succession planning is adequate,
but it is an area we are monitoring carefully and
will continue to advise the Board accordingly.
On behalf of the Board
Lady Patricia Lewis
Chairman of the Nomination Committee
13 May 2020
GENDER
AGE
Board
Board
Male 86%
Female 14%
50+ 86%
30-50 14%
Senior
Management
Senior
Management
Male 78%
Female 22%
50+ 56%
30-50 44%
Group Wide
Group Wide
Male 71%
Female 29%
50+ 17%
30-50 65%
18-30 18%
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
51
Governance Report
Remuneration Committee
Report
Remuneration Committee
J Mawuli Ababio (Chair) (appointed 21 November 2019)
Lt. Col. Sir Malcolm Ross (until 28 October 2019)
Lady Patricia Lewis
Charles Cattaneo (appointed 18 January 2019)
The late Lt. Col. Sir Malcolm Ross was Chairman until
his death on 28 October 2019 and I became Chairman
from 21 November 2019. Accordingly, as Chairman of the
Remuneration Committee at the year end, I present the
report of the committee for the year ended 31 December
2019, although I was not in the post for much of the year.
The Terms of Reference are reviewed by the Board
annually and amended where appropriate.
The Committee’s Terms of Reference were last reviewed
and approved by the Board on 31 March 2020 and can
be viewed on the Corporate Governance section of the
Company’s website (www.wsg-corporate.com).
As a Company whose shares are admitted to trading
on AIM, the preparation of a Remuneration Committee
report is not an obligation. The Group has, however,
sought to provide information that is appropriate to its
size and organisation.
Committee Membership
The Audit Committee is composed entirely of
independent Non-Executive Directors but other
individuals such as the Group’s Chairman and CEO and
may be invited to attend all or any part of any meeting
when deemed appropriate.
The Group Company Secretary, Roger Worrall, acts as
Secretary to the Committee and minutes of meetings are
circulated to all Committee members.
Executive Directors’ Remuneration Policy
The Remuneration Committee is responsible for
establishing a formal and transparent procedure for
developing policy on executive remuneration and to set
the remuneration packages of individual Directors. This
includes agreeing with the Board the framework for
remuneration of the Chief Executive, all other Executive
Directors and such other members of the executive
management of the Company as it is designated to
consider. It is furthermore responsible for determining
the total individual remuneration packages of each
Director, including, where appropriate, bonuses, incentive
payments and share options.
The Committee’s policy is to provide a remuneration
package which will attract and retain Directors and
management with the ability and experience required
to manage the Group and to provide superior long-term
performance. It is the aim of the Committee to reward
Directors competitively and on the broad principle that
their remuneration should be in line with the remuneration
paid to senior management of comparable companies.
There are four main elements of the remuneration
package for Executive Directors: base salary, share
options, benefits and annual bonus. Notice periods for
Executive Directors are 12 months.
Base salary is reviewed annually and in setting salary
levels the Remuneration Committee considers the
experience and responsibilities of the Executive Directors
and their personal performance during the previous
52
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
year. The Committee also takes account of external
market data, as well as the rates of increases for other
employees within the Group.
Share options are granted having regard to an
individual’s seniority within the business and are
designed to give Directors and staff an interest in the
increase in the value of the Group.
Benefits primarily comprise the provision of company
cars, pension payments, health insurance and
participation in the Group life assurance scheme.
All Executive Directors and executive management
participate in the Group’s annual bonus scheme,
which is based upon the assessment of individual
performance, subject to the Group achieving profitability
commensurate with its revenues and capital employed.
Exclusions
The terms of reference of the Committee do not
encompass:
• decisions to employ or dismiss Executives which is a
matter for the Board; or
• deliberate on the remuneration of any non-executive
Director, which is a matter for the Board; or
• responsibility for nominations to the Board which is a
matter for the Nominations Committee.
This report details how the Remuneration Committee
has fulfilled its responsibilities under its Terms of
Reference and under the QCA Corporate Governance
Code 2018. The report sets out the Company’s
remuneration policy, how the policy will be applied
in 2020, gives details of the remuneration outcomes
for 2019, and describes the workings of the
Remuneration Committee during the year.
Remuneration Outcomes for 2019 and
Remuneration Policy for 2020
Executive Directors’ remuneration
Executive Directors remuneration is determined by the
Remuneration Committee. The Executive Directors took
voluntary salaries reductions in October 2014 as part of
the cost reductions during the Ebola crisis which have
not been adjusted since. During the 2019 review the
Committee decided that, whilst there were substantial
improvements in Group’s performance, no adjustment
would be made in the year.
Non-Executive Directors’ remuneration
Non-Executive Directors’ remuneration is determined by
the Board as a whole, each refraining from determining
his own remuneration. The fees paid to Non-Executive
Directors are set at a level intended to attract individuals
with the necessary experience and ability to make a
significant contribution to the Group.
It is anticipated that Non-Executive Directors will spend
an average of 2 days a month undertaking their Role and
Duties. This will include attendance at board meetings,
the AGM, one annual board away day a year and at
least one site visit a year. They also attend periodic
Remuneration, Risk and Audit Committee meetings.
They are required to spend time considering all relevant
papers prior to each meeting.
In addition to the above they may be required to devote
additional time to the Company when it is undergoing
a period of particularly increased activity and may be
required to support the Company by attending
meetings with clients and advisors etc. both within
the UK and overseas.
The service contracts of the Non-Executive Directors
specify the following:
Non-Executive Directors
Severance
Notice
Lady Patricia Lewis
Charles Cattaneo
J Mawuli Ababio
None
None
None
3 months
3 Months
3 months
Contractual fees (pa)
£’000
24
24
24
Charles Cattaneo joined the board on 18 January 2019 and Mawuli Ababio was appointed on 21 November 2019.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
53
Governance Report
Remuneration Committee
Report
Board Balance, Time Commitment and Meetings
The PLC Board contains a balance of Executive and
Non-Executive Directors, including an Executive
Chairman who is responsible for dealing with the
strategic direction and long-term success of the
Company. The Board will meet every two months or
at any other time deemed necessary for the good
management of the business and at a location agreed
between the Board members. The Non-Executive
Directors are all considered independent Directors.
Executive and Non-Executive Directors’ remuneration
package and interest in share capital.
Details of the Executive and Non-Executive Directors’
remuneration and interest in share capital for the year
ended 31 December 2019 are as follows:
The PLC Board contains a
balance of Executive and
Non-Executive Directors.
Executive Directors
Sir Anthony Baldry
Peter Fowler
Mark Hughes
Stuart Fowler
Martin Boden
Non-Executive Directors
Sir Malcolm Ross*
Lady Patricia Lewis
Charles Cattaneo#
Mawuli Ababio+
James Sutcliff
Basic
£’000
Benefit in kind
£’000
Group NI
£’000
Total cost of
employment
2019
£’000
Total cost of
employment
2018
£’000
42
157
120
103
-
422
15
24
23
3
-
65
-
20
3
-
-
23
4
-
-
-
-
4
6
24
17
14
-
61
3
3
1
-
-
7
48
201
140
117
-
506
22
27
24
3
-
76
117
310
63
173
191
854
25
16
-
-
27
68
Total Board Remuneration
487
27
68
582
922
*Sir Malcolm Ross served until 28 October 2019,
# Charles Cattaneo served from 18 January 2019 and
+ Mawuli Ababio served from 21 November 2019.
54
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
No options were exercised during the year and no cash
benefit was therefore received by the Directors. There
was no new share-based payment expense in 2019
(2018 £302,000). There was a charge of £232,000,
which forms part of the share-based payment charge
of £556,000 relating to the options issued in 2018.
The remaining £325,000 relates to warrants issued,
The Executive and Non-Executive Directors who held
office during the year had no interests in the shares
or loan stock of the Company or any of its subsidiaries
except for the following holdings of ordinary shares
in the Company:
Peter Fowler and Mrs P J Fowler
6,461,794
-
-
6,461,794
1 January 2019
On appointment
Purchased in Year
31 December 2019
Mark Hughes
Stuart Fowler
Lady Patricia Lewis
Lt Col Sir Malcolm Ross
Sir Anthony Baldry
Charles Cattaneo
Mawuli Ababio
116,000
541,618
100,000
140,884
-
-
-
-
-
116,000
-
541,618
-
100,000
-
140,884
-
-
-
-
-
-
130,000
130,000
-
-
-
-
7,360,296
-
130,000
7,490,296
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
55
Governance Report
Remuneration Committee
Report
In addition to the interests disclosed above, the following
Executive and Non-Executive Directors have options to
acquire ordinary shares of 10p each in the Company
granted under the 2007 Share Option Plan. Full details
are as follows:
Market
Price at
Date of
Grant
Grant Price
01
January
2019
Change
in Year
31
December
2019
Date from which
exercisable
Sir Anthony Baldry
13p
13p
750,000
28.5p
25.5p
781,250
13p
1,750,000
10.25p
750,000
-
-
-
-
750,000
781,250
1 June 2019#
10 June 2016*
1,750,000
1 June 2019#
750,000
08 November 2019#
Peter Fowler
Peter Fowler
Mark Hughes
Stuart Fowler
Stuart Fowler
Stuart Fowler
Lt Col Sir Malcolm Ross
Lt Col Sir Malcolm Ross
13p
13p
34.5p
28.5p
13p
34.5p
28.5p
34.5p
15,000
(15,000)
-
25.5p
625,000
13p
750,000
34.5p
25.5p
2,000
93,750
-
-
625,000
750,000
10 June 2016*
1 June 2019#
(2,000)
-
-
93,750
10 June 2016*
Lt Col Sir Malcolm Ross options are available to his estate for
one year from his death. The market price of the shares at 31
December 2019 was 11.75p and the range during the year was
5.66p to 18.2p.
(*) These options were granted to the Directors at a price
of 28.5p under the 2007 EMI Scheme. Executive Directors
are issued share options under the EMI Scheme and Non-
Executive Directors under an unapproved scheme, which has
the same rules as the EMI Scheme but without the relevant tax
concessions. Save for a change of control in the Company,
Share Options granted to Directors will only vest if the
Company’s share price has reached 60p at any time
and became exercisable from 10 June 2016.
(#) These options were granted to the Directors at a price of
13p under the Company’s 2017 Share Option Scheme. They
can be exercised at any time from the first anniversary of the
date of grant up to the tenth anniversary of that date. Save for a
change of control in the Company, the Share Options will only
vest if the Company’s share price has reached 26p per Ordinary
Share at any time, being twice the middle market price on the
original date of grant.
Remuneration Committee activities
July 2019
November 2019
Review of overall remuneration policy
Consideration of Groups financial situation
Update on salary sacrifice position
Review executive salary for 2020
Review non-executive fees for 2020
Performance pay
Review of proposed performance pay package
Consideration of Long-Term Incentive plan options
Governance
Update on remuneration trends generally
On behalf of the Board
J Mawuli Ababio
Chairman of the Remuneration Committee
13 May 2020
56
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
No options were exercised during
the year and no cash benefit
was therefore received by the
directors. There was no share-
based payment expense in 2019.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
57
Governance Report
Directors’
Report
The Directors present their annual report and the
audited financial statements for the year ended
31 December 2019.
Principal activities
Westminster Group Plc is a specialist security and
services group operating worldwide through an
extensive international network of agents and contacts
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 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.
Review of business, future developments and
key performance indicators
A full review of the business and future development,
incorporating key performance indicators, is set out in
the Chief Executive Officer’s Strategic Report and the
Chief Financial Officer’s statements on pages 8 - 20.
The Directors who held office during the year were
as follows:
Executive Directors
Rt Hon Sir Tony Baldry
Peter Fowler
Stuart Fowler
Mark Hughes
Non-Executive Directors
Lt Col Sir Malcolm Ross (Deceased 28 October 2019)
Lady Patricia Lewis
Charles Cattaneo (Appointed 18 January 2019)
J Mawuli Ababio (Appointed 21 November 2019)
James Sutcliffe (Resigned 17 January 2019)
Risk management objectives and strategy
The Group’s corporate governance objective is to build
a risk management framework across the Group. Local
operations prepare relevant local risk registers which
are then reviewed by a committee of executive Group
management who then in turn report to the Audit
Committee who in turn report to the main Board. Clear
channels of communication exist to ensure that risk
management objectives are communicated across the
company and that risks are reported up to the Board
and relevant management. External auditors are used
where necessary and the Group will consider the need
to establish an internal audit process as the Group
expands. This may include operational reviews (such as
compliance with aviation security standards) as well as
the traditional financial and compliance aspects.
Results and dividends
The Group’s results for the financial year are set out in the
Consolidated Statement of Comprehensive Income.
The Directors do not recommend the payment of a
dividend (2018: £nil).
Directors’ interests in share capital and
share options
Details of the Directors’ interests in share capital and
share options are contained in the Remuneration
Committee report.
Other significant interests in the Company
At 13 May 2020, those shareholders, other than
Directors, who had disclosed to the Company an
interest of more than 3% of the issued share capital,
are set out as follows:
Name of shareholder
or nominee
No of shares Holding %
Hargreave Hale
5,300,000
3.32
Policy on payments to suppliers
It is a policy of the Group in respect of all suppliers,
where reasonably practical, to agree the terms of
payment with those suppliers when agreeing the terms
of each transaction and to abide by them. The ratio of
amounts owed by the Group to trade creditors at the
year-end represented 66 days (2018: 27 days).
58
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Share price
During 2019 the Company’s share price ranged from
5.66p to 18.2p and the share price at 31 December 2019
was 11.75p (2018: 9p).
Directors’ and officers’ liability insurance
The Company, as permitted by sections 234 and
235 of the Companies Act 2006, maintains insurance
cover on behalf of the Directors and Company Secretary
indemnifying them against certain liabilities which may
be incurred by them in relation to the Company.
Post balance sheet events
These are detailed in note 32 to the financial statements.
Going concern
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
loan note holders 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.
The Directors acknowledge that the COVID-19 pandemic
in 2020 is having a profound impact on the global
economy and businesses across the globe, the like of
which has not been experienced in a generation. At the
time of writing, the duration and full extent of the impact
on the global economy cannot be determined with any
accuracy although there are green shoots of optimism
with some countries appearing to be over the worst
of the disruption and some, including the UK, easing
lockdowns. The expectation is that the global economy
will begin to recover in the second half of 2020 although
it is suspected the virus will be with us for some time and
that some countries may yet face renewed outbreaks.
The Directors equally acknowledge that, at the current
time, the COVID-19 does create areas of uncertainty
for the business, particularly its aviation security and
training operations, although the restrictions on travel
and disruptions to supply chains and logistics may
also present a challenge as to when travel restrictions
will be lifted and how long it will take for air travel and
the aviation industry to recover. This will likely have
an impact, for some months on certain areas of the
business, in particular the airport security and training
operations.
These events or conditions emanating from COVID-19
indicate that a material uncertainty exists which may cast
significant doubt on the Group’s ability to continue as a
going concern and therefore its ability to settle it debts
and realise its assets in the normal course of business.
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.
Since the year end a £3m Mezzanine Loan Facility
repayable over 18 months together with a £1.75m Equity
Placing and Sharing Agreement has been entered in to
with RiverFort Global Opportunities PCC and YA II PN
Ltd (the “Financing Facility”). The proceeds from the
initial tranche of the Financing Facility have been used
to commence paying down the Group’s Convertible
Secured Loan Notes (CLN). On 30 March 2020 the
outstanding CLN balance of £1.68m was extended
in agreement with noteholders to 1 May 2021 to help
mitigate any adverse impact of the COVID-19 pandemic.
The balance of the Financing Facility will be used, if
required, to repay any CLN balance. The Directors have
stress tested the revenue and utilisation assumptions
included in the Group’s cash projections for a period of
at least 12 months from the date of approval of these
financial statements.
The Directors believe the measures and mitigation
strategies they have put in place together with its various
ongoing revenue streams, means the Group will generate
sufficient working capital and cash flows to continue
in operational existence and in addition to utilisation of
governmental support schemes it will continue to have
the support of lenders and shareholders, if required.
Thus, they continue to adopt the going concern basis
of accounting in the preparing the financial statements.
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 on
pages 14 - 16.
Auditor
In so far as each of the Directors is aware:
• There is no relevant audit information of which the
Company’s auditor is unaware, and
• The Directors have taken all steps that they ought to
have taken to make themselves aware of any relevant
audit information and to establish that the auditor is
aware of that information.
The Directors are responsible for the maintenance
and integrity of the corporate and financial information
included on the Group’s website. Legislation in the
United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
On behalf of the Board
The Directors therefore 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
Peter Fowler
Director
13 May 2020
Mark L W Hughes
Director
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
59
Governance Report
Statement of Directors’
Responsibilities
Directors’ responsibilities statement
Website publication
The Directors are responsible for ensuring that the
Annual Report and financial statements are made
available on a website. Financial statements are
published on the Company’s website in accordance
with legislation in the United Kingdom governing the
preparation and dissemination of financial statements,
which may vary from legislation in other jurisdictions.
The maintenance and integrity of the Company’s
website is the responsibility of the Directors. The
Directors’ responsibility also extends to the ongoing
integrity of the financial statements contained therein.
On behalf of the Board
Peter Fowler
Director
Mark L W Hughes
Director
13 May 2020
The Directors are responsible for preparing the Strategic
report, the Directors’ report and the financial statements
in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group
and parent Company financial statements for each
financial year. Under that law the Directors have prepared
the Group financial statements in accordance with
International Financial Reporting Standards as adopted
by the European Union (IFRS). Under company law the
Directors must not approve the financial statements
unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company
and of the profit or loss of the Group and Company for
that period. The Directors are also required to prepare
financial statements in accordance with the rules of the
London Stock Exchange for companies trading securities
on AIM.
In preparing these financial statements, the Directors are
required to:
• Select suitable accounting policies and then apply
them consistently;
• Make judgements and accounting estimates that are
reasonable and prudent;
• State whether applicable IFRS have been followed,
subject to any material departures disclosed and
explained in the financial statements; and
• Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Group will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position of
the Company and the Group and enable them to ensure
that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
60
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
61
Financial Statements
Independent
Auditor’s Report
to the Members of
Westminster Group Plc
Opinion
We have audited the financial statements of Westminster
Group PLC (the ‘Parent Company’) and its subsidiaries
(the ‘Group’) for the year ended 31 December 2019
which comprise the Consolidated Statement of
Comprehensive Income, Consolidated and Company
Statements of Financial Position, Consolidated and
Company Statements of Changes in Equity and
Consolidated and Company Cash Flow Statements
and notes to the financial statements, including a
summary of significant accounting policies.
The financial reporting framework that has been applied
in the preparation of the financial statements is applicable
law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union and, as
regards the Parent Company financial statements,
as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion:
• the financial statements give a true and fair view of
the state of the Group’s and of the Parent Company’s
affairs as at 31 December 2019 and of the Group’s
loss for the year then ended;
• the Group financial statements have been properly
prepared in accordance with IFRSs as adopted by
the European Union;
• the Parent Company financial statements have been
properly prepared in accordance with IFRSs as
adopted by the European Union and as applied in
accordance with the provisions of the Companies
Act 2006; and
• the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are
further described in the Auditor’s responsibilities for
the audit of the financial statements section of our
report. We are independent of the Group and the Parent
Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as
applied to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a
basis for our opinion.
Material uncertainty relating to going concern
We draw attention to Note 2 to the financial statements,
which refers to the impact of the ongoing COVID-19
pandemic on the Group. As stated in Note 2, these
events or conditions indicate that a material uncertainty
exists that may cast significant doubt on the Group’s and
Parent Company’s ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
We have highlighted going concern as a key audit matter
based on our assessment of the significance of the risk
and the effect on our audit strategy.
Our audit procedures in response to this key audit
matter included:
• Reviewing management’s cash flow forecasts,
which incorporate a number of stress test scenarios
and the proposed mitigating factors in response
to COVID-19, that cover a period of 12 months
from the financial reporting date and challenging
management’s assessment by reviewing, amongst
others, the mechanism of the Equity Placing and
Sharing Agreement entered into on 22 January 2020
and checking how this has been incorporated into
management’s assessment; reviewing predicted
sales in relation to the coronavirus detection
equipment based on sales to date and reviewing the
reasonableness of the level of disruption to existing
business, particularly the airport security and port
services contracts included in the forecasts;
• Reviewing documentation to agree the successful
rollover of the convertible loan notes to 1 May 2021 as
the Group is reliant on this extension to meet working
capital demands and debts as they fall due; and
• Reviewing board minutes during the year and up
to the date of approval of the financial statements
to identify any other issues that may impact the
Group’s and Parent Company’s ability to continue
as a going concern.
62
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Key audit matters
Key audit matters are those matters that, in our
professional judgement, were of most significance in our
audit of the financial statements of the current period and
include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters. We have not determined
any key audit matters to be communicated in our
report, other than the matter described in the material
uncertainty related to going concern section.
Our application of materiality
We apply the concept of materiality both in planning
and performing our audit, and in evaluating the effect
of misstatements. We consider materiality to be the
magnitude by which misstatements, including omissions,
could influence the economic decisions of reasonable
users that are taken on the basis of the financial
statements.
We determined materiality for the financial statements
as a whole to be £146,700 (2018: £77,000), calculated
with reference to a benchmark of 7.5% of the Group
loss before tax adjusted for exceptional impairment,
averaged over 3 years. The parent company materiality
was set at £132,600 being 5% of loss before tax (2018:
£69,000 limited to 90% of group materiality based on
loss before tax).
Performance materiality is the application of materiality at
the individual account or balance level set at an amount
to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial
statements as a whole. Performance materiality for the
group was set at £110,000 based on 75% of group
materiality (2018: £58,000: 75% of group materiality).
Performance materiality for the parent company was set
at 70% of parent company materiality being £92,800
(2018: 68%, £47,000)
We set materiality for each component of the group
dependent on the size and our assessment of the risk of
material misstatement of that component. Component
materiality ranged from to £4,900 to £110,000.
An overview of the scope of our audit
Our group audit was scoped by obtaining an
understanding of the group and its environment, including
the group’s system of internal control, and assessing the
risks of material misstatement in the financial statements.
We then directed our work towards those areas of the
financial statements which we assessed as having the
highest risk of containing material misstatements. We
also determined the type of audit work that needed to be
performed on each component.
The Group operates through seventeen subsidiaries,
eight of which we considered to be significant
components for the purposes of the consolidated
financial statements. The financial statements consolidate
these entities together with a number of non-trading
subsidiary undertakings. Audits of five significant
components located in the United Kingdom and one
significant component located in Ghana were performed
by BDO London. Two further significant components
were audited in Sierra Leone by a local audit firm acting
as component auditor. We were involved in planning
and completion meetings with the component auditor
and in devising a testing plan which allowed us to direct
the audit for the purposes of the group audit. We also
reviewed the working papers of the component auditor
in areas of significance to the group audit. For non-
significant components, material balances were tested.
This involved procedures such as agreeing intercompany
balances, obtaining bank letters and sampling of material
administrative expenses. The non-significant components
were tested by BDO London except for one entity located
in Sierra Leone where testing was performed by the local
component auditor.
We tested and examined information using both analytical
procedures and tests of detail, to the extent necessary to
provide us with a reasonable basis to draw conclusions.
These procedures, together with our detailed review of
the procedures performed by component auditors, gave
us the evidence that we needed for our opinion on the
group financial statements as a whole.
Other information
The Directors are responsible for the other information.
The other information comprises the information included
in the annual report, other than the financial statements
and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance
conclusion thereon.
We agreed with the Audit Committee that we would
report to them all individual audit differences in excess of
£7,300 (2018: £3,850) being 5% of the materiality for the
financial statements as a whole. We also agreed to report
differences below these thresholds that, in our view,
warranted reporting on qualitative grounds.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
63
Financial Statements
Independent
Auditor’s Report
such material inconsistencies or apparent material
misstatements, we are required to determine whether
there is a material misstatement in the financial
statements or a material misstatement of the other
information. If, based on the work we have performed,
we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
• the information given in the strategic report and the
Directors’ report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
• the strategic report and the Directors’ report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the
Group and the Parent Company and its environment
obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the
Directors’ report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Group
or the Parent Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of
our auditor’s report.
• adequate accounting records have not been kept by
Use of our report
the Parent Company, or returns adequate for our audit
have not been received from branches not visited by
us; or
• the Parent Company financial statements are not in
agreement with the accounting records and returns;
or
• certain disclosures of Directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
This report is made solely to the Parent Company’s
members, as a body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has
been undertaken so that we might state to the Parent
Company’s members those matters we are required
to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other
than the Parent Company and the Parent Company’s
members as a body, for our audit work, for this report,
or for the opinions we have formed.
Responsibilities of Directors
As explained more fully in the Statement of Directors’
responsibilities set out on page 60, the Directors are
responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view,
and for such internal control as the Directors determine
is necessary to enable the preparation of financial
Michael Simms (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
13 May 2020
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
64
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Financial Statements
Westminster Group PLC
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2019
Note
2019
2019
Continuing
Operations
Discontinued
Operations
2019
Total
2018
2018
2018
Continuing
Operations
(Restated)
Discontinued
Operations
Total
(Restated)
3
6
11
12
29
4
5
7
REVENUE
Cost of sales
GROSS PROFIT
Administrative expenses
(LOSS) / PROFIT FROM
OPERATIONS
Analysis of operating loss
Profit from operations
Add back amortisation
Add back depreciation
Reversal of impairment
Add back share-based expense
Add back exceptional items
EBITDA^ Profit/(loss) from
underlying operations
Finance costs
(LOSS) / PROFIT BEFORE
TAXATION
Taxation
(LOSS) / PROFIT AND TOTAL
COMPREHENSIVE EXPENSE
FOR THE YEAR
(LOSS) / PROFIT AND TOTAL
COMPREHENSIVE (LOSS) /
INCOME ATTRIBUTABLE TO:
OWNERS OF THE PARENT
NON-CONTROLLING
INTEREST
(LOSS) / PROFIT AND TOTAL
COMPREHENSIVE (LOSS) /
INCOME
£'000
10,889
(6,444)
£'000
£'000
-
-
10,889
(6,444)
4,445
-
4,445
28
(5,268)
£'000
6,668
(3,020)
3,648
(4,832)
£'000
-
-
-
£'000
6,668
(3,020)
3,648
149
(4,683)
28
(823)
(1,184)
149
(1,035)
(5,296)
(851)
(851)
28
(823)
(1,184)
149
(1,035)
43
172
-
556
106
26
-
-
-
-
-
43
172
-
556
106
33
136
-
281
380
28
54
(354)
(620)
-
(620)
(333)
-
-
33
136
(170)
(170)
-
21
-
-
281
401
(354)
(333)
(1,471)
26
28
(1,443)
(1,517)
149
(1,368)
-
26
872
-
872
(1,445)
28
(1,417)
(645)
149
(496)
(1,426)
(19)
28
(1,398)
-
(19)
(499)
(146)
149
-
(350)
(146)
(1,445)
28
(1,417)
(645)
149
(496)
LOSS PER SHARE
9
(1.04p)
0.02p
(1.02p)
(0.50p)
0.11p
(0.39p)
The accompanying notes form part of these financial statements.
^ This is an Alternative Performance Measure refer to Note 2 for further details
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
65
Financial Statements
Westminster Group PLC
Consolidated and Company Statements of Financial Position
As at 31 December 2019
Goodwill
Other intangible assets
Property, plant and equipment
Investment in subsidiaries
Deferred tax asset
TOTAL NON-CURRENT ASSETS
Inventories
Trade and other receivables
Cash and cash equivalents
TOTAL CURRENT ASSETS
Assets of disposal groups classified as held for sale
TOTAL ASSETS
Called up share capital
Share premium account
Merger relief reserve
Share based payment reserve
Equity reserve on convertible loan note
Revaluation reserve
Retained earnings:
At 1 January
Loss for the year
Other changes in retained earnings
At 31 December
(DEFICIT)/EQUITY ATTRIBUTABLE TO:
OWNERS OF THE COMPANY
NON-CONTROLLING INTEREST
TOTAL EQUITY
Borrowings
TOTAL NON-CURRENT LIABILITIES
Contractual liabilities
Trade and other payables
TOTAL CURRENT LIABILITIES
Liabilities of disposal group classified as held for sale
TOTAL LIABILITIES
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
Note
10
11
12
14
17
18
19
20
29
21
23
24
24
29
Group
2019
£'000
614
129
Restated
Group
2018
£’000
596
100
1,979
2,112
-
907
3,629
47
2,566
557
3,170
170
6,969
14,540
9,577
300
1,166
423
133
-
889
3,697
74
4,616
290
4,980
170
8,847
13,003
9,568
300
858
222
133
Company
2019
Restated
Company
2018
£'000
-
128
1,079
6,252
-
7,459
-
70
28
98
-
7,557
14,540
9,577
300
1,166
12
133
£'000
-
100
1,094
6,906
-
8,100
-
27
29
56
-
8,156
13,003
9,568
300
858
21
133
(22,594)
(22,258)
(16,149)
(1,398)
148
(349)
13
(2,652)
148
(14,228)
(1,921)
-
(23,844)
(22,594)
(18,653)
(16,149)
2,295
(365)
1,930
2,510
2,510
73
2,456
2,529
-
5,039
6,969
1,490
(346)
1,144
2,545
2,545
2,438
2,569
5,007
151
7,703
8,847
7,075
-
7,075
212
212
-
270
270
-
482
7,557
7,734
-
7,734
223
223
-
199
199
-
422
8,156
The accompanying notes form part of these financial statements. The Group and Company financial statements were
approved by the Board and authorised for issue on 13 May 2020 and signed on its behalf by:
Peter Fowler
Director
Mark L W Hughes
Director
66
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Financial Statements
Westminster Group PLC
Consolidated Statement of Changes in Equity
For the year ended 31 December 2019
Called
up
share
capital
Share
premium
account
Merger
relief
reserve
Share
based
payment
reserve
Equity
reserve on
convertible
loan note
Revaluation
reserve
Retained
earnings
Total
Non-
controlling
interest
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
13,003
9,568
300
858
133
222
(22,594)
1,490
(346)
1,144
1,500
-
-
-
37
-
-
9
-
-
-
-
-
556
-
-
-
-
-
-
-
-
-
-
-
-
-
(44)
-
-
-
-
-
-
1,537
9
-
-
-
(204)
-
-
-
-
308
-
201
201
-
1,500
-
1,500
(100)
(100)
-
(100)
-
-
44
204
556
-
556
46
-
46
-
-
-
-
-
-
-
201
-
201
148
2,203 -
2,203
-
-
- -
-
-
(1,398)
(1,398)
(19)
(1,417)
14,540
9,577
300
1,166
133
423
(23,844)
2,295
(365)
1,930
AS AT 1
JANUARY 2019
Shares issued for
cash
Cost of share
issues
Share based
payment charge
Exercise of
warrants and
share options
Lapse of Share
Options
Lapse of Warrants
CLN movement
TRANSACTIONS
WITH OWNERS
Total comprehen-
sive expense for
the year
AS AT 31
DECEMBER 2019
For the year ended 31 December 2018 (restated)
AS AT 1 JANUARY
2018
Restatement for
IFRS 16
AS AT 1
JANUARY 2018
(RESTATED)
Shares issued for
cash
Cost of share
issues
Share based
payment charge
Exercise of
warrants and share
options
Other movements
in equity
CLN movement
TRANSACTIONS
WITH OWNERS
Total comprehen-
sive expense for
the year
AS AT 31
DECEMBER 2018
12,074
9,226
300
621
-
-
-
-
12,074
9,226
300
621
841
409
-
-
88
-
-
(67)
-
-
-
-
929
342
-
-
-
-
-
-
-
-
-
-
-
-
237
-
-
-
237
-
133
-
133
-
-
-
-
-
-
-
-
186
(22,256)
284
(200)
-
(2)
(2)
-
186
(22,258)
282
(200)
84
(2)
82
-
-
-
-
-
36
36
-
-
-
-
1,250
-
1,250
(67)
-
(67)
237
-
237
88
-
88
13
-
13
-
36
-
13
36
13
1,557
-
1,557
-
(349)
(349)
(146)
(495)
13,003
9,568
300
858
133
222
(22,594)
1,490
(346)
1,144
The accompanying notes form part of these financial statements.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
67
Financial Statements
Westminster Group PLC
Company Statement of Changes in Equity
For the year ended 31 December 2019
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 2019
13,003
9,568
300
858
133
21
(16,149)
7,734
Shares issued for cash
1,500
Cost of share issues
Share based payment charge
Exercise of warrant
Recognition of equity component of
convertible loan note (CLN)
Other movements in equity
Lapse of Warrants
-
-
37
-
-
-
TRANSACTIONS WITH OWNERS
1,537
-
-
-
9
-
-
-
9
-
-
-
-
-
-
-
-
-
-
556
-
-
(44)
(204)
308
-
-
-
-
-
-
-
-
-
-
-
-
(9)
-
-
-
1,500
(100)
(100)
-
-
-
44
204
556
46
(9)
-
-
(9)
148
1,993
Total comprehensive expense for the year
-
-
- -
-
-
(2,652)
(2,652)
AS AT 31 DECEMBER 2019
14,540
9,577
300
1,166
133
12
(18,653)
7,075
AS AT 1 JANUARY 2018
12,074
9,226
300
621
Restatement for IFRS 16
-
-
-
-
AS AT 1 JANUARY 2018 RESTATED
12,074
9,226
300
621
Shares issued for cash
Cost of share issues
Share based payment charge
Exercise of warrant
Recognition of equity component of
convertible loan notes (CLN
841
-
-
88
-
409
(67)
-
-
-
TRANSACTIONS WITH OWNERS
929
342
Total comprehensive expense for the year
-
-
-
-
-
-
-
-
-
-
-
237
-
-
237
-
133
-
133
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21
21
(14,227)
8,127
(1)
(1)
(14,228)
8,126
-
-
-
-
-
-
1,250
(67)
237
88
21
1,529
-
(1,921)
(1,921)
AS AT 31 DECEMBER 2018
13,003
9,568
300
858
133
21
(16,149)
7,734
The accompanying notes form part of these financial statements.
68
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Financial Statements
Westminster Group PLC
Consolidated Cash Flow Statement
For the year ended 31 December 2019
Note
2019
2019
Continuing
Operations
Discontinued
Operations
2019
Total
2018
2018
2018
Continuing
Operations
(Restated)
Discontinued
Operations
(Restated)
Total
(Restated)
(LOSS) / PROFIT AFTER TAX
Taxation debit / (credit)
(LOSS) / PROFIT BEFORE TAX
Non-cash adjustments
Net changes in working capital
25
25
NET CASH USED IN
OPERATING ACTIVITIES
INVESTING ACTIVITIES:
Purchase of property, plant and
equipment
Purchase of intangible assets
Acquisition of subsidiary
30
Cash inflow on acquisition
CASH (OUTFLOW) / INFLOW
FROM INVESTING ACTIVITIES
CASHFLOWS FROM
FINANCING ACTIVITIES:
Gross proceeds from the issues
of ordinary shares and exercise
of warrants
Costs of share issues
CULN debt raised
Reduction in Finance Lease Debt
Finance cost on lease liabilities
Interest paid
CASH INFLOW FROM
FINANCING ACTIVITIES
Net change in cash and cash
equivalents
CASH AND EQUIVALENTS AT
BEGINNING OF YEAR
CASH AND EQUIVALENTS AT
END OF YEAR
£'000
(1,445)
(26)
(1,471)
1,412
(401)
(460)
(70)
(72)
(18)
-
(160)
£'000
£'000
(1,417)
(26)
28
-
28
£'000
(645)
(872)
£'000
£'000
149
-
(496)
(872)
(1,443)
(1,517)
149
(1,368)
-
1,412
(151)
(552)
491
(192)
(170)
-
321
(192)
(123)
(583)
(1,218)
(21)
(1,239)
-
-
-
-
-
(70)
(72)
(18)
-
(160)
(58)
-
-
104
46
1,547
-
1,547
1,338
(100)
-
(60)
(54)
(323)
-
-
-
-
-
(100)
-
(60)
(54)
(68)
176
-
(4)
(323)
(351)
-
-
-
-
-
-
-
-
-
-
-
(58)
-
-
104
46
1,338
(68)
176
-
(4)
(351)
1,010
-
1,010
1,091
-
1,091
390
(123)
267
(81)
(21)
(102)
290
557
392
290
The accompanying notes form part of these financial statements.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
69
Financial Statements
Westminster Group PLC
Company Cash Flow Statement
For the year ended 31 December 2019
(LOSS)/PROFIT AFTER TAX
Non-cash adjustments
Net changes in working capital
NET CASH USED IN OPERATING ACTIVITIES
INVESTING ACTIVITIES:
Purchase of property, plant and equipment
Purchase of intangible assets
Advances to subsidiaries
Cash inflow from intercompany loans
CASH OUTFLOW FROM INVESTING ACTIVITIES
CASHFLOWS FROM FINANCING ACTIVITIES:
Gross proceeds from the issues of ordinary shares
Costs of share issues
Net proceeds from the issue of convertible loan notes
Finance cost on lease liabilities
Interest paid
CASH INFLOW FROM FINANCING ACTIVITIES
Net change in cash and cash equivalents
CASH AND EQUIVALENTS AT BEGINNING OF YEAR
CASH AND EQUIVALENTS AT END OF YEAR
The accompanying notes form part of these financial statements.
Note
25
25
12
11
14
14
Company
2019
£'000
(2,652)
1,104
28
(1,520)
Company
2018
£’000
(1,921)
82
99
(1,740)
(26)
(71)
(11)
557
449
1,547
(100)
-
(47)
(330)
1,070
(1)
29
28
(33)
-
-
622
589
1,338
(68)
177
(42)
(303)
1,102
(49)
78
29
70
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
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 2019 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
International Financial Reporting Standards (“IFRS”) as
adopted by the European Union. The Parent Company
has elected to prepare its financial statements in
accordance with IFRS.
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 2019.
(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 tile company
has tile practical ability to direct tile relevant activities
of the investee without holding the majority of the
voting rights. In determining whether de-facto control
exists tile 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. lntercompany
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 £1,417,000
(2018: Restated loss of £496,000). The cash outflow
from operating activities during the year was £460,000
(2018: Outflow £1,218,000), 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
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
71
Financial Statements
Notes to the
Financial Statements
and cash forecasts, the continued support of the
shareholders and loan note holders 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.
The Directors acknowledge that the COVID-19
pandemic in 2020 is having a profound impact on the
global economy and businesses across the globe, the
like of which has not been experienced in a generation.
At the time of writing, the duration and full extent of the
impact on the global economy cannot be determined
with any accuracy although there are green shoots of
optimism with some countries appearing to be over
the worst of the disruption and some, including the UK,
easing lockdowns. The expectation is that the global
economy will begin to recover in the second half of
2020 although it is suspected the virus will be with us
for some time and that some countries may yet face
renewed outbreaks.
The Directors have stress tested the revenue and
utilisation assumptions included in the Group’s cash
projections for a period of 12 months from the date of
approval of these financial statements. The Directors
believe the measures and mitigation strategies they
have put in place together with its various revenue
ongoing streams, means the Group will therefore
generate sufficient working capital and cash flows
to continue in operational existence and in addition
to utilisation of governmental support schemes it
will continue to have the support of lenders and
shareholders, if required. Thus, they continue to adopt
the going concern basis of accounting in the preparing
the financial statements.
The Directors therefore 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 Officer’s report on
pages 14 - 16.
The Directors equally acknowledge that, at the current
time, the COVID-19 does create areas of uncertainty
for the business, particularly its aviation security and
training operations, although the restrictions on travel
and disruptions to supply chains and logistics may
also present a challenge as to when travel restrictions
will be lifted and how long it will take for air travel and
the aviation industry to recover. This will likely have
an impact, for some months on certain areas of the
business, in particular the airport security and training
operations.
Since the year end a £3m Mezzanine Loan Facility
repayable over 18 months together with a £1.75m
Equity Placing and Sharing Agreement has been
entered in to with RiverFort Global Opportunities
PCC and YA II PN Ltd (the “Financing Facility”). The
proceeds from the initial tranche of the Financing
Facility have been used to commence paying down
the Group’s Convertible Secured Loan Notes (CLN).
On 30 March 2020 the outstanding CLN balance of
£1.68m was extended in agreement with noteholders
to 1 May 2021 to help mitigate any adverse impact of
the COVID-19 pandemic. The balance of the Riverfort
Facility will be used, if required, to repay any CLN
balance.
These events or conditions emanating from COVID-19
indicate that a material uncertainty exists which may
cast significant doubt on the Group’s ability to continue
as a going concern and therefore its ability to settle
it debts and realise its assets in the normal course of
business.
The financial statements do not include the
adjustments that would be required should the going
concern basis of preparation no longer be appropriate.
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.
72
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Foreign currency
Supply of products
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).
Revenue in respect of supply of product is recognised
at a point in time when products are delivered, and
legal title is transferred to the customer.
Supply and installation contracts and
supply of services
Where the outcome can be estimated reliably in
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 6).
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.
• For which discrete financial information is available.
Revenue
Revenue recognition
Revenue is measured at the fair value of the
consideration received or receivable and represents
amounts receivable for goods and services provided
in the normal course of business, net of discounts,
VAT and other sales-related taxes:
respect of long-term contracts and contracts for on-
going services, revenue is recognised over the time
and represents the value of work done in the period,
including estimates of amounts not invoiced. Revenue
in respect of long-term contracts and contracts for on-
going services is recognised by reference to the stage
of completion, where the stage of completion can be
assessed with reasonable accuracy. This is assessed
by reference to the estimated project costs incurred
to date compared to the total estimated project costs.
Revenue is recognised only to the extent that it is highly
probable that a significant reversal in the amount of
cumulative revenue recognised will not occur when the
uncertainty associated with the variable consideration
is subsequently resolved Where a contract is loss
making, the full loss is recognised immediately.
Managed services income is recognised over time and
is based on the volume of the passenger processed
and freight scanned.
When the outcome of long-term contracts cannot be
estimated reliability, contract revenues are recognised
to the extent of contract costs incurred where it is
probable those costs will be recovered.
Maintenance Income
The revenue in relation to supply of maintenance
contract is recognised over time on a straight-line
basis. The unrecognised portion of maintenance
contract is included within trade and other payables
as Contract Obligation.
Training courses
The revenue on training course is recognised at a
point in time after the course has been conducted
i.e. performance obligation in relation to the course
are fulfilled.
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
ANNUAL REPORT 2019
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73
Financial Statements
Notes to the
Financial Statements
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.
IFRS 16 also changes the definition of a “lease” and
the manner of assessing whether a contract contains
a 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.
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.
Freehold buildings
Plant and equipment
Rate
2%
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.
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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.
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 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 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
ANNUAL REPORT 2019
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75
Financial Statements
Notes to the
Financial Statements
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.
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.
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.
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 the group is mainly situated in the
UK, most of the Groups costs and a substantial part of
its sales.
Goodwill
Goodwill has been tested for impairment by
considering its net present value for the expected
income stream in perpetuity at both a discount rate
judge to be 5% based on the normal lending rate
we are offered leases at and to establish what is the
discount rate (18%) at which no impairment is needed.
The income is assumed to be flat and stable for the
purpose of this test.
Deferred tax asset
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 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.
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.
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Revalued freehold property
The freehold property is stated at fair value. A full
revaluation exercise was carried out in May 2017. 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.
New standards, amendments and interpretations
The following new standards have been adopted and
where required the prior year’s figures have been
restated.
assets are measured at the amount of the lease liability,
thus on the adoption of IFRS 16, the Group recognised
right of use asset and lease liability each amounting
to £214,000 (2018: £29,000) and £216,000 (2018:
£30,000) respectively. The effect of applying this
standard is shown in note 12.
Effective from 1 January 2019, IFRIC 23 explains
how to recognize and measure deferred and current
income tax assets and liabilities if there is uncertainty
over a tax treatment. An uncertain tax treatment is
any tax treatment applied by an entity where there
is uncertainty over whether that approach will be
accepted by the tax authority.
• IFRS 16 Leases (effective date 1 January 2019)
Standards in issue not yet effective
• IFRIC 23 Uncertain tax treatments (effective date
1 January 2019)
IFRS 16 ‘Leases’; effective for periods beginning on
or after January 1, 2019. Under IFRS 16, a contract
is, or contains a lease if the contact conveys the right
to control the use of an identified asset for a period of
time in exchange for consideration. The new standard
eliminates the classification of leases by lessees as
either finance leases or operating leases and instead
introduces an integrated lessee accounting model.
Applying this model, lessees are required to recognise
a lease liability reflecting the obligation to make future
lease payments and a ‘right-of-use’ asset for virtually all
lease contracts.
IFRS 16 includes an optional exemption for certain
short-term leases and leases of low-value assets. The
Group has assessed the impact of the new standard
which is not material to the Group’s operations.
The Group has elected to apply IFRS 16 fully
retrospectively with the cumulative effect of initially
applying IFRS 16 recognised at 1 January 2018.
Consequently, comparatives for the year ended
31 December 2018 has been restated. Right of use
There are a number of standards, amendments to
standards, and interpretations which have been issued
by the IASB that are effective in future accounting
periods that the group has decided not to adopt early.
The most significant of these are as follows, which are
all effective for the period beginning 1 January 2020:
• IAS 1 Presentation of Financial Statements and
IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors (Amendment – Definition of
Material)
• IFRS 3 Business Combinations (Amendment –
Definition of Business)
• Revised Conceptual Framework for Financial
Reporting
Amendments to IAS 1 and IAS 8 Definition of
material
The amendments are intended to make the definition
of material in IAS 1 easier to understand and are not
intended to alter the underlying concept of materiality
in IFRS Standards. The concept of ‘obscuring’ material
information with immaterial information has been
included as part of the new definition.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
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77
Financial Statements
Notes to the
Financial Statements
The threshold for materiality influencing users has been
changed from ‘could influence’ to ‘could reasonably be
expected to influence’.
The definition of material in IAS 8 has been replaced
by a reference to the definition of material in IAS 1.
In addition, the IASB amended other Standards and
the Conceptual Framework that contain a definition
of material or refer to the term ‘material’ to ensure
consistency.
The amendments are applied prospectively for annual
periods beginning on or after 1 January 2020, with
earlier application permitted.
Amendments to References to the Conceptual
Framework in IFRS Standards
Together with the revised Conceptual Framework,
which became effective upon publication on 29
March 2018, the IASB has also issued Amendments
to References to the Conceptual Framework in IFRS
Standards. The document contains amendments to
IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34,
IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22,
and SIC-32.
Not all amendments, however, update those
pronouncements with regard to references to
and quotes from the framework so that they refer
to the revised Conceptual Framework. Some
pronouncements are only updated to indicate which
version of the Framework they are referencing to
(the IASC Framework adopted by the IASB in 2001,
the IASB Framework of 2010, or the new revised
Framework of 2018) or to indicate that definitions in
the Standard have not been updated with the new
definitions developed in the revised Conceptual
Framework.
The amendments, where they actually are updates,
are effective for annual periods beginning on or after
1 January 2020, with early application permitted.
Amendments to IFRS 3 Definition of a business
The amendments clarify that while businesses usually
have outputs, outputs are not required for an integrated
set of activities and assets to qualify as a business. To
be considered a business an acquired set of activities
and assets must include, at a minimum, an input
and a substantive process that together significantly
contribute to the ability to create outputs.
Additional guidance is provided that helps to determine
whether a substantive process has been acquired.
The amendments introduce an optional concentration
test that permits a simplified assessment of whether an
acquired set of activities and assets is not a business.
Under the optional concentration test, the acquired set
of activities and assets is not a business if substantially
all of the fair value of the gross assets acquired is
78
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
concentrated in a single identifiable asset or group of
similar assets.
The amendments are applied prospectively to all
business combinations and asset acquisitions for
which the acquisition date is on or after the first annual
reporting period beginning on or after 1 January 2020,
with early application permitted.
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.
This measure is 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; Managed
Services and Technology. This split of business segments is based on the products and services each offer.
2019
Managed Services
Aviation
Technology Group and Central
Group Total
Supply of products
Supply and installation contracts
Maintenance and services
Training courses
Revenue
Segmental underlying EBITDA^
from underlying continuing and
discontinued operations
Share based payments
Exceptional items (note 4)
Depreciation & amortisation
Segment operating result
Finance cost
Profit/ (loss) before tax
Income tax charge
Profit/(loss) for the financial year
Segment assets
Segment liabilities
Capital expenditure
2018 (Restated)
Supply of products
Supply and installation contracts
Maintenance and services
Training courses
Revenue
Segmental underlying EBITDA^
from underlying continuing and
discontinued operations
Share based payments
Exceptional items (note 4)
Impairments
Depreciation & amortisation
Segment operating result
Finance cost
Income tax charge
Profit/(loss) for the financial year
Segment assets
Segment liabilities
Capital expenditure
£'000
-
-
5,291
234
5,525
£’000
1,598
3,468
298
-
5,364
£'000
-
-
-
-
-
1,084
525
(1,555)
-
-
(105)
-
(72)
907
(1)
906
18
924
(30)
495
(3)
492
-
492
492
(2,833)
2,949
1,072
48
2,023
1,433
4
(556)
(1)
(113)
(2,225)
(616)
(2,841)
8
(2,833)
1,997
2,534
18
£'000
1,598
3,468
5,589
234
10,889
54
(556)
(106)
(215)
(823)
(620)
(1,443)
26
(1,417)
6,969
5,039
70
Managed Services
Aviation
Technology Group and Central
Group Total
£'000
-
-
3,471
219
3,690
829
-
(401)
170
(158)
440
(4)
492
929
5,033
1,129
23
£’000
1,216
1,420
342
-
2,978
(272)
-
-
-
(11)
(283)
1
380
98
1,960
3,336
-
£'000
-
-
-
-
-
(911)
(281)
-
-
-
(1,192)
(330)
-
(1,522)
1,854
3,238
35
£'000
1,216
1,420
3,813
219
6,668
(354)
(281)
(401)
170
(169)
(1,035)
(333)
872
(496)
8,847
7,703
58
^ This is an Alternative Performance Measure refer to Note 2 for further details
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
79
Financial Statements
Notes to the
Financial Statements
Geographical areas
5. FINANCE COSTS
Interest received
Finance cost on lease
liabilities
Interest payable on bank
and other borrowings
Interest paid on
convertible loan notes
(Note 16)
Other financing costs
Group
2019
£'000
-
(54)
(1)
(375)
(190)
(620)
Group
Restated
2018
£'000
1
(4)
(37)
(293)
-
(333)
6. LOSS FROM OPERATIONS
The following items have been included in arriving at
the loss for the financial year:
Group
2019
£'000
4,396
172
43
85
(166)
Group
2018
£'000
3,434
136
33
66
3
Staff costs (see Note 8)
Depreciation of property,
plant and equipment
Amortisation of intangible
assets
Lease rentals payable
Short term leases
Foreign exchange
(gain) / loss
Auditor’s remuneration
Amounts payable in both years relate to BDO LLP in
respect of audit and other services. The local Audit in
Sierra Leone is performed by Moore Sierra Leone.
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.
UK and Europe
1,957
171
2019
£'000
2018
£'000
Africa
Middle East
Rest of World
4,899
2,397
1,636
10,889
3,884
1,878
735
6,668
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
Included in revenues arising from the Technology
Solutions in the Middle East are revenues of
approximately £2,230,000 (2018: £1,414,000) which
arose from a sale to the Group’s largest customer
in 2019. There was also a sale of £1,236,000 for the
provision of advanced screening of containers at ports in
Asia (2018: Nil). Approximately 34% (2018: 50%) of the
Group’s revenues are derived from the contract with the
Sierra Leone Airport Authority. This contract contains
many individual customers. No other single customer
contributed more than 10% of the Group revenue in
either 2019 or 2018.
4. EXCEPTIONAL ITEMS
Middle East airport
pre-contract costs
Ferry closure costs
Other
2019
£'000
105
1
-
106
2018
£'000
294
21
86
401
The project signed in 2018 for a long-term security
support service in a Middle East airport pre-contract
costs ceased during 2019 when the project was
permanently put on hold.
^ This is an Alternative Performance Measure refer Note 2 for further details
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Audit services
Statutory audit of parent and consolidated financial statements
Review of interim results
Statutory audit of subsidiaries of the Company pursuant to legislation
Taxation services including research and development tax credits
Total payable to BDO
Local audit in Sierra Leone - Moore Sierra Leone
Group 2019
Group 2018
£'000
£'000
57
2
21
18
98
20
118
30
2
21
12
65
17
82
7. TAXATION
Analysis of credit in year.
Changes to the UK corporation tax rates were
substantively enacted as part of the Finance Bill
2015 (on 26 October 2015) and Finance Bill 2016
(on 7 September 2017) and was to have reduced to
17% from 1 April 2020. Deferred taxes at the balance
sheet date have been measured using these enacted
tax rates and reflected in these financial statements.
Current year
UK corporation tax on profits in the year
Potential foreign corporation tax on profits in the year
Deferred Tax
Foreign entity deferred tax
Review of expected utilisation of losses
Reconciliation of effective tax rate
Loss on ordinary activities before tax
Loss on ordinary activities multiplied by the standard rate of corporation tax
in the UK of 19% (2018: 19%)
Effects of:
Expenses not deductible for tax purposes
Deferred tax previously not recognised
Unrecognised losses carried forward
Total tax - credit
8. EMPLOYEE COSTS
Employee costs for the Group during the year:
Wages and salaries
Pension contributions
Social security costs
Share based payments Note 22
Group 2019
Group 2018
£'000
£'000
-
-
(18)
(8)
(26)
-
17
-
(889)
(872)
Group 2019
Group Restated 2018
£'000
(1,443)
(274)
106
-
142
(26)
£'000
(1,368)
(260)
57
(669)
-
(872)
Group 2019
Group 2018
£'000
3,854
44
266
4,164
232
4,396
£'000
2,922
21
210
3,153
281
3,434
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
81
Financial Statements
Notes to the
Financial Statements
The Group operates a stakeholder pension scheme. The Group made pension contributions totalling £44,000 during
the year (2018: £21,000), and pension contributions totalling £8,000 were outstanding at the year-end (2018: £4,000).
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 £582,000
(2018: £922,000) and the highest paid director received remuneration totalling £201,000 (2018: £310,000).
Average monthly number of people (including Executive Directors) employed
By function:
Sales
Operations
Administration
Management
2019 Group Number
2018 Group Number
Continuing
Operations
Discontinued
Operations
Total
Continuing
Operations
Discontinued
Operations
3
224
25
6
258
-
3
-
-
3
3
227
25
6
261
3
199
23
5
230
-
3
-
-
3
Total
3
202
23
5
233
9. 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.
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 diluted earnings per share the weighted average
number of ordinary shares in issue is adjusted to
The weighted average number of ordinary shares is
calculated as follows:
Issued ordinary shares
Start of year
Effect of shares issued during the year
Weighted average basic and diluted number of shares for year
Earnings
Profit / (loss) and total comprehensive expense (continuing)
Profit / (loss) and total comprehensive expense (discontinued)
Profit / (loss) and total comprehensive expense total
2019
£'000
130,028
8,834
138,862
2019
£'000
(1,445)
28
(1,417)
2018
£'000
120,743
5,409
126,152
2018
£'000
(645)
149
(496)
For the year ended 31 December 2019 and 2018
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 1.02p (2018 Loss 0.39p).
82
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
10. GOODWILL
Gross carrying amount at 1 January
Acquisition in year
Accumulated impairment at 1 January
Impairment charge for the year
Accumulated impairment at 31 December
Carrying amount at 1 January
Carrying amount at 31 December
Note
Group
2019
Group
2018
30
£'000
1,359
18
1,377
(763)
-
(763)
596
614
£'000
1,160
199
1,359
(763)
-
(763)
397
596
The goodwill balance relates to the acquisition of
Longmoor Security Limited, Keyguard U.K Limited in
2018 and Euro-Ops SARL in 2019.
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
11. OTHER INTANGIBLE ASSETS
recent 2020 financial budgets approved by management.
The projection assumes that the companies are held in
perpetuity. A discount rate of 18% 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.
2019
Cost
At 1 January 2019
Additions
At 31 December 2019
Accumulated amortisation and impairment
At 1 January 2019
Charge for the year
At 31 December 2019
Net book value at 31 December 2019
2018
Cost
At 1 January 2018
Disposals
Adjustment
Transfers
At 31 December 2018
Accumulated amortisation and impairment
At 1 January 2018
Charge for the year
Disposals
Adjustment
At 31 December 2018
Net book value at 31 December 2018
Group Website and Software
Company Website and Software
£'000
£'000
225
72
297
125
43
168
129
215
71
286
115
43
158
128
Group Website and Software
Company Website and Software
£'000
£'000
193
(12)
40
4
225
64
33
(12)
40
125
100
224
(12)
(1)
4
215
96
33
(12)
(2)
115
100
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
83
Financial Statements
Notes to the
Financial Statements
12. PROPERTY, PLANT AND EQUIPMENT
Group 2019
Cost or valuation
At 1 January 2019
Additions
Disposals
Transfer
At 31 December 2019
Accumulated amortisation and impairment
At 1 January 2019
Charge for the year
Disposals
Transfer
At 31 December 2019
Net book value at 31 December 2019
1,001
Group 2018 (Restated)
Cost or valuation
At 1 January 2018
Additions
Disposals
On acquisition
Transfer
At 31 December 2018
Accumulated amortisation and impairment
At 1 January 2018
Charge for the year
Disposals
Transfer
Acquisition
At 31 December 2018
1,031
8
-
-
1,039
17
21
-
-
38
1,014
17
-
-
-
1,031
-
17
-
-
-
17
Freehold
property
Plant and
equipment
Office
equipment,
fixtures
and fittings
Motor
vehicles
Right
of use
assets
£'000
£'000
£'000
£'000
£'000
Total
£'000
1,194
159
260
3,115
5
-
-
-
-
-
70
(63)
66
164
260
3,188
471
32
-
224
727
236
38
-
202
476
251
25
(63)
(158)
998
553
43
(34)
(134)
428
570
151
9
-
-
160
4
46
61
-
-
107
153
Freehold
property
Plant and
equipment
Office
equipment,
fixtures
and fittings
Motor
vehicles
Right
of use
assets
£'000
£'000
£'000
£'000
£'000
1,003
172
(34)
68
1,209
1,979
Total
£'000
2,996
189
(201)
176
(45)
33
131
-
96
-
260
3,115
4
21
-
-
21
46
1,015
136
(201)
(40)
93
1,003
214
2,112
727
-
(79)
-
(177)
471
434
31
(79)
(150)
-
236
235
1,123
41
(102)
-
132
1,194
488
57
(102)
110
-
553
641
99
-
(20)
80
-
159
89
10
(20)
-
72
151
8
Net book value at 31 December 2018
1,014
Right of use assets (motor vehicles) above have been
created in accordance with IFRS 16. These numbers
demonstrate the effect of implementing the standard
on the Group. Motor vehicles are leases for certain
84
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
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.
Company 2019
Cost or valuation
At 1 January 2019
Additions
Freehold
property
Plant and
equipment
Office
equipment,
fixtures
and fittings
Motor
vehicles
Right
of use
assets
£'000
£'000
£'000
£'000
£'000
Total
£'000
1,031
15
185
-
76
1,307
8
-
10
-
8
26
At 31 December 2019
1,039
15
195
-
84
1,333
Accumulated amortisation and impairment
At 1 January 2019
Charge for the year
Adjustment
17
15
174
-
7
213
21
-
7
-
19
47
-
-
(6)
-
-
(6)
At 31 December 2019
38
15
175
-
26
254
Net book value at 31 December 2019
1,001
-
20
-
58
1,079
Freehold
property
Plant and
equipment
Office
equipment,
fixtures
and fittings
Motor
vehicles
Right
of use
assets
£'000
£'000
£'000
£'000
£'000
Total
£'000
Company 2018
Cost or valuation
At 1 January 2018
Additions
Disposals
Adjustment
At 31 December 2018
Accumulated amortisation and impairment
At 1 January 2018
Charge for the year
Disposals
Adjustment
At 31 December 2018
1,014
17
-
-
1,031
-
17
-
-
17
Net book value at 31 December 2018
1,014
The freehold property was valued professionally by
Brown and Co, Chartered Surveyors, on 16 May 2017,
which provided a valuation of £1,014,000. 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.
14
1
-
-
15
13
1
-
1
15
-
216
15
(38)
(8)
185
203
6
(38)
3
174
11
-
-
-
-
-
-
-
-
-
-
-
-
1,244
76
109
-
-
76
(38)
(8)
1,307
-
216
7
-
-
7
31
(38)
4
213
69
1,094
No depreciation has been charged on the freehold
land only building additions have been depreciated.
The difference between the net book value of the totla
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.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
85
Financial Statements
Notes to the
Financial Statements
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:
Historical cost
Accumulated depreciation
At 1 January
Charge for the year
At 31 December
Net book value as at 31 December
2019
£'000
722
279
14
293
429
2018
£'000
714
265
14
279
435
13. LEASE COMMITMENTS
The Group has moved to accounting 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
At 1 January 2019
Additions
On acquisition
Movement in the year
As at 31 December 2019
Of which
Current lease 0-1 years
Non-current lease 2-5 years
As at 31 December 2019
2019
£'000
216
-
-
(58)
158
60
98
158
2018
£'000
30
112
96
(22)
216
58
158
216
86
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
14. INVESTMENT IN SUBSIDIARIES
Company
Cost
At 1 January 2019
Movement in Year
At 31 December
Accumulated impairment
At 1 January 2019
Movement in Year
At 31 December
2019
Investments
£'000
378
11
389
(378)
(11)
(389)
2019
Loans
£'000
15,458
(557)
14,901
(8,552)
(97)
(8,649)
2019
Total
£'000
2018
Investments
£'000
15,836
378
(546)
-
15,290
378
(8,930)
(378)
(108)
-
(9,038)
(378)
-
2018
Loans
£'000
16,080
(622)
15,458
(8,964)
412
(8,552)
2018
Total
£'000
16,458
(622)
15,836
(9,342)
412
(8,930)
6,906
6,906
Investment in subsidiaries
-
6,252
6,252
All loans relate to cash movements between Group
companies and are repayable on demand. Expected
credit losses 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
or investments over time and are therefore deemed to
be impaired.
15. SUBSIDIARY UNDERTAKINGS
The subsidiary undertakings at 31 December 2019 were as follows:
Name
Westminster International
Limited
Country of
incorporation
Principal activity
England
Advanced security technology. (Technology division)
Longmoor Security Limited England
Close protection training and provision of security
services. (Managed Services)
Westminster Aviation
Security Services Limited
England
Managed services of airport security under long term
contracts. (Managed Services)
Sovereign Ferries Limited
England
Dormant
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.
Keyguard U.K Limited
England
Security and risk management including manned guarding,
mobile patrols, risk management and K9 services.
Longmoor (SL) Limited
Sierra Leone
Security and terminal guarding.
Facilities Operations
Management Limited
Westminster Sierra Leone
Limited**
Sierra Leone
Infrastructure management.
Sierra Leone
Local infrastructure for airport operations.
Westminster Group GMBH Germany
Dormant
GLIS Gesellschaft für
Luftfahrt- und Infrastruktur-
Sicherheit GmbH
Westminster Sicherheit
GMBH
Germany
Managed Services
Germany
Dormant
Euro Ops SARL
France
Managed Services infrastructure
% of nominal ordinary
share capital and
voting rights held
100
100
100
100
100
100
100
90
49
100
85
85
100
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
87
Financial Statements
Notes to the
Financial Statements
Name
Westminster Managed
Services Limited (formerly
Westminster Facilities
Management Limited)
CTAC Limited
Westminster Aviation
Security Services (ME)
Limited
Westminster International
(Ghana) Limited *
Country of
incorporation
Principal activity
England
Dormant
England
England
Dormant
Dormant
Ghana
Managed Services
Subsidiary company registered addresses:
% of nominal ordinary
share capital and
voting rights held
100
100
100
90
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
Ghana
17 Route de Sundhoffen, 68280 Andolsheim. France.
2nd Floor, Emerald House, Gowa Lane, Roman Ridge, Accra.
Formed 21 October 2019
*
** Consolidated due to de facto control. These results do not have a material effect on the financial statements.
16. FINANCIAL INSTRUMENTS
Categories of financial assets and liabilities
The carrying amounts presented in the Consolidated and Company statement of financial position relate to
the following categories of assets and liabilities:
Financial assets
Trade and other receivables (note 19)
Cash and cash equivalents (note 20)
Financial liabilities
Financial liabilities measured at amortised cost
Borrowings (note 23)
Trade and other payables (note 24)
Liabilities held for sale (note 28)
Group
2019
£'000
2,320
557
2,877
2,510
2,405
-
4,915
Group
restated
2018
Company
2019
Company
restated
2018
£'000
£'000
£'000
4,556
290
4,846
2,545
2,440
151
5,136
-
28
28
212
254
-
466
-
29
29
223
184
-
407
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 27.
88
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Convertible Loan Notes
The Group had the following convertible loan notes outstanding during the year the key details of which are
set out below:
Amount
Conversion Price
Security
Redemption Date
Management Fee
Coupon
Conversion Detail
Secured Convertible Loan Notes (“CLN”)
£2.245m
25p until 22 May 2019 15p per share until 30 September 2019, 12.5p per share from
1 October 2019 until 31 December 2019 and thereafter 10p
Secured fixed and floating
30 June 2020. (Extended to 1 May 2021 after the year-end)
£25,000 per annum
12 % until 31 March 2019 then15% paid quarterly in arrears. Listed on the CISX
Company can force conversion if the share price is > 65p for 15 working days after
19 June 2016. This condition was not met in the year. Company can make repayment
without penalty at any time. The holder can convert at any time.
2019
2018
At 1 January
Fair value of new loans issued
Amortised finance cost
Interest paid
Fair value adjustment on extension
At 31 December
CULN
£’000
171
-
18
(10)
-
179
CLN
£’000
2,216
-
357
(312)
(28)
2,233
Total
£’000
2,387
-
375
(322)
(28)
2,412
Analysis of movement in debt at principal value (excluding IFRS impacts), memorandum only
At 1 January
New issue
At 31 December
CULN
£’000
171
-
171
2019
CLN
£’000
2,245
-
2,245
Total
£’000
2,416
-
2,416
CULN
£’000
-
165
8
(2)
-
171
CULN
£’000
-
171
171
CLN
£’000
2,184
-
351
(253)
(66)
2,216
2018
CLN
£’000
2,245
-
2,245
Total
£’000
2,184
165
359
(255)
(66)
2,387
Total
£’000
2,245
171
2,416
The convertible loan notes have been separated into
two components, the Host Debt Instrument and the
Embedded Derivative on initial recognition. The value of
the Host Debt Instrument will increase to the principal
sum amount by the date of maturity. The effective interest
cost of the Notes is the sum of that increasing value in
the period and the interest paid to Noteholders.
Secured convertible loan notes (CLN) are compound
financial instruments that can be converted to share
capital at the option of the holder, and the number
of shares to be issued does not vary with changes
in fair value.
On 24 May 2018 the Company extended the term
of the CLN resulting in an increase of coupon to 12%
from 24 May 2018 and conversion price decreased
from 35p to 25p.
On 21 May 2019 the Convertible Loan Notes were
extended to 30 June 2020. Under the terms of the CLN
extension the conversion price on any unredeemed
or unconverted CLN will be 15p per share until 30
September 2019, 12.5p per share from 1 October 2019
until 31 December 2019 and thereafter 10p per share
from 1 January 2020 until the new maturity date of 30
June 2020. The coupon payable on any unredeemed
or unconverted CLN amount will be 15% pa from 1 April
2019 until 30 June 2020. The Company may redeem the
whole or any part of the CLN holding at any time without
restriction or penalty.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
89
Financial Statements
Notes to the
Financial Statements
Like convertible unsecured loan notes (CULN),
this instrument is determined to have a liability and
equity component. The liability component is initially
recognised at fair value of a similar liability without
a conversion option. The equity component is
recognised initially as the difference between the fair
value of the compound financial instrument as a whole
and the fair value of the liability component. It is not
subsequently remeasured. The liability component
is measured at amortised cost using the effective
interest method.
See also Note 32 Subsequent events.
17. 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. A review has been performed this
year which has confirmed those expectations.
The tax losses against which this deferred tax asset is
being recognised are in the group’s holding company
and its principle 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 2022.
The Group believes it has a total potential deferred
tax asset of £1,904,000 (2018: £1,795,000). It has
recognised a deferred tax asset of £907,000 (2018:
£889,000) due to budgeted future profits of the
business beyond 2020. There remains £991,000
(2018: £896,000) of unrecognised deferred tax asset.
Deferred tax assets and liabilities have been calculated
using the expected future tax rate of 17% (2018: 17%).
Any changes in the future would affect these amounts
proportionately. On 17 March 2020, the change to 17%
was reversed, such that the 19% was substantively
enacted to continue to apply from 1 April 2020.
On 24 February 2020 the
company announced that
it had the redeemed or
converted £561,250 worth
of the CLN.
38days
average credit period in 2019
18. INVENTORIES
2019
2018
£'000
£'000
Finished
goods
Group
2019
Group
2018
Company
2019
Company
2018
£'000
£'000
£'000
£'000
47
47
74
74
-
-
-
-
Opening balance as at 1 January
Credit to income statement
Deferred tax asset as at
31 December
889
18
907
-
889
889
The cost of inventories recognised as an expense
within cost of sales amounted to £3,210,000 (2018:
£1,309,000). No reversal of previous write-downs was
recognised as a reduction of expense in 2019 or 2018.
90
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
19. TRADE AND OTHER RECEIVABLES
Amounts falling due within one year:
Trade receivables, gross
Allowance for credit losses
Trade receivables
Amounts recoverable on contracts
Other receivables
Financial assets
Prepayments
Non-financial assets
Trade and other receivables
The average credit period taken on sale of goods in
2019 was 38 days (2018: 41 days). An allowance has
been made for estimated credit losses of £116,000
(2018: £127,000). 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.
Current
Not more than 3 months
More than 3 months but less than 6 months
Allowances for Credit Losses
Opening balance at 1 January
Amounts written off
Amounts provided
Closing balance at 31 December
Group
2019
£'000
Group
2018
£'000
Company
2019
Company
2018
£'000
£'000
851
(116)
735
1,430
155
2,320
246
246
2,566
701
(127)
574
1,909
2,073
4,556
60
60
4,616
1
(1)
-
-
-
-
70
70
70
2
(2)
-
-
-
-
27
27
27
The following table provides an analysis of trade and
other 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.
2019
£'000
474
197
180
851
127
(113)
102
116
2018
£'000
306
219
176
701
52
-
75
127
There are no significant expected credit losses from
financial assets that are neither past due nor impaired.
At 31 December 2019 £510,000 (2018: £3,708,000)
of receivables were denominated in US dollars. The
Directors consider that the carrying amount of trade
and other receivables approximates to their fair value.
20. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Bank overdraft
Cash and cash equivalents
Group
2019
£'000
605
(48)
557
Group
2018
£'000
292
(2)
290
Company
2019
Company
2018
£'000
£'000
28
29
-
-
28
29
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.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
91
£’000
12,074
88
841
Financial Statements
Notes to the
Financial Statements
21. CALLED UP SHARE CAPITAL
Group and Company
The total amount of issued and fully paid shares is as follows:
At 1 January
2019
2018
Number
£’000
Number
130,027,511
13,003
120,743,420
Arising on exercise of share options and warrants
375,000
37
875,000
Other issues for cash
At 31 December
15,000,000
1,500
8,409,091
145,402,511
14,540
130,027,511
13,003
During the year the following equity issues took place:
Date
08 February 2019
25 July 2019
Comment
Equity placing
Equity placing
19 December 2019
Exercise of warrants
Shares Issued
Issue price
5,000,000
10,000,000
375,000
10.0p
10.0p
12.5p
22. SHARE OPTIONS
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
92
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
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.
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.
• 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.
These options are valued by the use of the Black-
Scholes model using a volatility of 70%, interest free
rate of 0.5% 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 (2018: 18.2p).
The average life of the unexpired share options was
7.1 years (2018: 8.4 years).
31 December 2019
31 December 2018
Grant Date
25 September 2009
28 June 2012
1 July 2014
10 December 2014
9 October 2015
1 June 2018
1 November 2018
Exercise
Price
Number
Outstanding
£0.345
£0.365
£0.510
£0.285
£0.140
£0.130
£0.130
-
225,000
225,000
2,281,250
40,000
6,150,000
750,000
9,671,250
During the year, no employee options were granted
(2018: 8,250,000), none were exercised (2018: none)
and 496,000 lapsed (2018: 1,740,750). The weighted
average price of the options lapsed in the year was
20.3p (2018: 19.9p).
The weighted average exercise price of exercisable
options at the end of 2019 was 18.1p (2018 18.2p)
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.
The amount recognised in profit or loss in respect
of employee share-based payments made in 2018
but expensed over a 12-month period was £232,000
(2018: £237,000).
Average Life
Outstanding
(Years)
-
2.5
4.5
4.9
5.8
8.4
8.8
7.1
Warrants
Number
Outstanding
56,000
295,000
245,000
2,281,250
40,000
6,500,000
750,000
10,167,250
Average Life
Outstanding
(Years)
0.7
3.5
5.5
5.9
6.8
9.4
9.8
8.4
The Company has historically issued the following
warrants which are still in force at the balance
sheet date:
• On 22 February 2016 (£0.475m CULN) 589,330
warrants with a life of 3 years (extended to 4 years)
and an exercise price of 20.15p per share.
• On 31 January 2018 (Placing Commission) 170,455
warrants with an exercise price of 22.0p and a life
of 5 years.
• On 25 July 2019 (£1m Share Issue) 10m warrants with
an exercise price of 12.5p and a life of 2 years.
The S P Angel Warrants were inadvertently omitted from
the 2018 accounts but have been accounted
for in 2019. The omission of a charge of £27,000 from
the 2018 accounts was not material.
On 25 July 2019 the Company announced a placing
of 10,000,000 Ordinary Shares to various holders.
For every share one detachable warrant was issued,
each warrant having a life of two years and an exercise
price of 12.5p per share. Warrants are valued by the
use of the Black-Scholes model, using volatility based
on the previous three years varying between 50-70%
and a relevant risk-free rate as noted above. Warrants
are recorded at fair value at inception and are not
remeasured.
The fair value of £324,000 (2018: Nil) for the issue of
both of these warrants was recognised in the year as
part of the share-based payments.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
93
Financial Statements
Notes to the
Financial Statements
23. BORROWINGS
Non-current
Convertible loan note (note 16)
Convertible unsecured loan note (Note 16)
Non-current lease debt
Total borrowings
24. TRADE AND OTHER PAYABLES
Current
Trade payables
Accruals and other creditors
Finance lease creditor (IFRS 16)
Financial liabilities
Other taxes and social security payable
Contractual liabilities
Non-financial liabilities
Total current trade and other payables
Shown on the balance sheet as:
Contractual liabilities
Trade and other payables
Group
2019
£'000
2,233
179
98
2,510
Group
2018
£'000
Company
2019
Company
2018
£'000
£'000
2,216
-
-
171
158
2,545
179
33
212
171
52
223
Group
2019
£'000
Group
Restated
2018
Company
2019
Company
Restated
2018
£'000
£'000
£'000
1,385
960
60
2,405
51
73
124
2,529
73
2,456
2,529
1,484
898
58
2,440
129
2,438
2,567
5,007
2,438
2,727
5,007
99
137
18
254
16
-
16
270
-
545
545
54
112
18
184
15
-
15
199
-
199
199
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 2019 was 66 days (2018: 27 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 2019 £1,243,000 (2018: £1,393,000)
of payables were denominated in US dollars, £16,000
(2018: Nil) were denominated in Euros and £22,000
(2018: Nil) were denominated in Sierra Leone Leones.
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25. 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 2019
Group 2018
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
Effect of assets / liabilities acquired
Net finance costs
Disposal & adjustment of fixed assets
Loss on disposal of
non-financial assets
Non-cash accounting for CLN & CULN
Increase in deferred tax asset
Share-based payment expenses
Total adjustments
215
2
620
2
-
35
(18)
556
1,412
-
-
-
-
-
-
-
-
-
215
2
620
2
-
35
(18)
556
1,412
150
(303)
330
-
2
75
-
273
491
(170)
(20)
-
-
-
-
-
-
-
(170)
(303)
330
-
2
75
-
273
321
Group 2019
Group 2018
Continuing
Operations
Discontinued
Operations
Total
Continuing
Operations
Discontinued
Operations
Total
£’000
£’000
£’000
£’000
£’000
£’000
Net changes in working capital:
(Decrease) / increase in inventories
(Decrease) / increase in trade and other
receivables
(Decrease) / increase in contract liabilities
(Decrease) / increase in trade and other
payables
Decrease in liabilities of disposal group
classified as held for sale
Total changes in working capital
27
2,050
(2,365)
(113)
-
(401)
Adjustments:
Depreciation, amortisation and impairment of non-financial assets
Finance costs
Non-cash accounting for CULN
Share-based payment expenses
Non-cash movement in intercompany balances
Other non-cash items
Total adjustments
27
(35)
2,050
(3,923)
-
-
-
-
(2,365)
(113)
(151)
(151)
(151)
(552)
2,438
1,328
-
(192)
-
-
-
-
-
-
(35)
(3,923)
2,438
1,328
-
(192)
Company
2019
Company
2018
£'000
£'000
90
458
(90)
556
108
(18)
1,104
67
296
(31)
237
(412)
(75)
82
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
95
Financial Statements
Notes to the
Financial Statements
Net changes in working capital:
(Increase) / decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Total changes in working capital
Company
2019
Company
2018
£'000
£'000
(43)
71
(28)
15
84
99
26. CONTINGENT ASSETS AND CONTINGENT
LIABILITIES
There are no material assets and contingent liabilities
(2018: Nil).
27. 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 and US
dollar. 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 2019
31 December 2019
Financial assets
Financial liabilities
Total exposure
Group 2018
31 December 2018
Financial assets
Financial liabilities
Total exposure
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| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Short-term
exposure
USD
Short-term
exposure
EUR
Short-term
exposure
SLL
£'000
£'000
£'000
510
(1,243)
(733)
-
(16)
(16)
-
(22)
(22)
Short-term
exposure
USD
Short-term
exposure
EUR
Short-term
exposure
SLL
£'000
£'000
£'000
3,708
(1,393)
2,315
-
-
-
-
-
-
If the US dollar were to depreciate by 10% relative to
its year end rate, this would cause a gain of profits in
2019 of £81,000 (2018: £376,000 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
The main borrowings of the Group are the convertible
loans and are detailed in note 16. All have fixed interest
rates. Interest on the cash holdings of the Group
and “other” loans noted in note 23 is not material and
therefore no calculation of interest rate sensitivity have
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 19 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 2019, the Group’s financial
liabilities have contractual maturities (including interest
payments where applicable) as summarised below:
2019
2018 Restated
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
-
2,456
2,456
-
270
270
2,233
-
2,233
-
-
-
179
-
179
179
-
179
-
2,569
2,569
-
199
199
2,216
-
2,216
-
-
-
171
-
171
171
-
171
Group
Convertible loans
Trade and other payables
Total
Company
Convertible loans
Trade and other payables
Total
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
97
Financial Statements
Notes to the
Financial Statements
28. DISCONTINUED OPERATIONS
At 30 September 2017 the Group took the decision to
dispose of its ferry operation in Sierra Leone, from this
date the operation together with the related finance
obligations was being actively marketed for sale, and
therefore has been reclassified as a disposal group
held for sale within the financial statements.
A discontinued operation is a component of the
Group’s activities that is distinguishable by reference
Profit / (loss) for the year from discontinued operations
Revenue
Cost of sales
Gross profit
Administration expenses
Operating loss from discontinued activities before taxation
Income tax expense
Loss from discontinued ordinary activities after taxation
Earnings per share relating to the discontinued operations
Cash flows relating to the discontinued operation are as follows:
Operating cash flows
29. DISPOSAL GROUPS HELD FOR SALE
At 30 September 2017 the Group took the decision to
dispose of its ferry operation in Sierra Leone, from this
date the operation together with the related finance
obligations was being actively marketed for sale, and
therefore has been reclassified as a disposal group
Assets held for sale:
Tangible fixed assets at cost
Accumulated depreciation
Intangible assets at cost
Accumulated amortisation
Assets held for sale
Related liabilities:
Accruals
Trade payables
Liabilities directly associated with assets classified as held for sale
98
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
to geographical area or line of business that is held
for sale, has been disposed of or discontinued,
or is a subsidiary acquired exclusively with a view
to resale. When an operation is classified as
discontinued, the comparative statement of
comprehensive income is re-presented as if the
operation had been discontinued from the start
of the comparative period.
2019
£'000
-
-
-
28
28
-
28
2018
£'000
-
-
-
149
149
-
149
0.02p
0.11p
28
149
held for sale within the financial statements. On this
date the Group impaired the assets of the disposal
group to nil. Details of the assets and liabilities held
for sale are as follows:
2019
£'000
2,820
(2,650)
-
-
170
-
-
-
2018
£'000
2,820
(2,650)
32
(32)
170
(148)
(3)
(151)
The accounting estimates made at the end of 2017
proved to be too prudent, in 2018 therefore it was
estimated that the net realisable amount was likely to
be around £170,000. This decision was reviewed again
at the end of 2019 and in the light of the sale, which
was accounted for in February 2020, £170,000 was
considered to remain the fair value of the Sierra Queen
however because commitments such as repair and
surrender of the terminals was completed in the year,
these were utilised.
The amounts recognised in respect of
the identifiable assets acquired and
liabilities assumed
Purchase of shares in Euro-Ops SRL
Financial assets
Inventory
Property, plant and equipment
Identifiable tangible assets
30. ACQUISITION OF SUBSIDIARY
On 30 April 2019 Westminster Group plc acquired
100% of the shares of Euro Ops SRL along with the
business and assets of Euro Ops International SRL.
Euro Ops is a French based aviation security and
support services company which, through its sister
company, Euro Ops International (also trading as
ICare), provides aviation support services such as
Airport Security, Aircrew Management, Humanitarian
Logistics, Operations & Dispatch, Ground Handling
etc. The business operates primarily in emerging
markets particularly in Francophone Africa providing
humanitarian assignments and is responsible for
sending teams all over the world to assist the UN
and NGO’s.
The fair value of the financial assets includes
receivables – Trade Debtors was nil.
Financial liabilities
Contingent liability
Total identifiable assets
Goodwill
Total consideration
Satisfied by:
Cash
Total consideration
Net cash inflow arising on Acquisition
Cash consideration
Cash outflow on acquisition
Acquisition-related costs (including administrative
expenses) amounted to £10,000.
Purchase of business & assets of
Euro-Ops International SRL
Euro Ops contributed £139,000 revenue and a loss of
£21,000 to the Group’s profit for the period between
the date of acquisition and the balance sheet date.
If the acquisition of Euro Ops had been completed
on the first day of the financial year, Group revenues
for the year would have been £11,098,000 and the
Group loss would have been (£1,438,000).
Financial assets
Inventory
Property, plant and equipment
Identifiable tangible assets
Financial liabilities
Contingent liability
Total identifiable assets
Goodwill
Total consideration
Satisfied by:
Cash
Total consideration
If the acquisition of Euro Ops
had been completed on the first
day of the financial year, Group
revenues for the year would
have been £11,098,000.
Net cash inflow arising on Acquisition
Cash consideration
Cash outflow on acquisition
£’000
-
-
-
-
(2)
-
(2)
9
7
7
7
(7)
(7)
-
-
-
-
-
-
-
9
9
9
9
(9)
(9)
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
99
Financial Statements
Notes to the
Financial Statements
31. 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.
The remuneration of the Directors, who are the key
management personnel of the Group is set out in the
Remuneration Committee report on pages 52 - 56 as
details of pension contributions for Directors.
In the year to 31 December 2019 fees and expenses
of £16,180 plus VAT were accrued to Cattaneo LLP
a Limited Liability Partnership under the control of
Charles Cattaneo. On the 31 December 2019 Cattaneo
LLP was owed £1,600 including VAT.
Certain members of the Fowler family, other than
directors, have been employed by the Group on normal
arms-length terms for between 10 and 22 years. Their
remuneration, in aggregate, for the year ended 31
December 2019 was £171,659 (2018: £166,250).
In 2019, up to his resignation from the board Mr James
Sutcliff was paid no consultancy fees and expenses
through his service company JSS Consultants Limited.
(2018: £23,119).
In the year to 31 December 2018, prior to his being
appointed as a director, Mr Mark L W Hughes received
consultancy fees and expenses through his service
company MLWH Limited. A total of £17,901 was paid to
this company. There were no such fees in 2019.
32. EVENTS AFTER THE REPORTING PERIOD
On 22 January 2020 the Company has entered into
a £3.0m Mezzanine Loan Facility and issued £1.75m
(14m shares at 12½p) Equity Placing and Sharing
Agreement (together the “Financing Facility”) with
RiverFort Global Opportunities PCC and YA II PN Ltd.
(together the “Investor”) which is being used to repay
its existing £2.245m Convertible Secured Loan Notes
and to provide additional financing if required.
The Financing Facility will provide the Company
with a £3m Mezzanine Loan Facility which may be
drawn down in tranches, each repayable over
18 months, together with monthly cash inflows
under the Equity Placing and Sharing Agreement,
based on the Company’s share price performance,
which will go towards the monthly repayment costs of
the loan. £1.5m was drawn down on 22 January 2019.
The Company has the right, at its sole discretion, to
draw down up to a further £1.5m at any time in the
following 24 months, subject to certain conditions.
100
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
The Group has
implemented logistical and
organisational changes to
consolidate the Group’s
resilience to COVID-19.
Separately under the Equity Placing and Sharing
Agreement (“EPSA”) the Investor subscribed £1.75m
(“Subscription Amount”) for ordinary shares in the
Company at a price of 12½p per ordinary share
(“Subscription Shares”) on deferred payment terms.
The Investor will have the right to sell the Subscription
Shares, subject to certain volume restrictions, over
a 12-month period, extendable to 24 months at the
Investor’s discretion. Under the EPSA the Investor
and its affiliates are prohibited from holding any short
position in or to forward or short sell Westminster
shares. The Investor may elect to convert the balance,
if any, of the remaining Mezzanine Loan into ordinary
shares of 14.54p once all the Subscription Shares
have been sold. The Investor has also agreed that
Subscription Shares may be sold to any third party
introduced by Westminster, individually or as part of
a future fundraising.
The Company has also agreed to issue to the Investor
3,499,222 warrants at 14.54p, being a premium of
34% to the closing price of 10.85p on 21 January
2020, that can be exercised between 6 and 48 months
from issue.
On 22 January 2020 the Group announced that it had
commenced a staged redemption programme of the
Company’s existing £2.245m Convertible Secured
Loan Notes (“CSLNs”). The CLSNs, initially issued
on 19 June 2013, were amended as outlined in our
announcement on 22 May 2019 and carry a 15%
coupon and from 31 December 2019 holders may
elect to convert their CSLNs at 10p per share in place
of cash redemption. The May 2019 amendments also
allow the Company to redeem the CSLNs in whole
or in part at any time before the maturity date without
restriction or penalty.
COVID-19 may impact the Group in varying ways
and could lead to downward pressure on the level of
revenues recognised. The Group has implemented
logistical and organisational changes to consolidate
the Group’s resilience to COVID-19, with the key focus
on product sales, which have seen a marked increase
since the outbreak of the pandemic.
As at the Balance Sheet date of 31 December 2019,
the enacted corporation tax rate to apply from 1 April
2020 was 17%, so that rate has been applied to the
deferred tax asset on losses. On 17 March 2020,
the change to 17% was reversed, such that the 19%
was substantively enacted to continue to apply from
1 April 2020.
On 22 February 2020 the Group reduced in its debt
position and reduction in financing costs by repaying or
converting £561,250 worth of its Convertible Secured
Loan Notes (“CSLN”). The Convertible Loan Notes
holders to the value of £6,250 elected to convert into
62,500 shares, £555,000 were redeemed for cash.
In February 2020 the Group shipped the Sierra Queen
and was able to recognise the sale under IFRS 15 in
that month.
On 30 March 2020 the Group extended the maturity
date for the Convertible Secured Loan Notes, noted
above, to 1 May 2021. The Company may redeem
the whole or any part of the CLN holding at any time
without restriction or penalty.
As detailed in the Chief Executive Officer’s Report,
pages 8 to 16, the Group has been affected the
ongoing COVID-19 pandemic. The duration of the
outbreak and its impact to global trade cannot be
accurately determined at the current date.
ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
|
101
Company
Information
Directors
Executive
Sir Tony Baldry (Chairman)
Peter Fowler
Mark Hughes
Stuart Fowler
Registered office
Westminster House
Blacklocks Hill
Banbury
Oxfordshire
OX17 2BS
Nominated adviser &
Stockbroker
SP Angel Corporate Finance LLP
Prince Frederick House
35-39 Maddox Street
London
W1S 2PP
Solicitors
Spratt Endicott Solicitors LLP
Linden House
55 The Green
South Bar Street
Banbury
OX16 9AB
Non-Executives
Lady Patricia Lewis
Charles Cattaneo
J Mawuli Ababio
Principal bankers
Lloyds Bank Plc
12 High Street
Banbury
Oxfordshire
OX16 5EF
Financial public
relations
Walbrook PR
4 Lombard Street
London
EC3V 9HD
Bird & Bird LLP
12 New Fetter Lane
London
EC4A 1JP
Company Secretary
Roger Worrall
Registrars
Link Asset Services
6th Floor
65 Gresham Street
London
EC2V 7NQ
Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Telephone
Email
Westminster Group Plc
+44 (0) 1295 756300
info@wg-plc.com
Westminster International Ltd
+44 (0) 1295 756300
info@wi-ltd.com
Westminster Aviation Security Services Ltd
+44 (0) 1295 756300
info@wass-plc.com
Keyguard U.K Ltd
+44 (0) 8452 572081
info@keyguarduklimited.co.uk
Longmoor Security Ltd
+44 (0) 1295 756380
info@longmoor-security.com
Euro-Ops
+33 (0) 6 08 07 09 25
ops@euro-ops.net
GLIS Gesellschaft für Luftfahrt -
und Infrastruktur Sicherheit GmbH
+49 8051 93 904 50
info@glis.eu
102
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Westminster Group plc
Westminster House
Blacklocks Hill
Banbury
Oxfordshire
OX17 2BS
United Kingdom
www.wsg-corporate.com