Annual
Report
and Financial Statements
2020
Worldwide world class protection
About Westminster
The Westminster
Group is a global
security and managed
services group
“Westminster believes
all citizens of the
world have the right
to personal safety
and security.”
MISSION STATEMENT
Annual report
Contents
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
Company Information
02
04
06
08
18
22
28
34
36
48
54
56
60
62
64
68
69
70
72
73
74
75
114
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
1
The years
Highlights
91%
274%
of 2019 revenue despite Covid-19
increase in equity
43%
225%
reduction in loss after tax
increase in containers scanned
32%
239
increase in average orders per month
staff worldwide
2
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Operational
Financial
• Successfully navigated Covid-19 largely due to
the Company’s multiple revenue stream business
model and early action by management. Both
Technology and Services Divisions, delivered
a robust performance.
• Strong and profitable H1 performance delivering
24% increase over H1 2019, although H2 was more
challenging due to travel restrictions.
• Travel restrictions and airport closures materially
affected our airport managed services, training and
guarding business but was offset by growth in product
sales and port services.
• Supplied products and solutions to 78 (2019:66)
countries across the world.
• Successfully completed a $665,000 contract to
supply screening and safety equipment to a global
investment management company’s 85 offices in
37 countries around the world.
• Secured a £1.5 million, 5-year contract to provide
security screening equipment and other services to
the Palace of Westminster (informally known as the
UK Houses of Parliament).
• Despite material impact from Covid-19 still a
chieved revenues of £10.0m (2019: £10.9m).
• Loss after tax improves to £0.7m (2019: loss
of £1.3m*).
• Repaid both Convertible Loan Notes and
RiverFort Loan out of £5m placing undertaken
in December 2020.
• Total Equity / Net Assets grows from £1.9m in
2019 to £7.1m in 2020.
Post Period End
• Commenced year debt free.
• Despite continued disruption from Covid-19
encouraging start to the year.
• Recovery of West African Airport operations ahead
of expectations.
• Port operations performing well.
• New training contracts indicating recovery in
training business.
• Commenced work on Palace of Westminster project
• Secured £750,000 3-year guarding contract for one
(delayed from 2020).
of the UK’s leading housebuilders.
• All large-scale project opportunities remain live,
• Successfully completed a contract at short notice to
repatriate 80 NGO staff stranded in Africa.
including African airport projects, despite timing delays
due to travel restrictions and other disruption.
• Signed strategic alliance with JP International Training.
• Enquiry levels remain healthy.
• Launched new group wide website.
• Launched new on-line training catalogue.
• Launched a UK focussed TV ‘Get Back to Work
Safely’ advertising campaign.
• Westminster’s aviation security training operations
was graded as ‘Outstanding’ in all areas audited by
UK Civil Aviation Authority (CAA).
• Implemented new working practices to keep all our
employees safe during Covid-19 and maintained
full employment utilising the furlough scheme
where appropriate.
• Recognised by the London Stock Exchange as one
of the select 1000 Companies to Inspire Britain.
• Outstanding achievement in international trade
recognised by a Queen’s Award for Enterprise for
International Trade.
“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.”
VISION STATEMENT
* restated refer Chief Financial Officer’s Report and note 31
ANNUAL REPORT 2020
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
| WESTMINSTER GROUP PLC
|
|
3
3
Westminster Group PLC
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.
78 50+
countries in 2020
agents and offices
Divisional Revenue Split (£’000)
Managed Services
(4,357)
Technology Services
(5,588)
Geographical Revenue Split (£’000)
UK & Europe
(2,056)
Africa
(4,172)
Middle East
(508)
Rest of World
(3,209)
4
| ANNUAL REPORT 2019
| WESTMINSTER GROUP PLC
Westminster
Around the world
Worldwide world class protection
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
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
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
5
Strategic report
Chairman’s
Statement
Overview
I am pleased to present the Westminster Group PLC.
Final Results for the year ended 31 December 2020
in which the Group has delivered a reasonably
strong performance despite the challenges of the
Covid-19 pandemic.
2020 has been dominated by Covid-19 which was
declared a global pandemic in March 2020 creating
a worldwide healthcare crisis with tens of millions of
citizens infected and a tragic loss 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 seen in a generation.
We are a business which operates internationally with
staff around the world, and we are heavily involved in
international travel, as such we are not immune to the
impact of the global disruption caused by the pandemic.
Rt. Hon Sir Tony Baldry DL
Chairman
“We have delivered a good
trading result with circa
£10m in revenues and a
substantially improved
loss after tax of £0.7m
(2019: £1.3m*).”
I am therefore proud of the way in which we have
successfully navigated the crisis which is due in no small
part to the agility and foresight of our management team
in taking early action, together with the strength of our
multi-revenue stream business model.
Revenue Growth
0
0
0
£
’
6,668
5,396
4,406
3,359
10,889
10,000
I am pleased to report therefore that despite all of the
challenges we have delivered a good trading result with
circa £10m in revenues and a substantially improved
loss after tax of £0.7m (2019: £1.3m*).
At the time of writing Covid-19 is still impacting the global
economy and many travel restrictions remain in place
and therefore there is still uncertainty and challenges for
businesses as we enter 2021. However, with vaccination
programmes being successfully rolled out around the
world and new cases of the virus declining there is cause
for optimism. In addition, due to the successful £5m
fundraise that we completed in December 2020, we
enter 2021 debt free, having repaid all our Loan Notes
and the RiverFort debt, and so are now in a much
stronger financial position to deal with the challenges
and to fund our current and anticipated contracts.
2015
2016
2017
2018
2019
2020
* Restated, refer to Chief Financial Officer report and Note 31
^ This is an Alternative Performance Measure refer to Note 2 for further details
6
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
I am proud of our achievements for 2020, particularly
against a backdrop of the global pandemic, which is
a testament to the hard work and dedication of all our
staff and I am therefore delighted that our achievements
have been recognised by a Queen’s Award for Enterprise
for International Trade. This prestigious award is
recognised worldwide and is an indication of the
growth and momentum we are achieving with our
world-wide business.
“We have successfully
navigated the crisis which
is due in no small part to
the agility and foresight
of our management team
in taking early action,
together with the strength
of our multi-revenue
stream business model.”
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.
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 business provide in many of the regions in
which we operate, and I would like to pay tribute to
our employees and other individuals and organisations
for their generous support and contributions to our
registered charity, the Westminster Group Foundation.
We work with local partners and other established
charities to provide goods or services for the relief of
poverty or advancement of education or healthcare
making a difference to the lives of the local communities
in which we operate. For more information or to donate
please visit www.wg-foundation.org.
Employees and Board
Our overriding priority however is and has been the safety
and wellbeing of our people around the world and to
continue to provide a valuable service to our customers.
To those ends we put in place various precautionary
measures, including cost reduction and are undertaking
regular risk assessments for all areas of our business and
have put in place processes and safe working practices,
with a number of employees working from home. We
also utilised the UK furlough scheme where appropriate.
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 2020 and the way in
which they have risen to the challenges and opportunities
presented by Covid-19.
We have not made any changes to the Board in 2020.
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.
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.
Rt. Hon Sir Tony Baldry DL
Chairman
29 April 2021
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
7
Strategic report
Chief
Executive
Officer’s
Report
Business Description
The Westminster Group is a global integrated security
services company delivering niche security solutions
and long-term managed services to high growth and
emerging markets around the world, with a particular
focus on long term recurring revenue business.
Our target customer base is primarily governments and
governmental agencies, critical infrastructure (such as
airports, ports & harbours, borders and power plants),
and large-scale commercial organisations worldwide.
We deliver our wide range of Land, Sea and Air solutions
and services through a number of operating companies
that are currently structured into two operating divisions;
Services and Technology; both primarily focused on
international business as follows:
Services Division
Focusing on long term (typically 10 – 25 years)
recurring revenue managed services contracts such
as the management and operation of security solutions
in airports, ports and other such facilities, together
with the provision of manpower, consultancy and
training services.
Technology Division
Focussing on providing advanced technology led
security solutions encompassing a wide range of
surveillance, detection, tracking, screening and
interception technologies to governments and
organisations worldwide.
In addition to providing our business with a broad
range of opportunities, these two divisions offer cost
effective dynamics and vertical integration with the
Technology Division providing vital infrastructure and
complex technology solutions and expertise to the
Services Division. This reduces both supplier exposure
and cost and provides us with increasing purchasing
power. Our Services Division provides a long-term
business platform to deliver other cost-effective
incremental services from the Group.
* Restated, refer to Chief Financial Officer report and Note 31
^ This is an Alternative Performance Measure refer to Note 2 for further details
8
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Peter Fowler
Chief Executive Officer
We have a successful track record of delivering a
wide range of solutions to governments and blue-chip
organisations around the world. Our reputation grows
with each new contract delivered - this in turn underpins
our strong brand and provides a platform from which we
can expand our business.
Overview
A defining aspect of 2020 has been the global impact of
Covid-19 and I am pleased to report that, despite parts
of our business being adversely impacted by lockdowns
and travel restrictions, the strength of our business
model, with multiple revenue streams from multiple
sources around the world, together with our global
footprint has meant that we were better placed than
many companies to deal with the numerous challenges
created by the Pandemic.
“We commenced 2020
on a positive note, with
visibility over circa £8m
of annual recurring
revenues from our
long-term managed
services, guarding and
maintenance contracts.”
We commenced 2020 on a positive note, with visibility
over circa £8m of annual recurring revenues from our
long-term managed services, guarding and maintenance
contracts. Our managed services contracts were
running at record levels, we had a healthy backlog of
work in hand, our product sales, guarding and training
businesses were all operating successfully, and we had
positive momentum with a number of our major business
development activities. In short, we were on course to
continue our year-on-year revenue growth and to deliver
healthy post tax profits.
However, as an international business we regularly
monitor global activities for issues that may affect our
business and in early January we had identified the
potential threats and opportunities from the Covid-19
outbreak, long before it was declared a pandemic. We
took early steps accordingly to mitigate any adverse
impact and to maximise opportunities including
restructuring our operations to maintain services and
keep our people safe, increased targeted marketing and
significantly increasing our stockholding of products
such as fever screening equipment, in order to deal
with expected demand. These measures were to prove
invaluable as the Covid-19 crisis unfolded and logistics
became challenging.
Given the worldwide impact of Covid-19, 2020 has
been a challenging year but a year in which we have
still achieved a number of successes to move our
business forward and I am proud of how our staff
have pulled together and how we have managed to
navigate the crisis.
We have kept our people safe, employed and maintained
our global operations, albeit some on reduced levels.
We have continued to deliver on business opportunities
and in 2020 we have supplied goods and service to
78 countries around the world, including some notable
contract wins despite the challenges from Covid-19.
We have continued to invest in our worldwide business
development programmes in order to deliver on our
growth potential, particularly in our long-term major
managed services projects. Despite the challenges and
impact of Covid-19 and travel restrictions resulting in a
material loss of revenue in our Services business as well
as much of our H2 order intake moving to 2021 we have
still delivered a result largely in line with expectations with
circa £10m in revenues and substantially improved loss
after tax of £0.7m (2019: £1.3m*).
I am delighted therefore that all our hard work, efforts
and achievements have not only resulted in Westminster
being recognised by the London Stock Exchange in
November 2020 as one of the select 1000 Companies to
Inspire Britain but more importantly, as announced on 29
April 2021, Her Majesty The Queen approved the Prime
Minister’s recommendation that Westminster should
receive a Queen’s Award for Enterprise for International
Trade, which is a huge accolade for our business.
Business review
Despite the challenges presented by Covid-19 in
2020 both of our divisions, Technology and Services,
delivered a robust performance. The Technology Division
increased revenues by 4% to £5.6m (2019: £5.4m)
mainly due to strong product sales. The Services Division
still delivered revenues of £4.4m (2019: £5.5m) despite
the fact our training, guarding and airport operations
were heavily impacted by Covid-19 travel restrictions and
lockdowns. It was however a year of two halves.
H1 2020 was very successful, delivering a 24% increase
over H1 2019 revenues, continuing our four years of
double-digit % revenue growth, and resulting in a pre-tax
profit of circa £230k. This, in part, was due to record
revenues from our West African airport operations for
the first two months of the year, the delivery of the 2nd
Asian port scanner (secured in 2019), a successful
campaign around Covid-19 sales resulting in a surge of
product sales, a significant contract for a global financial
institution worth $665k supplying fever screening to their
85 offices in 37 countries and of course an increasing
contribution from Ghana.
“H1 2020 was very successful,
delivering a 24% increase over
H1 2019 revenues, continuing
our four years of double-
digit % revenue growth, and
resulting in a pre-tax profit of
circa £230k.”
H2 2020 was a more challenging period due to the
prolonged impact of Covid-19 lockdowns and travel
restrictions. Our West African airport operations were
completely closed for several months, reopening at
the end of July 2020 with significantly reduced traffic
volumes, even lower than we experienced during the
height of the Ebola crisis. I am pleased to report however
that we have seen a steady and sustained improvement
in passenger numbers towards the end of the year,
which is encouraging for 2021. Our training and guarding
operations were heavily impacted throughout H2 and the
spike in Covid-19 related sales we saw in H1 dwindled
as companies retrenched and reduced spending due
to uncertainty. Ghana continued to show increasing
revenues making a healthy contribution.
2020 was a busy year. In addition to dealing with the
many challenges caused by the Covid-19 pandemic we
still managed to expand our operations, instigate new
strategies to grow and protect our business, and to
secure important new business, supplying goods and
services to 78 countries around the world, including
some notable contract wins.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
9
Strategic report
Chief Executive Officer’s Report
An example of just some of the many activities
and initiatives we undertook throughout the year
are as follows:
In January 2020 we entered into and announced a
£3.0m Mezzanine Loan Facility with RiverFort Global
Opportunities PCC and YA II PN Ltd. of which we drew
down £1.5m for the purposes of commencing repayment
of our existing £2.245m Convertible Secured Loan
Notes (CSLNs) and to provide additional financing if
required. We duly commenced the staged redemption
of the CSLNs in February 2020 repaying the first 25%).
However, given the growing global impact of Covid-19
we subsequently decided to conserve funds to deal
with the uncertainties arising from the pandemic and
in March 2020 agreed with noteholders to extend the
CSLNs redemption date until May 2021 (these were
subsequently repaid in full in December 2020).
In February 2020 just before travel restrictions were
imposed, we manged to deliver and subsequently receive
payment for the final container screening equipment unit
to a second port in Asia as part of the $3.4 million USD
contract secured in 2019. Installation of the unit and
collection of the installation fee of USD $0.18 million
will be finalised once we are able to travel and gain
access to the country.
In March 2020 we announced the main contract relating
to the container screening project at the $1.5 billion
container port expansion project in Tema Port, Ghana,
which Westminster has been operating since July 2019,
was finally signed between Meridian Port Services and
Scanport, confirming Westminster as the Technical
Partner for the duration of the 5-year renewable contract
term. It is pleasing to report that the operation has largely
been unaffected by Covid-19 and continued to generate
healthy revenues throughout the year, even during the
country’s lockdown period, which demonstrates the
value of this long-term managed services contract.
Under contract, Westminster and our local partners,
Scanport, are responsible for the screening of containers
passing through the port, with Westminster responsible
for technical management and operations and Scanport
being responsible for local management, costs and
employment. Revenues are generated by a container
screening fee which is shared between the port operator,
Scanport and Westminster.
In 2020 the project has generated $2.57 million USD
revenues for Westminster, and we expect this to continue
to rise as the fourth berth comes on stream later in 2021.
The project therefore has significant growth potential as
the port builds capacity.
In May 2020 we secured a contract to provide a leading
global investment management corporation with a range
10
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
of fever screening and safety equipment for deployment
to its worldwide offices as part of its ‘Return to Work’
programme. The contract, valued at c.US$665,000,
includes the provision of a range of fever screening
systems covering different applications together with
sanitisation stations to 85 offices in 37 countries around
the world. Given the logistical issues around deployment
and shipping caused by Covid-19 I am pleased to report
we successfully completed this project on time and to
budget.
In June 2020 our training business, which earlier in the
year had been graded as ‘Outstanding’ in all areas by
UK Civil Aviation Authority (CAA),signed a new strategic
alliance agreement with JP International Training Limited,
a leading aviation, maritime, and commercial training
organisation, extending our e-Learning platforms and
further enhancing our e-product services. Non-contact
distance learning is now a growing sector and has been
accelerated by the current pandemic and this alliance will
provide clients with access to industry-leading distance
training, delivered at our clients’ own pace and tailored to
enhance their employee’s knowledge, skills and ability,
so they may carry out their roles effectively.
“Non-contact distance
learning is now a growing
sector and has been
accelerated by the
current pandemic.”
In June we also announced that we had conducted
a successful trial of our fever screening solutions in
association with Menzies Aviation and their client, Air
France, at Stockholm Arlanda Airport. Both Menzies and
their clients were impressed with the versatility of the
system, adapting to different challenges and processes
within the airport environment and it was expected that
this would result in joint business opportunities with
Menzies Aviation offering the Westminster solution to
their global clients as part of their wider commercial
package. The continued travel restrictions and challenges
facing airports has meant this potential roll out is yet to
happen although airports are now more likely to focus on
sanitisation systems, which Westminster offer, rather than
fever screening. The joint initiative with Menzies Aviation
however has now led to other potential and sizeable
business opportunities we are jointly pursuing.
“In March 2020 we announced
the main contract relating to
the container screening project
at the $1.5 billion container
port expansion project in Tema
Port, Ghana.”
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
11
Strategic report
Chief Executive Officer’s Report
In July 2020, operations at our West African Airport once
again opened up for commercial flights having been
closed to all but essential traffic since March 2020 due
to Covid-19 travel restrictions. Initial traffic volumes on
re-opening were heavily impacted, worse than at the
height of the Ebola, crisis but I am pleased to report
that numbers slowly returned over the latter part of the
year and we expect the recovery to continue throughout
2021 but to not fully return to pre-covid levels until 2022.
I am proud to report that during the closed period we
continued to maintain security of the airport, kept all of
our local staff employed and safe, utilising the time to
enhance their training. Maintaining the livelihoods of our
local staff and their families during these challenging
times is important given the lack of any social safety net.
In addition to ensuring all our staff remained safe and
well during these challenging times we also, through
the Westminster Group Foundation, supported the local
community with much needed aid including a large
quantity of stable commodities such as rice, sugar and
water to the poor and disabled community in the Lungi
area of Sierra Leone who were suffering financially
through the closure of the airport and services.
“In August 2020 we
announced the launch of our
online training catalogue.”
In August 2020 we announced the launch of our online
training catalogue as part of our initiative to expand
non-contact sales through Computer Based Training
platforms, for which demand is growing and we
expect this trend to continue in the wake of the current
pandemic and associated travel restrictions. Westminster
has been providing training solutions to various sectors,
including aviation and security, around the world for
over 10 years, increasing its capabilities through various
acquisitions and joint ventures. The recent strategic
alliance agreement with JP International Training Limited
further expands our capabilities in this respect. Our
training business continues to be an important part of our
growth strategy and the quality of our training services is
widely respected. An example of this is that in a recent
audit of training companies by the UK Civil Aviation
Authority, Westminster was graded as ‘Outstanding’
in all areas audited, quite an accolade.
In September 2020 we were awarded a long-term
contract to replace and maintain the security screening
equipment at the Palace of Westminster, informally
known as the Houses of Parliament, together with the
provision of other confidential ancillary services.
12
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
The £1.8 million contract is for an initial period of 5 years,
although this may be extended. This contract was
awarded after a lengthy tender process under which
Westminster was rated highest out of all bidders, both
technically and commercially. Securing this latest high-
profile contract is a testament to our agility, expertise
and professionalism.
In October 2020 as part of our One Company, One Vision
programme and to improve internal communication with
our staff and operations around the world, we launched
a new group wide newsletter - the ‘Westminster Wire’
which will be a quarterly publication to inform all our staff,
agents and partners about important or exciting news,
both business and social, from around the world.
During October we also successfully delivered and
installed a sanitisation tunnel to our West African Airport
operation to help keep staff and passengers safe.
Sanitisation is one of the key elements in the fight to
reduce the transmission of Covid-19. The tunnel has
been greatly received and will help increase stakeholder
and passenger confidence that FNA is a Covid-19 secure
environment thereby encouraging larger passenger
numbers through the airport.
The Director General of the Airport’s Civil Aviation
Authority described the provision of the sanitisation
tunnel as ‘A promise made, a promise delivered’, further
strengthening Westminster’s relationship with the airport
and local government.
In November 2020 we were proud to have been
recognised by the London Stock Exchange as one of
the select 1000 Companies across all sectors to Inspire
Britain 2020, especially in a challenging year so affected
by Covid-19. 2020 has been a difficult year for everyone
but our team continued to work hard and helped to
make Westminster stand out. There are approximately
4 million companies registered in UK, with some 500,000
new incorporations each year, so to be highlighted in the
1,000 most inspirational in UK is a great accolade and a
testament to the hard work and dedication of all our staff.
In December 2020 we appointed Strand Hanson Limited
as our Financial and Nominated Adviser and Arden
Partners plc as our Broker and with them undertook an
investor roadshow, culminating in an oversubscribed £5m
fundraise, which included a number of new institutional
holders. The £5m capital raise has enabled the Company
to repay its Convertible Loan Notes and the outstanding
RiverFort loan, saving some £300k annual costs, so
that we entered 2021 debt free, other than operating
leases, and with the capital reserves to deal with the
current global uncertainties and to undertake current
and anticipated new projects. The placing and a share
capital reorganisation were approved by shareholders
as announced on 21 December 2020.
All of this is in addition to a diverse range of products
and solutions, including Covid-19 related products such
as fever detection cameras, sanitising equipment and
PPE, which we successfully delivered to a wide range of
customers in 78 countries across 6 continents including
National Governments, Sports Stadia, Educational
Facilities, Conference/Exhibition Centres, Shopping
Malls, Financial Institutions, Hospitality Sector and
Medical Centres etc.
On a more general note our guarding business was
adversely impacted during 2020 due to the closure of
businesses and sites where we had guarding operations
around the country as a result of Covid-19. Encouragingly
however, we also secured new contracts in the year such
as the £1 billion Stanton Cross development project in
Northamptonshire and in December 2020 we secured
a contract with one of the UK’s leading home builders,
valued at over £750,000 over three years commencing
1 January 2021, for the provision of static and mobile
guarding and security services at one of their many
sites in the UK. HS2, which was given go ahead in
February 2020, is another opportunity for our guarding
business which we identified some time ago and have
already become a registered security provider to the
main contractors. With the UKs vaccination programme
advancing well and the end of lockdowns hopefully in
sight we anticipate a continued recovery and increase
in guarding revenues.
Our French business, Euro Ops which we acquired in
May 2019, is proving to be a valuable strategic addition
to the Group. The company provides aviation focussed
services such as humanitarian flights & logistics,
emergency flights, flight operations, charter and storage
management. An example of our ability to provide
emergency services in challenging locations is that in
July 2020 we successfully completed the emergency
repatriation of 80 stranded NGO staff, at short notice,
from Mali, West Africa. The Company has not only
brought new skills, services and revenues to the Group
but provides greatly improved access to Francophone
countries for the wider Group services, with some
interesting project opportunities being pursued. One
large scale opportunity in particular was developed to
advanced stages during 2020 although travel restrictions
have been a frustration and whilst there is never certainty
of timing or outcome, we are extremely optimistic on this
large-scale prospect.
As previously announced, we have entered into a
strategic joint venture with an influential company in
Saudi Arabia Hazar International, and had formed
Westminster Arabia, registered in Saudi Arabia. The
Kingdom is a huge potential market for Westminster
particularly given the Crown Prince’s 2030 vision which
offers opportunities for several of our Group services.
Whilst the final legalisation of documents for the company
were delayed by several months due to the closure of
governments and embassy offices, I am pleased to
report this process has at last been completed and we
look forward to Westminster Arabia being an important
part of our growth through 2021 and beyond.
“With the UKs vaccination
programme advancing well
and the end of lockdowns
hopefully in sight we
anticipate a continued
recovery and increase
in guarding revenues.”
An experienced business development team is in place
within the Kingdom and has been pursuing several
large-scale project opportunities whilst waiting for the
formation to be completed and various licences to
be put in place. One of several project opportunities
being pursued in the Kingdom is Saudi ports for which
we conducted detailed operational and vulnerability
assessments and have been appointed as an approved
contractor. Progress on such projects has been
hampered by Covid-19 travel restrictions in the Kingdom
however we anticipate these will ease in the near future.
Our German subsidiary, situated to the south east of
Munich, is focussed on supplying security technology
and solutions to the European market. Post Brexit the
business is particularly well positioned to serve the
Group’s EU clients. The team also has a specific focus
on developing the Group’s managed service contracts
in frontier markets, including large projects in south west
Africa and west Asia. In 2020 our German office supplied
and installed advanced scanning solutions to an army
garrison in Stuttgart, as well as technology products to
organisations in the Baltic Regions.
The Technology opportunity pipeline is substantial
and growing as the business develops partnerships
with a number of larger businesses across Europe.
The Services side of the business is expected to gain
momentum in the coming year, particularly as the aviation
industry opens up again.
A key strategy for 2020 has been to redefine our
diverse businesses in line with our ‘One Company,
One Vision’ approach which involved rebranding parts
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
13
Strategic report
Chief Executive Officer’s Report
of our business to better reflect the global Westminster
brand. To those ends we have implemented several
new initiatives.
In June 2020 we launched the first phase of the new
Westminster website. The website has been designed
to ensure the visitor journey throughout the site is an
informative interaction with the Westminster Group
and its strong and trusted brand. With this upgrade we
operate one of the world’s largest security websites
which is still a work in progress with more content and
applications constantly being added. The other Group
websites are in the process of being migrated. The new
website brings better focus on the Group’s vast range of
LAND, SEA & AIR products and solutions, and will in due
course encompass a sophisticated e-commerce section
and enlarged customer and investor engagement areas.
In addition to the new website, a re-branding exercise
was completed with the Westminster Group logo being
modernised and aligned with tones and formats of the
new website.
During the summer of 2020 we launched a UK focussed
TV advertising campaign across a variety of channels,
with the theme ‘Get Back to Work Safely’. Whilst this
is principally targeted at generating sales, it is equally
designed to enhance brand awareness and the
expansion our UK client base. We have also expanded
our product base to not only include all levels of fever and
detection and associated equipment but also a range of
sanitisation products and systems to assist businesses
maintain compliance with social distancing requirements.
In view of the continued and prolonged impact of the
Covid-19 pandemic we continued to look for new
opportunities and initiatives that would be more resilient
to lockdowns and travel restrictions such as expanding
our online and non-contact sales opportunities. One
such initiative was the extension of our Covid-19 PPE
sales through medical vending machines. We 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 country. Whilst
we initially had success with this initiative, we surprisingly
experienced some reluctance from transport companies
about implementing PPE vending and this together with
the significant roll out of PPE masks etc., both good
and bad, being sold everywhere meant this initiative has
not yet produced any material revenues, although we
continue to receive enquiries for such systems. With face
covering likely to be an ongoing requirement for some
time this initiative may yet bear fruit.
On a wider front, despite all the challenges we have
faced this year, we have continued to progress various
existing and new large-scale managed services project
opportunities around the world which can and will
provide step changes in growth when secured. No
two opportunities are the same and each can have
their own idiosyncrasies and challenges. As we have
previously advised, project opportunities of this size
and nature, particularly in emerging markets, are not
only time-consuming and involve complex negotiations
with numerous commercial and political bodies but
discussions can ebb and flow over many months, with
periods of intense activity which can be followed by
long periods of inactivity. This has been particularly
the case in 2020 with the added disruption of the
Covid-19 pandemic. It is however precisely because
of such challenges that competition is limited and the
opportunities offer transformational growth opportunities.
Whilst there is never certainty as to timing or outcome
of the many project opportunities we are pursuing, we
are making progress on a number of fronts and we will
provide market updates on material developments when
appropriate and in line with our regulatory responsibilities.
In summary, despite the challenges created by Covid-19,
in in some case because of it, 2020 was a busy year
and a year in which, due to our early action and multiple
revenue stream business model, we managed to not only
navigate the crisis, maintain our operations and keep our
people safe but we continued to make progress on a
number of fronts. The 2020 results, although encouraging
given the pandemic would have been an even better If it
were not for the travel restrictions and lockdown periods
in the year which delayed the signing of some anticipated
contracts and the delivery of some already signed, such
as the Palace of Westminster. However, these delayed
opportunities and revenues whilst lost from 2020 will
now likely benefit 2021.
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.
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
14
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
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.
“The UK A key strategy for
2020 has been to redefine
our diverse businesses in
line with our ‘One Company,
One Vision’ approach.”
A key strategy for 2020 has been to redefine our diverse
businesses in line with our ‘One Company, One Vision’
approach which involved rebranding parts of our
business to better reflect the global Westminster brand.
Much of this was completed in 2020 including the launch
of a major new group wide website and marketing
material reflecting the Westminster brand.
Whilst we continue to pursue our many organic growth
opportunities the expansion strategy, we continue to
identify potential 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. As part of our growth strategy
the Board set out its priority goals to be delivered during
the year, although we did indicate the unpredictability
of the Covid-19 pandemic and the uncertainty of its
duration may impact the delivery of some of these
goals. In the event this proved to be the case and the
global uncertainty and travel restrictions together with
distractions governments and companies experienced
in dealing with the challenges did impact the delivery of
some of those goals, although the business did meet
many of its goals and continued to make progress on a
number of fronts.
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
Average Number of Orders Per Month
Number of Countries Supplied
Number of Return Customers
2020
£10.0m
40%
£4.5m
19
239
£16,264
2020
51
1,003
1,520
38,962
2020
356
54
78
70
2019
£10.9m
41%
£5.6m
38
261
£16,843
2019
121
309
4,040
70,671
2019
185
41
66
96
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
15
Strategic report
Chief Executive Officer’s Report
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.
Current Trading & Business Outlook
The outlook for 2021 is looking positive. We entered the
year debt free, other than minor operating leases. There
are encouraging signs the Covid-19 disruptions and travel
restrictions, which have continued to create delays and
challenges for the first few months of the year, are at
last easing and we expect to return to revenue growth
levels that we were experiencing pre-covid. Revenues
from existing contracts, including long-term managed
services, and the revenue slippage from 2020 together
with the anticipated recovery in our guarding, training
and West African Airport operations provide the basis
for our optimism, although we recognise that the global
outlook remains uncertain and subject to change with the
potential to further delay closure and delivery of projects.
We are encouraged to see an on-going improvement in
passenger numbers at our airport operations in West
Africa with the first quarter numbers being 13.84% ahead
of expectations and currently running at around 57% of
pre-covid levels, which is far better than many other parts
of the world. We expect to see a continuing improvement
throughout the year returning to full pre-covid numbers
in 2022.
Our Ghana port security operations continue to remain
largely unaffected by Covid and continue to generate
healthy revenues, which demonstrates the value of
this long-term managed services contract. In 2020 the
project generated circa $2.6 million USD of revenues for
Westminster, and we expect this to continue to rise as
the port expands capacity and the fourth berth comes
on stream later in 2021.
“Our Ghana port security
operations continue to
remain largely unaffected
by Covid and continue to
generate healthy revenues.”
Accordingly, the Board have set its key goals
for 2021 as:
1.
Improve ratio of enquiries received/
quotations issued by number and
quotations issued/orders received
by value;
2.
Increase product portfolio and sales
achieved;
3. Secure at least one more long-term
managed services contract;
4. Deliver a year of double-digit
revenue growth;
5. Deliver another year of significant
recurring revenue growth;
6. Deliver a material improvement in
profitability;
7. Deliver a sustained and material
improvement in our share price; and
8.
Instigate an Investors in People
programme.
Performance Indicators
Our 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 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.
16
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
“We continue to have
healthy levels of enquiries
and in the first few
months of the year have
supplied a wide range of
products and solutions to
clients worldwide.”
We continue to have healthy levels of enquiries and in
the first few months of the year have supplied a wide
range of products and solutions to clients worldwide.
With lockdown restrictions beginning to ease we can
also look forward to progressing with some of the
delayed projects and opportunities that slipped from
2020, such as the Palace of Westminster contract which
we secured in September 2020 and which commenced
operations in April 2021.
As Covid restrictions are easing we can also complete
the formation and licencing of Westminster Arabia and
we look forward to the business being an important
part of our growth through 2021 and beyond. The
Kingdom of Saudi Arabia is a potentially significant
market for Westminster particularly given the Crown
Prince’s 2030 vision which offers opportunities for
several of our Group services.
We have recently entered into an exclusive service
agreement with a company about to launch an innovative
and verified Covid testing service with UK government
approval, under which Westminster will provide a range
of specialist services. Whilst too early to assess the
likely scale or success of the project, this initiative could
potentially lead to interesting business developments in
what could be an important new service in helping to
open up the leisure and entertainment sector.
We are closely monitoring geo-political events with
regards to the US and Iran regarding the JCPOA
agreement. As reported in our 2018 Annual Report and
our 2019 interim Report we previously signed a 15 year,
€24 million per annum contract for airport security, with
the full support on the British Government, which was
put on hold when President Trump unilaterally withdrew
from JCPOA. Should circumstances change and US
and international sanctions, including banking, be lifted,
there remains an opportunity for our German office to
revisit this prospect.
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. At the time of our recent
fundraising in December 2020 we listed out some of
the larger project opportunities we are pursuing, which
remain in play, and we also announced that we were in
the advanced stages of securing a long-term contract
with the Government of an African country for the
provision of airport security managed services relating to
five airports in the country. Whilst in the current climate
we have, frustratingly, experienced delays in travelling
and finalising matters we remain excited by this near-term
prospect although there can never be absolute certainty
of outcome or timing.
I am proud of our achievements in recent years as we
continue to build our business, particularly in 2020
against a backdrop of the global pandemic, which is a
testament to the hard work and dedication of all our staff.
I am therefore delighted that in April 2021 Westminster
was selected for a Queen’s Award for Enterprise for
International Trade in recognition of its outstanding
growth in overseas sales and is one of just 205
organisations nationally to be awarded the prestigious
Queen’s Award for Enterprise. To have been selected
for this distinguished award is an honour, not just for the
Company but for all our employees around the world
who have contributed to this success.
The award will be formally
presented by the Lord Lieutenant
for Northamptonshire on behalf of
Her Majesty the Queen, at a
ceremony on Friday, 30 July 2021.
The business model and
opportunities we have been
developing over the years underpin
our confidence for the future growth of our business.
Notwithstanding the continued disruption and delays in
the first few months of 2021 we remain optimistic that
with restrictions beginning to be eased we can once
again return to double-digit revenue growth and whilst
there is still uncertainty in the world, we currently still
expect to meet 2021 financial year market expectations
both at the revenue and PBT level.
Peter Fowler
Chief Executive Officer
29 April 2021
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
17
Strategic report
Chief
Financial
Officer’s
Report
Revenue
Revenues of c£10.0m (2019 £10.9m) held up well
considering the unprecedented challenges of the
Covid-19 pandemic.
Services was resilient at £4.4m (2019: £5.5m). This
drop is primarily a combination of two factors. Firstly,
the effect of the Covid-19 pandemic (see also below),
primarily the closure and slow recovery of passenger
numbers at our West African Airport, reduction in
guarding due to lockdown in Keyguard and being unable
to run training courses in this period; all of these will
gradually come back to normal levels as the pandemic
recedes. However, secondly, this reduction was offset by
strong growth of our Tema Port Ghana operation which
screened over 1 million containers in 2020, its first full
year, over 3 times the number in 2019.
Technology revenues increased by 4% to £5.6m (2019:
£5.4m). This is primarily because strong fever detection
sales at the start of the pandemic offsetting a decline in
large solution sales and other product sales as a result
of the uncertainty the pandemic caused.
Mark L W Hughes
Chief Financial Officer
Gross Margin
Despite a reduction in in the higher margin Services
Division, overall better margin in the Technology Division
helped to maintain our Gross Margin at 40% (2019: 41%).
Part of the reason for the increase in the technology
gross margin is the lack of large solutions sales which
are typically at 15%. Thus, we had a better margin mix.
Operating Cost Base
Group administrative costs dropped by 11% to £4.7m
(2018: £5.3m) in total. When the pandemic began the
group made redundancies and other cost cuts. We
have taken advantage of the UK Government furlough
scheme, receiving £214,000 in 2020 (2019: Nil), to keep
employing key staff such as trainers who, whilst there is
no work for them due to lockdowns and other restrictions
Reconciliation to adjusted EBITDA
Loss from operations
Depreciation, amortisation and impairment charges
Reported EBITDA
Share based expense
Exceptional items
Adjusted EBITDA (loss) / profit
2020
£,000
(744)
225
(519)
-
-
(519)
2019
£,000
(676)
215
(461)
386
106
13
^ This is an Alternative Performance Measure refer to Note 2 for further details
18
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
imposed. Having these employees will be key to our
success in the recovery.
Exceptional Items
There is no exceptional item this year (2019: £0.1m).
The 2019 exceptional item is the pre contract costs on a
Middle East airport project. This project was fully shelved
in the first half of 2019. Those costs relate to the period
up to 30 June 2019.
Effect of Covid-19
Whilst Westminster has done better than many in the
Covid-19 epidemic due to its multi revenue stream
business model and early action taken by management
to plan for the crisis, there is no doubt that Covid-19
did have a significant impact on the business and the
performance in 2020 would have been substantially
better had the pandemic never happened.
For the Services Division, the closure of our West African
Airport, training being halted, guarding curtailed because
part of it related to hospitality venues and there was a
general decline of economic activity all had their effect.
We also would have expected to gain at least one large
managed services contract, had we been able to travel
freely in the period.
The Technology Division performed much better largely
due to the surge in product sales, not least around safety
and screening equipment, however the pandemic and
associated travel restriction not only delayed the closure
of a number of sizeable contracts but also prevented the
installation and deployment of those contracts already
signed – an example of which is the significant £1.8m
Palace of Westminster contract which was due to be
awarded in May 2020 and largely installed that year but
which finally got awarded in September 2020 but could
not be started until April 2021.
Operational EBITDA^ from underlying continuing
and discontinued operations
The Group loss from operations was £0.7m (2019:
£0.7m). When adjusted for the exceptional and non-cash
items set out below and depreciation and amortisation,
the Group recorded an EBITDA^ loss from underlying
continuing and discontinued operations of £0.52m (2019:
£0.01m profit).
Finance Costs
Total finance costs of £0m (2019: £0.6m) decreased from
the prior year as the coupon on the Convertible Loan
Notes (CLN) was offset by the calculated adjustment
following the repayment of the CLN. There was an
underlying cash charge of £0.3m (2019: £0.3m).
Result for the Year
The Group loss before taxation improved to £0.7m
(2019 Restated: Loss before tax of £1.3m) and the
loss per share was 0.45p (2019 Restated: Loss per
share of 0.91p).
Restatement of 2019 Accounts
A prior year adjustment has been made in respect of
investor warrants and certain other matters. The overall
effect of this is that the 2019 loss was reduced by
£147,000 from £1,398,000 to £1,251,000. See note
31 for further details.
The disclosure of investment in subsidiaries and
intercompany loans has been altered see note 14
for further details.
Statement of Financial Position
Total Group assets amounted to £9.5m on 31 December
2020 compared with £6.9m on 31 December 2019. The
main movement was an increase in cash at the year-
end following the December 2020 placing and after the
repayment of debt.
Net Group current assets amounted to £5.4m on
31 December 2020 (2019: £3.1m). Again, this is primarily
an increase in cash.
The Group trade and other receivables balance as at
31 December 2020 was £2.4m (2019: £2.5m). Average
days sales outstanding at the year-end were 19 (2019:
38). The 2019 balance had a large solutions debt which
was paid in 2020 distorting the overall calculation.
Cash and cash equivalents of £2.1m at 31 December
2020 compared with £0.6m at 31 December 2019.
In December 2020 we raised equity of £5m which
was used to remove all the remaining long-term debts
with the exception of the IFRS16 debt element of
operating leases.
Assets of disposal groups classified as held for sale were
£Nil (2019: £0.17m). This reduction follows the disposal of
the Sierra Queen in 2020.
Trade and other payables were £2.3m (2019: £2.5m) and
average creditor days were 50 (2019: 66).
A deferred tax asset of £1.0m (2019: £0.9m) was held at
the year end.
Total equity on 31 December 2020 stood at a surplus of
£7.1m (2019: £1.9m).
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
19
Strategic report
Chief Financial Officer’s Report
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 8.
Convertible Loan Notes (CLN) and Convertible Unsecured Loan Notes (CULN)
Summary of movements in loan notes
at principal value £’000
At 1 January
Fair Value adjustment on Conversion/
Repayment
Conversion
Repaid
At 31 December
2020
2020
CULN
171
CLN
2,245
2020
Total
2019
CULN
2019
CLN
2,416
171
2,245
19
-
-
19
(213)
(213)
(190)
(2,032)
(2,222)
-
-
-
-
-
-
2019
Total
2,416
-
-
-
-
-
-
171
2,245
2,416
On 31 December 2019, the secured CLN carried a
coupon of 15% payable quarterly in arrears, had a
conversion price of 10p from 1 January 2020 to maturity
on 1 May 2021. During 2020 the Group first paid down or
converted 25% of the CLN in February 2020. There were
some conversions in the year and in December 2020
the group paid the remaining capital owed. The secured
CLN was fully repaid as at 31 December 2020 and the
security has been released.
Equity Issues
On 31 December 2019, the unsecured CLN carried
a coupon of 5% payable quarterly in arrears, had a
conversion price of 10p and matured on 31 July 2021.
The unsecured CLN’s capital was fully repaid on
22 December 2020.
Date
Type
Number of Shares
Price per share (p)
Funds Raised £’000
23 January 2020
Equity placing
14,000,000
12.5
1,750
01 April 2020
02 June 2020
Conversion of Loan Note
Conversion of Loan Note
02 October 2020
Conversion of Loan Note
07 October 2020
Conversion of Loan Note
22 December 2020
Equity placing
62,500
937,500
937,500
187,500
125,000,000
141,125,000
10
10
10
10
4
6
94
94
19
5,000
6,963
^ This is an Alternative Performance Measure refer to Note 2 for further details
20
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Summary of Warrants
As at 31 December 2020 the warrants outstanding were:
Number
Holder
Strike Price (p)
Issued
Life (years)
Vesting Criteria
170,455
S P Angel
9,625,000
Various Holders
3,499,222
RiverFort
25,000,000
Various Holders
22.0
12.5
5.2
7.0
31 January 2018
25 July 2019
21 January 2020
22 December 2020
5
2
4
2
At grant
At grant: - detachable
6 months after grant: - detachable
At grant: - detachable
589,330 warrants with a strike price of 20.15p issued on 1 February 2016 lapsed during 2020.
For further details on warrants refer to Note 22 page 103.
Cash Flow Statement
During the year, the Group had an operating cash outflow of £1.6m (2019 Restated: outflow £0.6m) which arose
primarily from an unfavourable working capital movement of £0.8m (2019 Restated: £0.5m).
During the year, the Group raised £6.96m gross from the issue of new equity (2019: £1.55m).
Reconciliation from adjusted EBITDA^ to normalised operating cash flow
Adjusted EBITDA
(Loss) / profit on asset disposal
Net changes in working capital
Movement on tax
Net cash used in underlying operating activities
2020
£,000
(519)
-
(1,033)
31
(1,521)
2019
restated
£,000
13
(9)
(511)
(26)
(533)
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 page 112.
Principle risks and uncertainties
The principal risk and uncertainties facing the Group
are outlined on pages 22–27.
Going Concern
The assessment of Going Concern is summarised in
the Directors Report on page 61.
Mark L W Hughes
Chief Financial Officer
29 April 2021
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
21
Strategic report
Risk Management
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.
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 below, together with
how we manage or mitigate them:
22
| ANNUAL REPORT 2020
| 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
Risk Management Committee
Committee Membership
The Committee’s Terms of Reference were last reviewed
and approved by the Board on 24 March 2021 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;
• Adherence to internal risk management policies and
procedures;
• Compliance with risk-related regulatory requirements;
• External risk assessments in relation to the Company’s
international business; and
The current Risk Management Committee members are:
• Peter Fowler (Group CEO) (Chair)
• Mark Hughes (Group CFO)
• Stuart Fowler (Group COO)
• Roger Worrall (Group Company Secretary)
• Joanna Fowler (Head of Services Division)
• Hamish Russell (General Manager Technology
Division)
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.
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.
• Maintenance of the Group’s Risk Register.
Risk Flags
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 22 to 27.
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
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
23
Strategic report
Risk Management
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.
• Develop and maintain relationship with local embassies.
• 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.
• Develop and maintain links with governments in project
War & Terrorism
Risk
territories.
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
• Adopt additional technologies such as AI to enhance our
through Airport/Port secured by Westminster.
detection capabilities.
• 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.
• Adopt a code of conduct for staff in relation to their actions
whilst at work and on deployment overseas.
• Use multiple brands in across the business to reduce exposure
to reputational damage.
• Ensure regular risk assessments are undertaken for major
projects and that mitigation actions are in place.
• Maintain an incident response plan for all major projects.
• Source independent reports of project country status.
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.
• Local retained doctor and first aiders.
• Secure compounds / safe assessed hotels.
• Maintain emergency response plans.
24
| ANNUAL REPORT 2020
| 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.
• Forex & exchange control risks on international
transactions.
• Use direct settlement e.g. IATA or Letters of Credit.
• Undertake regular active debtor management.
• Use milestone payments on projects.
• Closely monitor large debtors, undertake credit checks and use
credit insurance where possible.
• Where possible match purchases and sales in same currency.
• Hedging where appropriate.
Increased Cost of Capital
Risk
Mitigation Strategy
Likelihood
Impact
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.
• Maintain regular dialogue with multiple funding sources, put in
place project finance facility.
• Build reserves to cover potential funding milestones.
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
Some of the countries in which the Group operates could
be affected by sanctions:
• Ensure any business partner contractually commit to obligations
regarding compliance and undertake background checks
ahead of business partner appointment.
• Ensure up-to-date export control policy and check new
products for export controlled content.
• Use software tools where possible to monitor and ensure
compliance with regulations.
Likelihood
Impact
Mitigation Strategy
• Sanctions Policy.
• Maintain sanctions list within CRM system to flag potential
• Change in sanctions status of operational country could
sanctioned enquiries.
prevent the continuation of a project.
• Change in sanctions status in supplier country may
increase project costs and require resourcing.
• Regularly check sanctions for high risk projects.
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 2020
| WESTMINSTER GROUP PLC
|
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.
• Anti-virus software and email checking software.
• Cyber-attack on corporate and financial system.
• Risk committee to review IT policy against evolving threats.
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.
• Proper review to ensure the Group does not take on a project
where requirements are unachievable.
• Make sure contractual terms are adequate within proposals.
Major incident within a contract.
• Use AI Detection on screening systems where possible.
• Maintain a press plan and emergency response plan.
26
| ANNUAL REPORT 2020
| 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
• Cross training between staff.
• Succession planning.
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
Business is affected by War, Civil Unrest or Natural Disaster.
• Monitor global situations.
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.
Failure of Infrastructure
Risk
Westminster’s performance is dependent on the availability
and quality of its physical infrastructure, its information
technology.
• Have contingency plans including emergency response team.
• 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.
• Maintain regularly updated Risk Assessments.
• Maintain social distancing within offices.
• Use home working as much as possible.
• Use online meetings where possible.
• Undertake risk assessments of all proposed travel.
• Undertake risk / reward analysis of the merits of any travel.
Likelihood
Impact
Mitigation Strategy
•
Implement a disaster recovery plan.
• Maintain disaster recovery insurance.
• Expand use and setup of home working solutions.
• Reduce reliance on paper records.
The Group’s profile around the world
and sectors within which it operates
heightens the risks of cyber-attack.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
27
Strategic report
Stakeholder Engagement
Section 172 Statement
The Directors are well aware of their duty under section
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;
• the interests of the Company’s employees;
• 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
• the need to act fairly between members of the
Company.
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.
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 directly employ an average of 239 (2019: 261) in 2020
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.
How we engage
• 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
new and existing employees.
• 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 when local rules allow i.e. outside of
lockdown periods.
• The Group CEO provides updates and presentations to
our people on important Company developments.
28
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
• The Group Chairman regularly meets individual employees
when appropriate.
• We encourage our people to have a culture of respect and
integrity and operate a whistle blowing policy.
Key Activity During 2020
• We continued with our employee appraisal system throughout
our business.
• We expanded our workforce with excellent new people in the
UK and overseas.
• We held several employee awards ceremonies virtually in the
year recognising individual achievements.
• We continued to engage directly with employees via video
conference in the pandemic.
•
Instigated a groupwide newsletter for employees
(“Westminster Wire”).
• Supported our West African Airport staff whilst the airport
was closed maintaining full employment and security of the
airport; utilising the time for additional training.
• Furloughed underutilised staff on the UK government
Job Retention Scheme.
• Regular Covid-19 risk assessments to keep our staff around
the world safe. Implemented social distancing and safe
working practices throughout the organisation.
Our Strategic Partners
In previous Annual Reports we have 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 an
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.
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 significant 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 an 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 significant shareholders for briefings and presentations
when appropriate.
Key Activity During 2020
• The strategic alliance agreement with JP International
Training Limited enabled the launch of a new Online Training
Catalogue.
• Worked with our Saudi Arabian Joint Venture partner, Hazar,
to enable Westminster Arabia to be authorised to trade.
• Translated Westminster brochures, presentations and other
documents to provide materials in various languages.
• We held regular virtual meetings and dialogues with all our
Strategic Partners.
• Continued a review and re-engagement programme with our
network of agents.
• We engage with private investors whenever possible and
investor correspondence is handled by the Company’s IR/
PR advisors, Walbrook. The CEO often responds to individual
correspondence where appropriate.
•
In normal times, 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 2020
• We engaged with investors on topics of strategy, governance,
developments and performance.
• We issued our 2019 Annual Report on 14 May 2020 and our
2020 Interim Report on 14 August 2020.
• We held our AGM as a closed meeting, because of the
Coronavirus pandemic on 25 June 2019; but on 23 July 2020
we held an investor webinar to provide an update on the
Company’s activities and trading.
• CEO undertook investor focussed interviews with various
broadcast organisations.
• Undertook a roadshow with potential investors arranged
by our new stockbroker, Arden Partners. This resulted in a
number of institutions investing in the Company.
• We raised £6.96m in equity from investors against a difficult
market which enabled the repayment of all the CLNs, the
RiverFort debt and prepared the Group for important business
development. Whilst dilutive the funding was done in the best
interests of the Company and its shareholders.
ANNUAL REPORT 2020
| 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.
Key Activity During 2020
• Raised a £1.5m mezzanine loan (£3m facility) with the
intention of paying off the CLN in H1 2020 – 25% redeemed
or converted February 2020. Remaining money then used to
buy inventory for fever detection and help the Group navigate
the Covid-19 crisis (repaid in December 2020).
• We agreed with the holders of the Company’s remaining
£1.68m CLNs to extend the maturity date to 1 May 2021
In order to allow the Company time to put a cost-effective
redemption programme in place. (All the remaining CLN,
CULN and RiverFort loan were repaid or redeemed by
31 December 2020).
• We continued to hold a number of exploratory and positive
meetings with various banks and lending institutions leading
to us moving to Clydesdale plc in 2021.
• We continued to explore working with UK Export Finance on
some of our large-scale project opportunities.
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 2020
• Relaunched new expanded ecommerce website.
•
Implementing new CRM software.
• We undertook regular internal sales meetings virtually 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 attended and spoke virtually 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.
30
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Our business is focused
on providing innovative
and turn-key solutions
that meet our customer
requirements
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
31
Strategic report
Stakeholder Engagement
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
advancement of education or healthcare making a difference
to the lives of the local communities in which we operate.
Key Activity During 2020
•
In October 2020, Westminster’s charity, the Westminster
Group Foundation, donated a Sanitary Gate sanitising
tunnel to the Sierra Leone Aviation Authority, who installed
^ This is an Alternative Performance Measure refer to Note 2 for further details
32
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
• 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 2020
• We regularly interacted with our various suppliers.
• We engaged with new suppliers to expand our portfolio
including Covid-19 related products.
• Worked with some manufacturers to establish new routes
to market.
• Our engineers attended technical training courses with
manufactures virtually.
it at Freetown International Airport in Lungi. It is effective in
reducing the viral load present on surfaces by 99% in just
5 seconds, without causing harm to humans.
• The Westminster Group Foundation also supported
AlansAfrica on their project to donate desk and bench sets
to Port Loko Primary School in Sierra Leone.
• We have helped enable the re-opening of places of
worship, installing walk through fever detectors and hand
sanitiser stations.
• Sierra Leone Tacugama Chimpanzee Sanctuary has benefited
from a donation from the Westminster Group Foundation to
assist with education support programmes in schools.
• The Westminster Group Foundation donated rice and other
basic food to people struggling during the Covid-19 crisis in
the Lungi area of Sierra Leone.
• To view the many community support projects we are
undertaking visit www.wg-foundation.org.
We work with around
140 suppliers and look to
choose the best products.
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.
• 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 2020
• Westminster’s aviation security training operations was graded
as ‘Outstanding’ in all areas audited by UK Civil Aviation
Authority (CAA).
• Awarded a contract to replace and maintain the security
screening equipment at the Palace of Westminster, informally
known as the Houses of Parliament.
• We applied for and were granted 5 export control licences
during the year.
• Our West African airport operations were subject to an ICAO
audit and were highly praised for effectiveness.
• We liaised virtually with a number of Ambassadors and High
Commissioners from our overseas missions around the world.
• Appointed a Compliance Officer to ensure we have the
highest standard of adherence to regulations.
• We utilised the UK government “Job retention scheme” to
furlough underutilised staff.
• All Directors and new staff undertake an antibribery webinar.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
33
Governance report
Board of Directors
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.
Rt. Hon. Sir Tony Baldry DL
Executive Chairman
Peter Fowler
Chief Executive Officer
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.
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.
34
| ANNUAL REPORT 2020
| 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 2020
| WESTMINSTER GROUP PLC
|
35
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 48 - 53
(Audit Committee Report)
Nomination
Committee
Responsible for ensuring the
Board and its committees have
appropriate leadershipand
succession planning in place.
See page 54 - 55
(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 56 - 59
(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 22 - 27
(Risk Management Committee)
Operational Board
Responsible for management
and governance of Group’s
divisions and business.
See page 39
(Board Structure)
Disclosure
Committee
Responsible for oversight
of the Group’s disclosure
obligations and MAR.
See page 43
(Disclosure Committee)
36
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
The Directors are
committed to delivering
high standards of
corporate governance.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
37
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
Sir Tony Baldry
Peter Fowler
Mark Hughes
Stuart Fowler
Charles Cattaneo
Lady Patricia Lewis
Mawuli Ababio
H
17
17
17
17
17
17
17
A
16
17
17
16
17
16
17
H
-
44
44
44
44
44
44
A
-
44
44
44
44
44
44
H
-
-
-
-
5
5
5
A
-
-
-
-
5
5
5
H
-
1
-
-
1
1
1
A
-
1
-
-
1
1
1
H
-
-
-
-
3
3
3
A
-
-
-
-
3
3
3
Key
H = Maximum number of scheduled meetings held a director could have attended A = Number of meetings actually attended in person or remotely
38
| ANNUAL REPORT 2020
| 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, an 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.
PLC Board
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 are all considered independent Directors.
Operations Board
The current Operations Board members are:
• Peter Fowler (Group CEO) (Chair)
• Mark Hughes (Group CFO)
• Stuart Fowler (Group COO)
• Roger Worrall (Group Company Secretary)
• Joanna Fowler (Head of Managed Services Division)
• Hamish Russell (General Manager)
The Operational Board comprises of certain
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 meets
informally 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 holds a formal minuted meeting
once a month. The Operational Board reports to the
PLC Board.
International Advisory 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.
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 34 to 35.
e
c
n
e
i
r
e
p
x
E
d
r
a
o
B
d
e
i
r
a
V
t
n
e
m
p
o
l
e
v
e
D
s
s
e
n
i
s
u
B
e
c
n
e
i
r
e
p
x
E
l
a
n
o
i
t
a
n
r
e
t
n
I
t
n
e
m
e
g
a
n
a
M
l
a
i
c
n
a
n
i
F
e
c
n
a
n
r
e
v
o
G
s
t
e
k
r
a
M
l
a
t
i
p
a
C
t
e
k
r
a
M
c
i
l
b
u
P
s
n
o
i
t
a
l
e
R
c
i
l
b
u
P
l
a
u
t
c
a
r
t
n
o
C
&
l
a
g
e
L
r
o
t
c
e
S
y
t
i
r
u
c
e
S
l
a
c
i
n
h
c
e
T
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+
60+
r
e
d
n
e
G
M
M
M
M
M
F
M
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
39
Governance report
Corporate Governance Report
Board Evaluation
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 any Board
Committee are acted upon in a formal and structured
manner. No issues were identified for the year ending
31 December 2020.
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.
Internal control
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.
The Board considers evaluation of its
performance and that of its committees
and individual Directors to be an integral
part of corporate governance.
40
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Key Board Activity and Focus in 2020
Leadership
Financial
• Evaluated Board effectiveness.
• Approved 2019 Financial Accounts & Annual Report.
• Reviewed senior management performance.
• Board Diversity & Experience reviewed.
• Approved the half year results.
• Approved the 2021 Budgets.
• Management and Succession Strategy planning reviewed.
• Reviewed Tax Issues across operational jurisdictions.
• Appraisals systems in place and functioning.
• New Business Central Accounts system went live in March.
Strategy
People and Culture
• Approved the divisional reorganisation to meet ‘One Com-
• Reviewed and approved existing and new company policies
pany, One Vision’ ethos, focussed on the LAND, SEA & AIR
marketing structure.
• Approved new website production to incorporate all
companies and expanded e-commerce facility.
• Reacted to Convid-19 pandemic, expanding fever
detection and sanitisation portfolio.
• Expanded marketing team and commenced social media
marketing to compliment traditional marketing routes.
•
Instigated a focussed marketing campaign including
TV advertising.
• Continued to pursue major project opportunities.
•
•
throughout the year.
Implemented ‘One Company Vision’.
Identified as one of the ‘1,000 companies to inspire Britain’
in 2020 by the London Stock Exchange.
• Approved staff to be furloughed, due to Covid-19.
• Supported communities during Covid-19 via Westminster
Group Foundation.
• Maintained full employment of staff and kept facilities safe
and secure during West African airport closure.
• Approved the move to using Board Intelligence portal for
Board & Committee meetings.
• Launched group wide newsletter – Westminster Wire.
Financing
Operations
• Approved capital raises and issue of equity.
• Covid-19 Risk Assessments reviewed monthly basis
• Approved repayment of Convertible Loan Notes and
throughout the year.
RiverFort debt.
• Expanded supplier network and product lines.
• Approved new auditors PKF Littlejohn LLP.
• Approved new brokers Arden Partners Plc.
• Approved new nomad Strand-Hanson Ltd.
• Approved new bankers Clydesdale / Yorkshire.
• Utilised UK Governments furlough scheme where appropriate.
• Supplied goods and service to 78 countries around the world,
including some notable contract wins such as the Palace of
Westminster.
• Continued to secure strategic alliances.
• Managed Covid-19 situation with overseas ex-pats staff
unable to rotate as normal.
• Covid-19 - Implemented social distancing and safe working
practices throughout the organisation.
• Approved the sale of the Sierra Queen.
Shareholders
Governance
• Responded to investor enquiries.
• Agreed with Convertible Secured Loan Note holders to
extend maturity date to 1 May 2021 (subsequently repaid
in full in December 2020).
• Audit, Disclosure, Remuneration, Nominations and Risk
Committee Terms of Reference reviewed and approved.
• Reviewed the Group’s compliance with adopted QCA
governance code.
• Held closed AGM due to Covid-19 restrictions.
• Considered effect of Covid-19 on the Group’s Activities.
• Held webinar with investors on H1 results, due to Covid-19
• All Directors undertook and passed the Group’s
pandemic.
anti-bribery webinar.
• CEO undertook investor focussed interviews with various
broadcast organisations.
• Undertook a Shareholder analysis including nominee
underlying holders.
• Approved Convertible Loan Note conversions to
Ordinary Shares.
• Undertook an investor roadshow with new Broker, raising
£5m largely from new institutional investors.
• As part of the policy review the following existing or new
policies were reviewed and approved: - Pension Policy, -
Overtime Policy, Health & Safety Policy, Dealing in Company
Securities Policy, AIM Rule (and MAR) Compliance Policy.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
41
Governance report
Corporate Governance Report
Board Evaluation
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.
We deliver our wide range of solutions and services
through a number of operating companies that are
currently structured into two operating divisions;
Services and Technology; both primarily focused
on international business as follows:
Services Division:
Focusing on long term (typically 10 – 25 years)
recurring revenue^ managed services contracts
such as the management and operation of security
solutions in airports, ports and other such facilities,
together with the provision of manpower, consultancy
and training services.
Technology Division:
Focussing on providing advanced technology led
security solutions encompassing a wide range of
surveillance, detection, tracking, screening and
interception technologies to governments and
organisations worldwide.
These two divisions offer cost effective dynamics and
vertical integration with the Technology Division providing
vital infrastructure and complex technology solutions
and expertise to the Services Division. This reduces
both supplier exposure and cost and provides us with
^ This is an Alternative Performance Measure refer to Note 2 for further details
42
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
increasing purchasing power. Our Services Division
provides a long-term business platform to deliver other
cost-effective incremental services from the Group.
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 be 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 in some
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.
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.
Our corporate strategy is outlined on pages 14-15.
Further information on the Group’s Stakeholder
Engagement can be found on pages 28-33.
Corporate Culture
Market Abuse Regulations
The Board recognises that a corporate culture based
on sound ethical values and behaviours is an asset and
provides competitive advantages. The Group operates
in international markets and is mindful that respect of
individual cultures is critical to corporate success. In
accordance with Westminster Group’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.
Westminster Group is also independently certified to
and operates an ISO 9001 Quality Assurance programme
and is working towards ISO 14001 – Environmental
Management.
The Group also supports the local communities in
which it operates indirectly through various charities
and organisations and directly through 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
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 approved
by the Board on 24 March 2021 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 will be 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.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
43
Governance report
Corporate Governance Report
Committee Membership
The current Disclosure Committee members are:
• Lady Patricia Lewis (Chair)
• Charles Cattaneo (NED)
• J M Mawuli Ababio (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.
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;
• Providing valuable employment and investment
opportunities in third world areas;
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.
• 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
• The Group maintains a stringent anti-bribery policy
and complies with both UK and local statutes.
44
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
As an entrepreneurial business
operating in emerging markets
there is clearly an elevated risk
which is balanced by potentially
greater rewards.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
45
Governance report
Corporate Governance Report
Anti-bribery and corruption
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 has a 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 https://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 https://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
• CSR (Corporate Social Responsibility) Policy
• Data Protection Policy
• Equal Opportunities Policy
• Whistle-blower Policy
• Code of Ethics
• Sanctions Policy
• Export Control Policy
• Market Abuse Regulations (MAR) Policy
46
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
The Group monitors capital on the basis of the carrying
amount of equity plus its loans, 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. 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.
The Group has a well-
established anti-corruption
policy in place which covers
bribery and corruption,
gifts and hospitality, and
facilitation payments.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
47
Governance report
Audit
Committee
Report
I am pleased, as Chairman of the Audit Committee, to
present its report for the year ended 31 December 2020.
The Committee’s Terms of Reference were last reviewed
and approved by the Board on 24 March 2021 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.
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 2020 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.
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.
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.
48
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Audit Committee
Charles Cattaneo (Chair)
J M Mawuli Ababio
Lady Patricia Lewis
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 35. 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 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 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.
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 2020, the
committee reviewed:
• the Group’s Half-year Report for the six months
to 30 June 2020; and
• the Annual Report for the year ended
31 December 2020.
In carrying out these reviews, the committee:
• reviewed the appropriateness of Group accounting
policies including monitoring 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
The Audit
Committee focused
particularly on the
appropriateness of
the Group’s financial
statements.
made within the Annual Report reflect the actual
position of the Group; and
• considered key areas in which estimates 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 2020 financial
statements, and how they were addressed by the
committee are set out on page 51.
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.
Committee Evaluation
As outlined on pages 38 to 40 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 2020.
Meetings
The Audit Committee met five times during the year
ended 31 December 2020 to review the 2019 Financial
Statements, the 2020 half-year results, to consider and
accept the External Auditors plan for the 2020 audit.
There were also meetings with potential auditors to
replace BDO, which led to the decision to appoint PKF
Littlejohn LLP.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
49
Mar
May
Aug
Sep
Dec
Governance report
Audit Committee Report
Audit Committee activities 2020
Financial reporting
Review any related party matters and intended disclosures
Agree & Approve Audit Committee Papers
Covid-19 effect on Company
2019 Annual Report & Financial Statements including auditors report
Review and approve preliminary & half-year results
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
Review IFRS 17 Insurance Contracts paper
2021 Budget Approve
External auditors
Review Potential Auditors to replace BDO and appointment of PKF
Approval of year-end audit plan
Approval of audit engagement letter and audit fees - UK
Approval of audit engagement letter and audit fees - External, Ghana, Sierra Leone
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
Review of General Risks
Review of the General Risk Matrix
Review of Coronavirus Risk Assessment
Sierra Leone Risk & Artificial Intelligence (AI)
Currency and Foreign Exchange
Business Central - Dynamics Status Review
50
| ANNUAL REPORT 2020
| 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 the ability to affect costs and revenues. 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 considered the Board’s view that it believed the Group will generate
sufficient working capital and cash flows to continue in operational existence and 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, considering 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
Deferred tax assets
The committee reviewed the judgements applied by management in determining the
recognition of revenue for the period to 31 December 2020. The Committee was satisfied
that such judgements were appropriate, and any risk had been adequately addressed.
The committee reviewed the judgements applied by management in determining the
recognition of revenue for the period to 31 December 2020, The Committee was satisfied
that considering the expected level of future profits such judgements were appropriate,
and any risk had been adequately addressed.
RiverFort EPSA
The committee considered a paper on the accounting treatment of the RiverFort EPSA,
and the Committee agreed with the Directors decision.
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.
Following the completion of the 2019 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. It also noted that
the Group had been audited by effectively the same
firm, albeit with two name changes, for the last 8 years.
Based on this review and the need for effective rotation
to maintain independence, it decided therefore that
the Group should change auditors. Having talked to a
number of audit firms and undergone a formal tender
process the committee decided to appoint PKF Littlejohn
LLP to undertake the Group and UK audits. The
committee also decided to appoint PKF Ghana as the
auditor of Westminster International (Ghana) Limited.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
51
Governance report
Audit Committee Report
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 2020 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
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.
external auditor that seeks to ensure that the services
provided by the external auditor are not, or are not
perceived to be, in conflict with auditor independence.
The committee decided in 2020 to strengthen this
independence by asking the Group to appoint a
separate firm in the UK (Ellacotts) as UK tax advisors.
It also continued to monitor 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
had 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 below.
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.
Non-audit services
In order to further ensure independence, the committee
has a policy on the provision of non-audit services by the
The Audit Committee has been delegated, from the
Board, the responsibility for monitoring the effectiveness
of the Group’s system of internal control.
Internal Control
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
19
68
2016
2017
2018
2019
2020
Other services
Tax
Overseas Audit
UK Audit
52
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
The committee continues
to monitor the performance
and objectivity of the
external auditors.
The Audit Committee monitors the Group’s risk
management and internal control processes through
detailed discussions with, the Risk Committee,
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 40.
On behalf of the Board
Charles Cattaneo
Chairman of the Audit Committee
29 April 2021
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
53
Governance report
Nomination
Committee
Report
As Chairman of the Nomination Committee, I am pleased
to present the report of the committee for the year ended
31 December 2020.
The Committee’s Terms of Reference were last reviewed
and approved by the Board on 24 March 2021 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
Company, both executive and non-executive, with a
view to ensuring the continued ability of the Company
to compete effectively in the marketplace;
• To review the balance of the Board and its
Nomination Committee
Lady Patricia Lewis (Chair)
Charles Cattaneo
J M Mawuli Ababio
Peter Fowler
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.
committees, and consider Non-Executive Directors’
independence, whether the balance between non-
executive and executive directors remains appropriate,
Members of the Committee do not participate in any
discussions relating to their own reappointment or
replacement.
54
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
2020 Activity
During the year the Committee undertook
the following activities:
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 39.
We considered succession planning and
discussed this during our meetings. 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.
Nomination Committee Activities
Dec 2020
Review Management &
Succession Strategy
Board Diversity &
Experience Matrix
Key Personnel Replacement
On behalf of the Board
Lady Patricia Lewis
Chairman of the Nomination Committee
29 April 2021
GENDER
AGE
Board
Board
Male 86%
Female 14%
50+ 86%
30-50 14%
Senior
Management
Senior
Management
Male 71%
Female 29%
50+ 43%
30-50 57%
Group Wide
Group Wide
Male 71%
Female 29%
50+ 18%
30-50 63%
18-30 18%
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
55
Governance report
Remuneration
Committee
Report
As Chairman of the Remuneration Committee, I am
pleased to present the report of the committee for
the year ended 31 December 2020.
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 24 March 2021 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 Remuneration 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.
56
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Remuneration Committee
J M Mawuli Ababio (Chair)
Lady Patricia Lewis
Charles Cattaneo
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
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. None have been granted in 2020.
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
2021, gives details of the remuneration outcomes for
2020, and describes the workings of the Remuneration
Committee during the year.
Remuneration Outcomes for 2020 and
Remuneration Policy for 2021
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 2020 review the
Committee decided that, whilst there were substantial
improvements in Group’s performance, no adjustment
would be made in the year other than to recognise
changes in time committed.
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. Due to Covid-19 restrictions the
away day and site visits were not possible in 2020. They
also attend periodic Remuneration 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
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
57
Governance report
Remuneration Committee Report
Board Balance, Time Commitment and Meetings
The 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 2020 are as follows:
Executive Directors
Sir Anthony Baldry
Peter Fowler
Mark Hughes
Stuart Fowler
Non-Executive Directors
Sir Malcolm Ross
Lady Patricia Lewis
Charles Cattaneo
J M Mawuli Ababio
Basic
£’000
Benefit in kind
£’000
Group NI
£’000
Total cost of
employment
2020
£’000
Total cost of
employment
2019
£’000
73
157
120
110
460
-
24
24
24
72
-
19
4
-
23
-
-
-
-
-
9
20
14
14
57
-
2
-
-
2
82
196
138
124
540
-
26
24
24
74
48
201
140
117
506
22
27
24
3
76
Total Board Remuneration
532
23
59
614 582
No options were exercised during the year and no cash
benefit was therefore received by the Directors.
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 that Mawuli Ababio has 10% of our dormant
Ghana company (Westminster International (Ghana)
Limited) and for the following holdings of ordinary
shares in the Company:
Peter Fowler and Mrs P J Fowler
6,461,794
40,000
6,501,794
1 January 2019
Purchased in Year
31 December 2019
Mark Hughes
Stuart Fowler
Lady Patricia Lewis
Sir Anthony Baldry
Charles Cattaneo
J M Mawuli Ababio
116,000
541,618
100,000
-
-
116,000
541,618
150,000
250,000
-
-
-
130,000
120,000
250,000
-
-
-
7,349,412
310,000
7,659,412
58
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
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. Details are as follows:
Market
Price at
Date of
Grant
01
January
2020
Change
in Year
Grant Price
Sir Anthony Baldry
13p
13p
750,000
Peter Fowler
Peter Fowler
Mark Hughes
Stuart Fowler
Stuart Fowler
28.5p
25.5p
781,250
13p
13p
13p
1,750,000
10.25p
750,000
28.5p
25.5p
625,000
13p
13p
750,000
-
-
-
-
-
-
31
December
2020
750,000
781,250
1,750,000
Date from which
exercisable
1 June 2019#
10 June 2016*
1 June 2019#
750,000
8 November 2019#
625,000
750,000
10 June 2016*
1 June 2019#
The market price of the shares at 31 December 2020
was 4.15p and the range during the year was 3.80p
to 13.79p.
(*) 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
Jan 2020
July 2020
Dec 2020
Review of overall remuneration policy
Review of restitution of voluntary salary reduction / salary sacrifice from Nov 2014
Consideration of proposals for overall packages including Long Term Incentive plans
Review executive & higher paid staff salary for 2020
Decision to implement Keyman Insurance
Consideration of directors shareholding in company
Review of remuneration of Non-Executive Directors
Review of the Sector & Comparative Trends
Board remuneration for 2021
On behalf of the Board.
J M Mawuli Ababio
Chairman of the Remuneration Committee
29 April 2021
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
59
Governance report
Directors’ Report
The Directors of Westminster Group PLC (Company
Number: 03967650) present their annual report and
the audited financial statements for the year ended
31 December 2020.
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 to 21.
The Directors who held office during the year were as
follows:
Executive Directors
Rt Hon Sir Tony Baldry
Peter Fowler
Stuart Fowler
Mark Hughes
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 (2019: £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 29 April 2021, 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
Interest in
shares
Percentage
Spreadex Ltd
19,787,083
6.91%
Non-Executive Directors
Janus Henderson
12,500,000
4.36%
Lady Patricia Lewis
Charles Cattaneo
J M Mawuli Ababio
Premier Miton Group
10,000,000
3.49%
60
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
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 50 days (2019: 66 days).
Share price
During 2020 the Company’s share price ranged from
3.80p to 13.79p and the share price at 31 December
2020 was 4.15p (2019: 11.75p).
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.
seen a significant rise in product sales revenues
mitigating reductions elsewhere in the business. The
Directors continue to monitor the situation with respect
to Covid-19 and to update its risk assessments and
contingency planning as necessary.
The Directors have therefore reviewed the Group’s
resources taking into account the continuing, if
diminishing, issues caused by the pandemic at the
date of approving the financial statements, and their
projections for future trading, which give a reasonable
expectation that the Group has adequate resources to
continue in operational existence for the foreseeable
future, which for the avoidance of doubt is at least 12
months from the date of signing the financial statements.
Thus, they continue to adopt the going concern basis of
accounting in the preparing the financial statements.
Auditor
In so far as each of the Directors is aware
Post balance sheet events
These are detailed in note 32 to the financial statements.
• There is no relevant audit information of which the
Company’s auditor is unaware, and
Going concern
As detailed in note 2 to the accounts, the financial
statements are prepared on a going concern basis.
In assessing whether the going concern assumption is
appropriate, management have considered all relevant
available information about the future. As part of its
assessment, management have considered the profit
and cash forecasts, the continued support of the
shareholders and Directors and management ability
to affect costs and revenues. Management regularly
forecast results, financial position and cash flows for
the Group.
In 2020, the Directors took timely action implementing
logistical and organisational changes to consolidate the
Group’s resilience to Covid-19, including a reduction
in costs, risk assessments, safe working practices
and various other measures, including utilisation of
governmental support schemes. The Directors also took
action to expand the Group’s range of fever screening
and safety equipment, expanding its supply base and
instigating targeted marketing campaigns which has
• 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.
Peter Fowler
Director
29 April 2021
Mark L W Hughes
Director
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
61
Governance report
Statement
of Directors’
Responsibilities
Directors’ responsibilities statement
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 Accounting Standards in conformity with
the requirements of the Companies Act 2006. 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.
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
29 April 2021
Mark L W Hughes
Director
62
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
The Directors are responsible for
preparing the Strategic report, the
Directors’ report and the financial
statements in accordance with
applicable law and regulations.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
63
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 2020 which
comprise the Consolidated Statement of Comprehensive
Income, the Consolidated and the Company Statements
of Financial Position, the Consolidated Statement of
Changes in Equity, the Company Statement of Changes
in Equity, the Consolidated Cash Flow Statement, the
Company Cash Flow Statement and notes to the financial
statements, including significant accounting policies.
The financial reporting framework that has been applied
in their preparation is applicable law and international
accounting standards in conformity with the requirements
of the Companies Act 2006 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 2020 and of the group’s
and parent company’s loss for the year then ended;
• the group financial statements have been properly
prepared in accordance with international accounting
standards in conformity with the requirements of the
Companies Act 2006;
• the parent company financial statements have been
properly prepared in accordance with international
accounting standards in conformity with the
requirements of the Companies Act 2006 and as
applied in accordance with the provisions of the
Companies Act 2006; and
We are independent of the group and 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded
that the director’s use of the going concern basis of
accounting in the preparation of the financial statements
is appropriate. Our evaluation of the directors’
assessment of the group’s and parent company’s
ability to continue to adopt the going concern basis of
accounting included a review of the group’s forecast
financial information up to the end of 2023, as well as
obtaining the post year-end management accounts for
review. See the Key Audit Matters section of this report
for further description of our evaluation of the directors’
assessment of going concern.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the group’s or parent company’s
ability to continue as a going concern for a period of at
least twelve months from when the financial statements
are authorised for issue.
Our responsibilities and the responsibilities of the
directors with respect to going concern are described in
the relevant sections of this report.
• the financial statements have been prepared in
Our application of materiality
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.
The scope of our audit was influenced by our application
of materiality. We determined materiality for the financial
statements as a whole to be £140,000 for the group
financial statements using 1.5% of group turnover.
We consider the turnover to be the most relevant
determinant of the group’s financial position and
performance used by shareholders. 2020 has been a
special year to the group as the COVID-19 pandemic
64
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
has adversely impacted a few of the revenue streams
and therefore the group’s going concern is dependent
on recovery from the pandemic and ability to secure
new contracts to fund operations.
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding £7,000 in addition to other identified
misstatements that warranted reporting on
qualitative grounds.
Materiality for the parent company financial statements
was set at £139,999.
Whilst materiality for the financial statements as a whole
was set at £140,000, each significant component of
the group was audited to an overall materiality ranging
between £6,900 to £139,999 with performance
materiality set at 70%. We applied the concept of
materiality both in planning and performing the audit,
and in evaluating the effect of misstatement.
Our approach to the audit
In designing our audit we determined materiality, as
above, and assessed the risk of material misstatement
in the financial statements. We addressed the risk of
management override of internal controls, including
evaluating whether there was evidence of bias by the
directors that represents a risk of material misstatement
due to fraud. We also considered revenue recognition
and going concern.
A full scope audit was performed on the complete
financial information of the group’s significant operating
component located in Sierra Leone and United Kingdom.
The group’s Sierra Leone operations are audited by a non
PKF network firm. The audit team discussed significant
events occurring during the year and post year-end
period with the component auditor and performed a
review of the component auditor’s working papers,
including review of planning and completion stage group
reporting. The group audit team are responsible for the
scope and direction of the audit process. All other work
was performed remotely by PKF Littlejohn LLP.
Key audit matters
Key audit matters are those matters that, in our
professional judgment, 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.
Key Audit Matter
How our scope addressed this matter
Revenue recognition (See Note 2)
Our work in this area included:
Under ISA 240 there is a presumption that revenue recognition is a
fraud risk.
The group has several different revenue streams under the main
trading entities Westminster International Limited, Westminster
Aviation Security Services and Keyguard UK Limited.
There is a risk regarding the completeness and accuracy of the
revenue given that the point of recognition for each material revenue
stream could be different and should conform to IFRS 15.
• Documenting our understanding of the internal control
environment in operation for the material income streams
and undertaking a walk-through to ensure that the key
controls within these systems have been operating in the
period under audit;
• Understanding the revenue recognition policy for each
income stream in accordance with the IFRS 15 5 step
approach
• Substantive transactional testing of income recognised in
the financial statements, including deferred and accrued
income balances recognised at year end; and a review of
post year end receipts to ensure completeness of income
recorded in the accounting period.
Going concern (See Note 2)
Our work in this area included:
The COVID-19 pandemic creates uncertainty for the business,
particularly in the aviation and security industries where the
operations have been impacted in the year. As a result of COVID-19,
revenues in both these areas have reduced in the year.
• A review of budgets/forecasts and compare with available
post year-end results.
• Reviewing performance to past budgets.
There is a risk that the group is not a going concern, given the
reliance on funding provided by 3rd party loans and the necessity
for future fund raising. In addition, the group was loss making in
both 2018 and 2019 and experienced cash outflows.
• Challenge of management assumptions used in formulating
the cash flow forecasts.
• Ensuring appropriate disclosures have been made in the
financial statements surrounding the going concern position
and COVID-19.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
65
Financial statements
Independent Auditor’s Report
to the Members of Westminster Group PLC
Other information
The other information comprises the information included
in the annual report, other than the financial statements
and our auditor’s report thereon. The directors are
responsible for the other information contained within
the annual report. Our opinion on the group and parent
company 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. 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 course of the audit, or otherwise appears to
be materially misstated. If we identify such material
inconsistencies or apparent material misstatements,
we are required to determine whether this gives rise
to a material misstatement in the financial statements
themselves. 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 their 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:
• adequate accounting records have not been kept by
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.
Responsibilities of directors
As explained more fully in the Statement of Directors’
Responsibilities, the directors are responsible for
the preparation of the group and parent company
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 statements that are free from
material misstatement, whether due to fraud or error.
In preparing the group and parent company financial
statements, the directors are responsible for assessing
the group 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.
66
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities,
including fraud is detailed below:
• We obtained an understanding of the group and
parent company and the sector in which they operate
to identify laws and regulations that could reasonably
be expected to have a direct effect on the financial
statements. We obtained our understanding in this
regard through discussions with management.
• We determined the principal laws and regulations
relevant to the group and parent company in this
regard to be those arising from:
o AIM Rules
o Local industry regulations in Sierra Leone and
Ghana
o Local tax and employment law in Sierra Leone
and Ghana
• We designed our audit procedures to ensure the audit
team considered whether there were any indications
of non-compliance by the group and parent company
with those laws and regulations. These procedures
included, but were not limited to:
o Enquires of management
o Review of Board minutes
o Review of legal expenses
o Review of RNS announcements
• We also identified the risks of material misstatement of
the financial statements due to fraud. We considered,
in addition to the non-rebuttable presumption of a risk
of fraud arising from management override of controls,
we did not identify any significant fraud risks.
• As in all of our audits, we addressed the risk of fraud
arising from management override of controls by
performing audit procedures which included, but
were not limited to, the testing of journals; reviewing
accounting estimates for evidence of bias; and
evaluating the business rationale of any significant
transactions that are unusual or outside the normal
course of business.
Because of the inherent limitations of an audit, there is
a risk that we will not detect all irregularities, including
those leading to a material misstatement in the financial
statements or non-compliance with regulation. This
risk increases the more that compliance with a law or
regulation is removed from the events and transactions
reflected in the financial statements, as we will be less
likely to become aware of instances of non-compliance.
The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves
intentional concealment, forgery, collusion, omission or
misrepresentation.
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.
Use of our report
This report is made solely to the 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 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
company and the company’s members as a body,
for our audit work, for this report, or for the opinions
we have formed.
Joseph Archer (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
29 April 2021
15 Westferry Circus
Canary Wharf
London E14 4HD
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
67
Financial statements
Consolidated Statement of
Comprehensive Income
for the year ended 31 December 2020
Note
2020
2020
Continuing
Operations
Discontinued
Operations
2020
Total
£'000
9,945
2019
2019
2019
Continuing
Operations
(Restated)
Discontinued
Operations
Total
(Restated)
£'000
£'000
£'000
10,889
-
10,889
£'000
£'000
9,945
-
(5,974)
-
(5,974)
(6,444)
-
(6,444)
3,971
-
3,971
4,445
-
4,445
(4,715)
-
(4,715)
(5,149)
(744)
-
(744)
(704)
28
28
(5,121)
(676)
(744)
-
(744)
(704)
28
(676)
63
-
162
-
63
162
-
-
-
(519)
-
(519)
43
-
172
-
368
106
(15)
-
-
28
43
172
368
106
13
(17)
-
(17)
(620)
-
(333)
(761)
-
(761)
(1,324)
28
(1,296)
31
-
31
26
-
26
(730)
-
(730)
(1,298)
28
(1,270)
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
3
6
11
12
4
5
7
Add back exceptional items
EBITDA^ (Loss)/Profit from
underlying operations
Finance costs
LOSS BEFORE TAXATION
Taxation
LOSS AND TOTAL
COMPREHENSIVE EXPENSE
FOR THE YEAR
LOSS AND TOTAL
COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Add back share-based expense
-
-
-
OWNERS OF THE PARENT
(560)
-
(560)
(1,279)
28
(1,251)
NON-CONTROLLING
INTEREST
LOSS PROFIT AND TOTAL
COMPREHENSIVE INCOME
(170)
-
(170)
(19)
-
(19)
(730)
-
(730)
(1,298)
28
(1,270)
EARNINGS PER SHARE
9
(0.45p)
-
(0.45p)
(0.93p)
0.02p
(0.91p)
The accompanying notes form part of these financial statements.
^ This is an Alternative Performance Measure refer to Note 2 for further details
68
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Financial statements
Consolidated and Company Statements
of Financial Position
for the year ended 31 December 2020
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
Non current receivable
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)/profit for the year
Other changes in retained earnings
At 31 December
(DEFICIT)/EQUITY ATTRIBUTABLE TO:
OWNERS OF THE COMPANY
NON-CONTROLLING INTEREST
TOTAL (DEFICIT)/EQUITY
Borrowings
TOTAL NON-CURRENT LIABILITIES
Contractual liabilities
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
Note
10
11
12
14
17
18
19
20
29
19
21
23
24
24
Group
2020
£'000
614
187
1,901
-
956
3,658
773
2,438
2,143
5,354
Restated
Group
2019
Company
2020
Restated
Company
2019
£’000
614
129
1,979
-
£'000
£'000
-
-
187
1,088
-
128
1,079
-
907
-
-
3,629
1,275
1,207
47
-
-
2,525
557
3,129
9,147
1,716
10,863
-
170
-
484
9,496
16,278
14,069
300
1,050
-
139
-
-
6,928
14,540
9,577
300
978
423
133
12,138
16,278
14,069
300
1,050
-
139
8,720
28
8,748
-
-
9,955
14,540
9,577
300
978
12
133
(23,697)
(560)
15
(22,594)
(1,251)
148
(18,468)
(2,504)
15
(16,149)
(2,467)
148
(24,242)
(23,697)
(20,957)
(18,468)
7,594
(535)
7,059
29
29
100
2,308
2,408
2,437
9,469
2,254
10,879
7,072
(365)
-
-
1,889
2,510
2,510
10,879
13
13
7,072
212
212
73
-
-
2,456
2,529
5,039
6,928
1,246
1,246
1,259
12,138
2,671
2,671
2,883
9,955
The accompanying notes form part of these financial statements. The Company has taken advantage of the exemption
under Section 408 of the Companies Act 2006 from presenting its own profit and loss account. The Company made a
loss of £2,504,000 in 2020, (2019: £2,467,000 loss). The Group and Company financial statements were approved by
the Board and authorised for issue on 29 April 2021 and signed on its behalf by:
Peter Fowler
Director
Mark L W Hughes
Director
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
69
Financial statements
Consolidated Statement of Changes in Equity
for the year ended 31 December 2020
Called
up
share
capital
Share
premium
account
Merger
relief
reserve
Share
based
payment
reserve
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
14,540
9,577
300
1,166
133
423
(23,844)
2,295
(365) 1,930
-
-
-
(188)
-
-
147
(41)
-
(41)
14,540
9,577
300
978
133
423
(23,697)
2,254
(365) 1,889
1,525
5,225
-
(733)
-
-
-
-
-
-
-
87
-
-
-
(15)
-
-
-
-
-
-
6,750
- 6,750
-
-
(733)
-
(733)
-
-
87
-
87
-
-
(15)
-
(15)
213
-
-
-
-
-
-
213
-
213
-
-
- -
6
-
-
6
-
6
-
-
- -
-
-
15
15
-
15
AS AT 1
JANUARY 2020
as previously
stated
Prior year a
djustment
(Note 31)
AS AT 1
JANUARY 2020
Shares issued
for cash
Cost of share
issues
Share based
payment charge
Lapse of share
options
Exercise of
warrants and
share options
Revaluation of
freehold property
Other movements
in equity
CLN Movement
-
-
- -
-
(423)
-
(423)
-
(423)
TRANSACTIONS
WITH OWNERS
1,738
4,492
-
72
6
(423)
15
5,900 - 5,900
Total comprehen-
sive expense for
the year
AS AT 31
DECEMBER
2020
-
-
- -
-
-
(560)
(560)
(170)
(730)
16,278
14,069
300
1,050
139 -
(24,242)
7,594
(535) 7,059
70
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Financial statements
Consolidated Statement of Changes in Equity
for the year ended 31 December 2020
Called
up
share
capital
Share
premium
account
Merger
relief
reserve
Share
based
payment
reserve
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
-
-
-
-
-
-
- -
-
1,500
-
1,500
- -
(100)
(100)
-
(100)
-
-
368
- -
-
-
368
368
-
-
-
(44)
- -
44
-
-
-
-
-
-
(204)
- -
204
-
-
-
37
9
- -
- -
-
46
-
46
-
-
AS AT 1
JANUARY 2019
Shares issued
for cash
Cost of share
issues
Share based
payment charge
Lapse of Share
Options
Lapse of
Warrants
Exercise of
warrants and
share options
CLN movement
-
-
- -
-
201
-
201
-
201
TRANSACTIONS
WITH OWNERS
Total comprehen-
sive expense for
the year
AS AT 31
DECEMBER
2019
1,537
9
-
120
-
201
148
2,015
-
2,015
-
-
- -
- -
(1,251)
(1,251)
(19)
(1,270)
14,540
9,577
300
978
133
423
(23,697)
2,254
(365)
1,889
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
71
Financial statements
Company Statement of Changes in Equity
for the year ended 31 December 2020
Called
up
share
capital
Share
premium
account
Merger
relief
reserve
Share
based
payment
reserve
Equity
reserve on
convertible
loan note
Revaluation
reserve
Retained
earnings
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
AS AT 1 JANUARY 2020 as
previously stated
14,540
9,577
300
1,166
Prior year adjustment (Note 31)
-
-
AS AT 1 JANUARY 2020
14,540
9,577
-
300
1,525
5,225
-
Shares issued for cash
Cost of share issues
Share based payment charge
Lapse of Share Options
Exercise of warrants and share options
213
Revaluation of freehold property
CLN Movement
Other movements in Equity
-
-
-
(733)
-
-
-
-
-
-
-
-
-
-
-
-
-
(188)
978
-
-
87
(15)
-
-
-
-
133
-
133
-
-
-
-
-
6
-
-
6
12
(18,653)
7,075
-
12
185
(3)
(18,468)
7,072
-
-
6,750
-
-
(733)
-
-
87
(15)
213
6
(12)
15
-
-
-
-
15
-
-
-
(12)
-
(12)
TRANSACTIONS WITH OWNERS
1,738
4,492
-
72
15
6,311
Total comprehensive expense
for the year
-
-
- -
-
-
(2,504)
(2,504)
AS AT 31 DECEMBER 2020
16,278
14,069
300
1,050
139
-
(20,957) 10,879
AS AT 1 JANUARY 2019
13,003
9,568
300
858
133
21
(16,149)
7,734
Shares issued for cash
Cost of share issues
Share based payment charge
Lapse of Share Options
Lapse of Warrants
1,500
-
-
-
-
-
9
-
-
-
-
-
-
-
-
368
-
-
-
(44)
-
(204)
-
-
-
-
-
Exercise of warrants and share options
37
Recognition of equity component of
convertible loan notes (CLN)
-
-
-
-
-
-
-
-
-
(9)
(9)
-
1,500
(100)
(100)
-
368
44
204
-
-
-
-
46
(9)
148
1,805
TRANSACTIONS WITH OWNERS
1,537
Total comprehensive expense
for the year
-
9
-
-
120
-
-
-
-
133
-
(2,467)
(2,467)
12
(18,468)
7,072
-
-
-
-
-
-
-
AS AT 31 DECEMBER 2019
14,540
9,577
300
978
72
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Financial statements
Consolidated Cash Flow Statement
for the year ended 31 December 2020
Note
2020
2020
Continuing
Operations
Discontinued
Operations
2020
Total
2019
2019
Continuing
Operations
Discontinued
Operations
2019
Total
£'000
£'000
£'000
£'000
£'000
£'000
(LOSS) / PROFIT AFTER TAX
(730)
-
(730)
(1,298)
28
(1,270)
Taxation
(31)
-
(31)
(26)
-
(26)
(LOSS) / PROFIT BEFORE TAX
(761)
-
(761)
(1,324)
28
(1,296)
(59)
-
(59)
1,224
-
1,224
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
25
25
12
11
(1,203)
(2,023)
170
1,033)
170
(1,853)
(360)
(460)
(151)
(123)
(111)
-
(111)
(70)
-
(511)
(583)
(70)
(72)
(18)
Acquisition of a subsidiary
-
-
-
(121)
-
(121)
(72)
(18)
-
-
CASH OUTFLOW FROM
INVESTING ACTIVITIES
CASHFLOWS FROM
FINANCING ACTIVITIES:
Gross proceeds from the issues
of ordinary shares
(232)
-
(232)
(160)
-
(160)
6,963
-
6,963
1,547
-
1,547
Costs of share issues
(733)
-
(733)
(100)
-
(100)
Repayment of convertible
loan note
16
(2,222)
-
(2,222)
-
-
Reduction in finance lease debt
(69)
-
Finance cost on lease liabilities
(5)
-
(69)
(5)
(60)
(54)
-
-
(60)
(54)
CLN and other interest paid
(262)
-
(262)
(323)
-
(323)
Other loan repayments,
including interest
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
20
(1)
-
(1)
-
-
-
3,671
-
3,671
1,010
-
1,010
1,416
170
1,586
390
(123)
267
557
2,143
290
557
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
73
Financial statements
Company Cash Flow Statement
for the year ended 31 December 2020
(LOSS)/PROFIT AFTER TAX
Other 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
CASH OUTFLOW FROM INVESTING ACTIVITIES
CASHFLOWS FROM FINANCING ACTIVITIES:
Gross proceeds from the issues of ordinary shares
Costs of share issues
Repayment of convertible loan note
Change in 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
Note
25
25
12
11
Company
2020
£'000
(2,504)
583
(1,852)
(3,773)
(62)
(121)
(183)
6,963
(733)
(190)
(20)
(2)
(374)
5,644
1,688
28
CASH AND EQUIVALENTS AT END OF YEAR
20
1,716
The accompanying notes form part of these financial statements.
Company
2019
£’000
(2,467)
929
564
(974)
(26)
(71)
(97)
1,547
(100)
-
-
(47)
(330)
1,070
(1)
29
28
74
| ANNUAL REPORT 2020
| 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 2020 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 Accounting Standards in conformity with
the requirements of the Companies Act 2006. The
Parent Company has elected to prepare its financial
statements in accordance with IFRS. The Company
has taken advantage of the exemption under Section
408 of the Companies Act 2006 from presenting its
own profit and loss account.
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.
of the investee without holding the majority of the
voting rights. In determining whether de-facto control
exists the company considers all relevant facts and
circumstances, including:
• The size of the company’s voting rights relative to
both the size and dispersion of other parties
• who hold voting rights
• Substantive potential voting rights held by the
company and by other parties
• Other contractual arrangements
• Historic patterns in voting attendance.
The consolidated financial statements present the
results of the company and its subsidiaries (“the
Group”) as if they formed a single entity. Intercompany
transactions and balances between group companies
are therefore eliminated in full.
The consolidated financial statements incorporate
the results of business combinations using the
acquisition method. In the statement of financial
position, the acquiree’s identifiable assets, liabilities
and contingent liabilities are initially recognised at
their fair values at the acquisition date. The results of
acquired operations are included in the consolidated
statement of comprehensive income from the date on
which control is obtained. They are deconsolidated
from the date on which control ceases.
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.
(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.
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 2020.
(ii) Subsidiaries
Where the company has control over an investee, it
is classified as a subsidiary. The company controls
an investee if all three of the following elements are
present: power over the investee, exposure to variable
returns from the investee, and the ability of the investor
to use its power to affect those variable returns. Control
is reassessed whenever facts and circumstances
indicate that there may be a change in any of these
elements of control.
De-facto control exists in situations where the company
has the practical ability to direct the relevant activities
(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 £730,000
(2019 restated: £1,270,000), The cash outflow from
operating activities during the year was £2,023,000
(2019: Outflow £460,000), 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,
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
75
Financial statements
Notes to the Financial Statements
management have taken into account the profit
and cash forecasts, the continued support of the
shareholders and the Directors’ and management’s
ability to affect costs and revenues. Management
regularly forecast results, the financial position and
cash flows for the Group.
In 2020, the Directors took timely action implementing
logistical and organisational changes to consolidate the
Group’s resilience to Covid-19, including a reduction
in costs, risk assessments, safe working practices
and various other measures, including utilisation
of governmental support schemes. The Directors
also took action to expand the Group’s range of
fever screening and safety equipment, expanding
its supply base and instigating targeted marketing
campaigns which has seen a significant rise in product
sales revenues mitigating reductions elsewhere in
the business. The Directors continue to monitor the
situation and to update its risk assessments and
contingency planning as necessary.
Further details on measures being taken to address
the challenges and opportunities presented by
Covid-19 can be found in the Chief Executive
Office’s report on pages 8 to 17.
The Directors have reviewed the Group’s resources
at the date of approving the financial statements,
and their projections for future trading, which due to
winning incremental new business give a reasonable
expectation that the Group has adequate resources to
continue in operational existence for the foreseeable
future, which for the avoidance of doubt is at least
12 months from the date of signing the financial
statements. Thus, they continue to adopt the going
concern basis of accounting in the preparing the
financial statements.
Business combinations
The consideration transferred by the Group to obtain
control of a subsidiary is calculated as the sum of
the acquisition date fair values of assets transferred,
liabilities incurred, and the equity interests issued by
the Group, which includes the fair value of any asset
or liability arising from a contingent consideration
arrangement. Acquisition costs are expensed as
incurred.
The Group recognises identifiable assets acquired
and liabilities assumed in a business combination
regardless of whether they have been previously
recognised in the acquiree’s financial statements
prior to the acquisition. Assets acquired and liabilities
assumed are generally measured at their acquisition
date fair values.
76
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Foreign currency
Items included in the financial statements of the
Company are measured using the currency of the
primary economic environment in which the entity
operates - ‘the functional currency’. The functional
and presentation currency in these financial
statements is the Great British Pounds (GBP).
Transactions in foreign currencies are translated at
the foreign exchange rate ruling at the date of the
transaction (spot exchange rate). Foreign exchange
gains and losses resulting from the settlement of
such transactions and from the re-measurement
of monetary items at year-end exchange rates are
recognised in profit or loss. Non-monetary items
measured at historical cost are translated using the
exchange rates at the date of the transaction and
not subsequently retranslated.
Foreign exchange gains and losses are recognised
in arriving at profit before interest and taxation
(see Note 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, and
• For which discrete financial information is available.
Revenue
Revenue recognition
Revenue represents income derived from contracts for
the provision of goods and services, over time or at a
point in time, by the Group to customers in exchange
for consideration in the ordinary course of the Group’s
activities.
Performance Obligations
Upon approval by the parties to a contract, the
contract is assessed to identify each promise to
transfer either a distinct good or service or a series
of distinct goods or services that are substantially
the same and have the same pattern of transfer to
the customer. Goods and services are distinct and
accounted for as separate performance obligations
in the contract if the customer can benefit from them
either on their own or together with other resources
that are readily available to the customer and they are
separately identifiable in the contract.
Transaction price
At the start of the contract, the total transaction
price is estimated as the amount of consideration to
which the Group expects to be entitled in exchange
for transferring the promised goods and services
to the customer, excluding sales taxes. Variable
consideration, such as price escalation, is included
based on the expected value or most likely amount
only to the extent that it is highly probable that there
will not be a reversal in the amount of the cumulative
revenue recognised. The transaction price does not
include estimates of consideration resulting from
contract modifications, such as change orders,
until they have been approved by parties to the
contract. The total transaction price is allocated to the
performance obligations identified in the contract in
proportion to their relative stand-alone selling prices.
Given the nature of many of the Group’s products and
services, which are designed and/or manufactured
under contract to customers’ individual specifications,
there are typically no observable stand-alone selling
prices. Instead, stand-alone selling prices are typically
estimated based on expected costs plus contract
margin consistent with the Group’s pricing principles.
Whilst payment terms vary from contract to contract,
an element of the transaction price may be received
in advance of delivery. The Group may therefore
have contract liabilities depending on the contracts
in existence at a period end. The Group’s contracts
are not considered to include significant financing
components on the basis that there is no difference
between the consideration and the cash selling price.
Revenue recognition
Revenue is recognised as performance obligations
are satisfied as control of the goods and services is
transferred to the customer.
For each performance obligation within a contract the
Group determines whether it is satisfied over time or at
a point in time. Performance obligations are satisfied
over time if one of the following criteria is satisfied:
• The customer simultaneously receives and
consumes the benefits provided by the Group’s
performance as it performs;
• The Group’s performance creates or enhances an
asset that the customer controls as the asset is
created or enhanced; or
• The Group’s performance does not create an asset
with an alternative use to the Group and it has
an enforceable right to payment for performance
completed to date.
The Group has determined that most of its contacts
satisfy the overtime criteria, either because the
customer simultaneously receives and consumes the
benefits provided by the Group’s performance as it
performs, or the Group’s performance does not create
an asset with an alternative use to the Group and it
has an enforceable right to payment for performance
completed to date. For each performance obligation
recognised over time, the Group recognises revenue
using an input method, based on costs incurred in the
period. Revenue and attributable margin are calculated
by reference to reliable estimates of transaction
price and total expected costs, after making suitable
allowances or technical and other risks. Revenue
and associated margin are therefore recognised
progressively as costs are incurred, and as risks have
been mitigated or retired. The Group has determined
that this method appropriately depicts the Group’s
performance in transferring control of the goods and
services to the customer.
If the overtime criteria for revenue recognition is not
met, revenue is recognised at the point in time that
control is transferred to the customer which is usually
when legal title passes to the customer and the
business has the right to payment.
When it is expected that total contract costs will
exceed total contract revenue, the expected loss is
recognised immediately as an expense.
Operating expenses
Operating expenses are recognised in profit or loss
upon utilisation of the service or at the date of their
origin. Expenditure for warranties is recognised and
charged against the associated provision when the
related revenue is recognised. Certain items have been
disclosed as operating exceptional due to their size
and nature and their separate disclosure should enable
better understanding of the financial dynamics.
Interest income and expenses
Interest income and expenses are reported on an
accruals basis using the effective interest method.
Goodwill
Goodwill is stated after separate recognition of
identifiable intangible assets. It is calculated as the
excess of the sum of a) fair value of consideration
transferred, b) the recognised amount of any non-
controlling interest in the acquiree and c) acquisition
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
77
Financial statements
Notes to the Financial Statements
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%
The Group recognises a right-of-use asset
and a corresponding lease liability at the lease
commencement date. The lease liability is initially
measured at the present value of the following lease
payments:
• fixed payments;
• variable payments that are based on index or rate;
• the exercise price of any extension or purchase
option if reasonably certain it can be exercised; and
• penalties for terminating the lease, if relevant
The lease payments are discounted using the interest
rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate for
that type of asset.
The right-of-use assets are initially measured based on
initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date,
plus any initial direct costs. The right-of-use assets are
depreciated over the period of the lease term using
the straight-line method. The lease term includes
periods covered by the option to extend, if the Group is
reasonably certain to exercise that option. In addition,
right-of-use assets may during the lease term be
reduced by any impairment losses, if any, or adjusted
for certain remeasurements of the lease liability.
Freehold land is not depreciated.
Impairment on non-financial assets
Leases
All leases that fall under IFRS 16 will be recorded on
the balance sheet as liabilities, at the present value
of the future lease payments, along with an asset
reflecting the right to use the asset over the lease
term. Rentals payable under operating leases exempt
from IFRS 16 are charged to income on a straight-
line basis over the term of the relevant lease. At
inception of a contract, the Group assesses whether
a contract is, or contains, a lease based on whether
the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration.
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.
78
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
FINANCIAL INSTRUMENTS
Financial assets
The Group’s financial assets include cash and cash
equivalents and loans and other receivables. All
financial assets are recognised when the Group
becomes party to the contractual provisions of the
instrument. All financial assets are initially recognised
at fair value, plus transaction costs. They are
subsequently measured at amortised cost using
the effective interest method, less any impairment
losses. Any changes in carrying value are recognised
in the Statement of Comprehensive Income. Interest
and other cash flows resulting from holding financial
assets are recognised in the Statement of Cash Flows
when received, regardless of how the related carrying
amount of financial assets is measured.
The Group recognises a loss allowance for expected
losses on financial assets that are measured at
amortised cost including trade receivables and
contract assets. The amount of expected credit losses
is updated at each reporting date to reflect changes in
credit risk since initial recognition.
Cash and cash equivalents comprise cash at bank
and deposits and bank overdrafts. Bank overdrafts are
shown within borrowings in current liabilities unless a
legally enforceable right to offset exists.
Financial liabilities
The Group’s financial liabilities comprise trade
and other payables and borrowings. All financial
liabilities are recognised initially at their fair value and
subsequently measured at amortised cost using
the effective interest method. Financial liabilities are
derecognised when they are extinguished, discharged,
cancelled or expire.
Convertible loan notes with an option that leads to
a potentially variable number of shares, have been
accounted for as a host debt with an embedded
derivative. The embedded derivative is accounted for at
fair value through profit and loss at each reporting date.
The host debt is recognised initially at fair value, and
subsequently measured at amortised cost using the
effective interest method.
Convertible loan notes which can be converted to
share capital at the option of the holder, and where
the number of shares to be issued does not vary
with changes in fair value, are considered to be a
compound instrument.
The liability component of a compound instrument is
recognised initially at the fair value of a similar liability
that does not have an equity conversion option.
The equity component is recognised initially at the
difference between the fair value of the compound
instrument and fair value of the liability component.
Any directly attributable transaction costs are allocated
to the liability and equity components.
Financial liabilities and equity instruments issued by
the Group are classified according to the substance
of the contractual arrangements entered into and
the definitions of a financial liability and an equity
instrument. An equity instrument is any contract
that evidences a residual interest in the assets of the
Group after deducting all of its liabilities.
Investments and loans in subsidiaries
Subsidiary fixed asset investments are valued at cost
less provision for impairment. The Group applies the
IFRS 9 simplified approach to measuring expected
credit losses which uses a lifetime expected loss
allowance for all investment and loans in subsidiaries.
Inventories
Inventories are stated at the lower of cost and net
realisable value. Costs of ordinarily interchangeable
items are assigned using the first in, first out cost
formula. Costs principally comprise of materials and
bringing them to their present location. Net realisable
value represents the estimated selling price less all
estimated costs to completion and costs to be
incurred in marketing, selling and distribution.
Taxation
The tax expense represents the sum of the tax
currently payable and deferred tax. Current and
deferred tax are recognised as an expense or income
in profit or loss, except in respect of items dealt with
through equity, in which case the tax is also dealt with
through equity.
The tax currently payable is based on taxable profit
for the year. Taxable profit differs from net profit as
reported in the Statement of Comprehensive Income
because it excludes items of income or expense that
are taxable or deductible in other years and it further
excludes items that are never taxable or deductible.
The Group’s liability for current tax is calculated by
using tax rates that have been enacted or substantively
enacted by the balance sheet date.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
79
Financial statements
Notes to the Financial Statements
Deferred tax
Pensions
Deferred tax is the tax expected to be payable or
recoverable on material differences between the
carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used
in the computation of taxable profit and is accounted
for using the balance sheet liability method. Deferred
tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised
to the extent that it is probable that taxable profits
will be available against which deductible temporary
differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of
other assets and liabilities in a transaction which affects
neither the tax profit not the accounting profit.
Cash and cash equivalents
Cash and cash equivalents include cash in hand,
deposits held at call with banks, other short-term highly
liquid investments with original maturities of three
months or less, and bank overdrafts. Bank overdrafts
are shown within borrowings in current liabilities unless
a legally enforceable right to offset exists.
Equity, reserves and dividend payments
Share capital represents the nominal value of shares
that have been issued.
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.
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.
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.
Merger relief reserve includes any premiums on issue
of share capital as part or all of the consideration in a
business combination.
Share-based payments
The Group has two types of share based payments
other than employee compensation.
Warrants issued for services rendered which are
accounted for in accordance with IFRS 2 recognising
either the cost of the service if it can be reliably
measured or the fair value of the warrant (using
Black-Scholes option pricing models).
Warrants issued as part of Share Issues have been
determined as equity instruments under IAS 32. Since
the fair value of the shares issued at the same time is
equal to the price paid, these warrants, by deduction,
are considered to have been issued at nil value.
The share-based payment reserve represents equity-
settled share-based employee remuneration until such
share options are exercised or lapse. It also includes
the equity settled items such as warrants for services
rendered accounted for in accordance with IFRS 2.
The revaluation reserve within equity comprises gains
and losses due to the revaluation of property, plant
and equipment.
Retained earnings include all current and prior period
retained profits and losses.
Dividend distributions payable to equity shareholders
are included in liabilities when the dividends have
been approved in a general meeting prior to the
reporting date.
80
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
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.
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.
SIGNIFICANT MANAGEMENT JUDGEMENTS IN
APPLYING ACCOUNTING POLICIES
The following are significant management judgements
in applying the accounting policies of the Group
that have the most significant effect on the financial
statements.
Items included in the financial statements of each of
the Group’s entities are measured using the currency
of the primary economic environment in which the
entity operates (‘the functional currency’). The Board
has judged that because most of the Groups costs and
a substantial part of its sales are situated in the UK.
Goodwill
Goodwill (note 10) has been tested for impairment
by considering its net present value for the expected
income stream in perpetuity at a discount rate judged
to be 5% based on the normal lending rate we are
offered leases at, which management consider is
a good surrogate for cost of capital. It was also
established that 20% (2019:18%) is the discount
rate at which no impairment still would be needed.
The income is assumed to be flat and stable for the
purpose of this test. Goodwill which does not show
a net present value higher than its carrying cost will
be impaired.
Deferred tax asset
Deferred tax assets (note 17) 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.
Revalued freehold property
The freehold property is stated at fair value. A full
revaluation exercise was carried out in December
2020. The fair value is based on market value, being
the estimated amount for which a property could
New standards, amendments and interpretations
The following new standards have been adopted and
where required the prior year’s figures have been
restated.
Amendments to IAS 1, Presentation of financial
statements’ on classification of liabilities
These narrow-scope amendments to IAS 1,
‘Presentation of financial statements’, clarify that
liabilities are classified as either current or non-current,
depending on the rights that exist at the end of the
reporting period. Classification is unaffected by the
expectations of the entity or events after the reporting
date (for example, the receipt of a waiver or a breach
of covenant). The amendment also clarifies what IAS 1
means when it refers to the ‘settlement’ of a liability
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
concentrated in a single identifiable asset or group of
similar assets.
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.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
81
Financial statements
Notes to the Financial Statements
principle-based accounting for insurance contracts.
IFRS 17 supersedes IFRS 4 Insurance Contracts as of
1 January 2023. This is not applicable to the Group.
Classification of Liabilities as Current or Non-
Current (Amendments to IAS 1)
The amendments aim to promote consistency in
applying the requirements by helping companies
determine whether, in the statement of financial
position, debt and other liabilities with an uncertain
settlement date should be classified as current
(due or potentially due to be settled within one year)
or non-current. If endorsed this will apply for
annual reporting periods beginning on or after
1 January 2023.
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.
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.
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.
Other Standards not applicable
The following new standards or amendments are
not applicable to the Group
• Amendment to IFRS 16, ‘Leases’ – Covid-19
related rent concessions
• Amendments to IFRS 17 and IFRS 4, ‘Insurance
contracts’, deferral of IFRS 9
• Amendments to IFRS 9, IAS 39 and IFRS 7 –
Interest rate benchmark reform
Standards amendments and interpretations in
issue not yet effective
IFRS 17 Insurance Contracts
IFRS 17 requires insurance liabilities to be measured
at a current fulfilment value and provides a more
uniform measurement and presentation approach
for all insurance contracts. These requirements
are designed to achieve the goal of a consistent,
82
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
83
Financial statements
Notes to the Financial Statements
Reference to the Conceptual Framework
(Amendments to IFRS 3)
The amendments update an outdated reference to the
Conceptual Framework in IFRS 3 without significantly
changing the requirements in the standard. If endorsed
this will apply for annual reporting periods beginning on
or after 1 January 2022.
Property, Plant and Equipment — Proceeds
before Intended Use (Amendments to IAS 16)
The amendments prohibit deducting from the cost
of an item of property, plant and equipment any
proceeds from selling items produced while bringing
that asset to the location and condition necessary for
it to be capable of operating in the manner intended
by management. Instead, an entity recognises the
proceeds from selling such items, and the cost of
producing those items, in profit or loss. If endorsed
this will apply for annual reporting periods beginning
on or after 1 January 2022.
Onerous Contracts — Cost of Fulfilling a
Contract (Amendments to IAS 37)
The amendments specify that the ‘cost of fulfilling’ a
contract comprises the ‘costs that relate directly to the
contract’. Costs that relate directly to a contract can
either be incremental costs of fulfilling that contract
(examples would be direct labour, materials) or an
allocation of other costs that relate directly to fulfilling
contracts (an example would be the allocation of the
depreciation charge for an item of property, plant and
equipment used in fulfilling the contract). If endorsed
this will apply for annual reporting periods beginning
on or after 1 January 2022.
Alternative performance measures (APM)
In the reporting of financial information, the Directors
have adopted the APM ‘EBITDA profit from underlying
continuing and discontinued operations (APMs were
previously termed ‘Non-GAAP measures’), which is
not defined or specified under International Financial
Reporting Standards (IFRS).
The Directors also look at recurring revenue as a key
performance indicator. This is revenue arising from
multi-year contracts.
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; Services and Technology. This split of
business segments is based on the products and
services each offer.
84
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
2020
Managed Services
Technology Group and Central
Group Total
Supply of products
Supply and installation contracts
Maintenance and services
Training courses
Revenue
Segmental underlying EBITDA^
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
£'000
-
-
4,259
98
£’000
4,237
1,039
312
-
4,357
5,588
655
-
(136)
519
(1)
518
51
569
781
-
(9)
772
-
772
(2)
770
492
(2,833)
5,255
912
39
1,392
694
10
£'000
-
-
-
-
-
(1,955)
-
(80)
(2,035)
(16)
(2,051)
(18)
(2,069)
2,849
831
134
£'000
4,237
1,039
4,571
98
9,945
(519)
-
(225)
(744)
(17)
(761)
31
(730)
9,496
2,437
183
2019 (Restated)
Managed Services
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
£'000
-
-
5,291
234
5,525
£’000
1,598
3,468
298
-
5,364
£'000
-
-
-
-
-
1,084
525
(1,596)
-
(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
(368)
(1)
(113)
(2,078)
(616)
(2,694)
8
(2,686)
1,956
2,534
18
£'000
1,598
3,468
5,589
234
10,889
13
(368)
(106)
(215)
(676)
(620)
(1,296)
26
(1,270)
6,926
5,039
70
^ This is an Alternative Performance Measure refer to Note 2 for further details
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
85
Financial statements
Notes to the Financial Statements
Geographical areas
5. FINANCE COSTS
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
Africa
Middle East
Rest of World
Total
2020
£'000
2,056
4,172
508
3,209
9,945
2019
£'000
1,957
4,899
2,397
1,636
10,889
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 “Rest of World” are revenues of
approximately £1,284,000 (2019: £1,236,000) for the
provision of advanced screening of containers at ports
in Asia. This was the Group’s largest customer in 2020.
No other single customer contributed more than 10%
of the Group revenue in either 2020 or 2019.
4. EXCEPTIONAL ITEMS
Middle East airport
pre-contract costs
Ferry closure costs
2020
£'000
-
-
-
2019
£'000
105
1
106
The 2019 exceptional relates to 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.
Finance cost on lease
liabilities
Interest payable on bank
and other borrowings
Interest paid on convertible
loan notes (Note 16)
Other movement on
convertible loan notes
Total finance benefit /
(costs)
Group 2020
Group 2019
£'000
£'000
(5)
(1)
(54)
(1)
(262)
(375)
251
(17)
(190)
(620)
6. LOSS FROM OPERATIONS
The following items have been included in arriving at
the loss for the financial year:
Group 2020
Group 2019
Staff costs (see Note 8)
Depreciation of property,
plant and equipment
(see Note 12)
Amortisation of intangible
assets (see Note 11)
Operating lease rentals
payable
Short term leases
Foreign exchange
loss/(gain)
£'000
3,887
162
63
96
(43)
£'000
4,396
172
43
85
(166)
Auditor’s remuneration
Amounts payable in 2020 years relate to PKF in
respect of audit and other services (2019: BDO were
the Company’s auditors). The local Audit in Sierra Leone
is performed by Moore Sierra Leone (both years). The
local audit in Ghana is performed by PKF Ghana.
86
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
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 PKF Littlejohn UK (2019: BDO)
Local audit in Sierra Leone - Moore Sierra Leone
Local audit in Ghana - PKF Ghana
Total fees
Group 2020
Group 2019
£'000
46
2
20
-
68
18
1
87
£'000
57
2
21
18
98
20
-
118
7. TAXATION
Analysis of tax charge / (credit) in year
The Finance Act 2020 set the Corporation Tax main
rate at 19% for the financial year beginning 1 April 2020.
Deferred taxes at the balance sheet date have been
measured using a 19% tax rate and reflected in these
financial statements.
Current year
UK corporation tax on profits in the year
Potential foreign corporation tax on profits in the year
Deferred Tax (Note 17)
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% (2019: 19%)
Effects of:
Expenses not deductible for tax purposes
Foreign entity deferred tax movement (Note 17)
Unrecognised losses carried forward
Total tax - credit
Group 2020
Group 2019
£'000
£'000
-
18
(49)
-
(31)
-
-
(18)
(8)
(26)
Group 2020
Group 2019
£'000
(761)
(145)
(158)
(49)
320
(31)
£'000
(1,296)
(246)
106
-
114
(26)
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
87
Financial statements
Notes to the Financial Statements
8. EMPLOYEE COSTS
Employee costs for the Group during the year:
Wages and salaries
Pension contributions
Social security costs
Share based payments
Job retention support
Net Cost
Group 2020
Group 2019
£'000
3,757
60
284
4,101
-
4,101
(214)
3,887
£'000
3,854
44
266
4,164
232
4,396
-
4,396
The Group operates a stakeholder pension scheme. The Group made pension contributions totalling £60,000 during
the year (2019: £44,000), and pension contributions totalling £13,000 were outstanding at the year-end (2019: £8,000).
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 £614,000
(2019: £582,000) and the highest paid director received remuneration totalling £196,000 (2019: £201,000).
Average monthly number of people (including Executive Directors) employed
By function:
Sales
Operations
Administration
Management
2020 Group Number
2019 Group Number
Continuing
Operations
Discontinued
Operations
Total
Continuing
Operations
Discontinued
Operations
7
197
24
10
238
-
1
-
-
1
7
198
24
10
239
3
224
25
6
258
-
3
-
-
3
Total
3
227
25
6
261
88
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
9. EARNINGS 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
(Loss) / Profit and total comprehensive expense (continuing)
(Loss) / Profit and total comprehensive expense (discontinued)
(Loss) / Profit and total comprehensive expense total
2020
£'000
145,403
17,245
162,648
2020
£'000
(730)
-
(730)
2019
£'000
130,028
8,834
138,862
2019
£'000
(1,298)
28
(1,270)
For the year ended 31 December 2020 and 2019 the
issue of additional shares on exercise of outstanding
share options, convertible loans and warrants would
decrease the basic loss per share and there is therefore
no dilutive effect. Loss per share was 0.45p (2019 Loss
restated 0.91p).
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
Group
2020
£'000
1,377
-
1,377
(763)
-
(763)
614
614
Group
2019
£'000
1,359
18
1,377
(763)
-
(763)
596
614
The goodwill balance relates to the acquisition of
Longmoor Security Limited, Keyguard U.K Limited
and Euro-Ops SARL.
The Group tests goodwill annually for impairment, or
more frequently if there are indications that goodwill
may be impaired. The recoverable amounts of the
cash-generating unit are determined from value in use
calculations. The key assumptions are discount rate (5%)
future revenues (assumed as flat) derived from the most
recent 2020 financial budgets approved by management.
The projection assumes that the companies are held
in perpetuity. A discount rate of 20% (2019:18%) 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.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
89
Financial statements
Notes to the Financial Statements
11. OTHER INTANGIBLE ASSETS
2020
Cost
At 1 January 2020
Additions
Disposals
At 31 December 2020
Accumulated amortisation and impairment
At 1 January 2020
Charge for the year
Disposals
At 31 December 2020
Net book value at 31 December 2020
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
Group Website and Software
Company Website and Software
£'000
£'000
297
121
(3)
415
168
63
(3)
228
187
286
121
(3)
404
158
62
(3)
217
187
Group Website and Software
Company Website and Software
£'000
£'000
225
72
297
125
43
168
129
215
71
286
115
43
158
128
90
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Total
£'000
3,188
111
(200)
6
3,105
1,209
162
(167)
1,204
1,901
Total
£'000
12. PROPERTY, PLANT AND EQUIPMENT
Group 2020
Cost or valuation
At 1 January 2020
Additions
Disposals
Revaluation
At 31 December 2020
Accumulated amortisation and impairment
At 1 January 2020
Charge for the year
Disposals
At 31 December 2020
1,039
34
-
6
1,079
38
21
-
59
Net book value at 31 December 2020
1,020
Freehold
property
Plant and
equipment
Office
equipment,
fixtures
and fittings
Motor
vehicles
Right
of use
assets
£'000
£'000
£'000
£'000
£'000
998
164
260
37
-
-
727
40
(1)
-
(17)
-
766
1,018
476
44
(1)
519
247
428
41
(18)
451
567
(86)
-
78
160
1
(86)
75
3
(96)
-
164
107
55
(62)
100
64
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
Freehold
property
Plant and
equipment
Office
equipment,
fixtures
and fittings
Motor
vehicles
Right
of use
assets
£'000
£'000
£'000
£'000
£'000
1,031
8
-
-
1,039
17
21
-
-
38
471
32
-
224
727
236
38
-
202
476
251
1,194
159
260
3,115
25
(63)
(158)
998
553
43
(34)
(134)
428
570
5
-
-
-
-
-
70
(63)
66
164
260
3,188
151
9
-
-
160
4
46
61
-
-
107
153
1,003
172
(34)
68
1,209
1,979
Net book value at 31 December 2019
1,001
Right of use assets (motor vehicles) above have been
created in accordance with IFRS 16. Motor vehicles are
leased for certain employees for lease terms ranging
between 3-5 years with fixed payments. The Group
does not purchase or guarantee the future value of
lease vehicles.
The freehold property was valued professionally by White
Commercial, Chartered Surveyors, as at 31 December
2020, which provided a valuation of £1,020,000. The
valuation was made on the basis of recent market
transactions on arm’s length terms and on an alternative
use basis. The Revaluation Reserve is not available for
distribution to shareholders.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
91
Financial statements
Notes to the Financial Statements
12. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Company 2020
Cost or valuation
At 1 January 2020
Additions
Disposals
Revaluation
At 31 December 2020
Accumulated amortisation and impairment
At 1 January 2020
Charge for the year
Disposals
At 31 December 2020
Net book value at 31 December 2020
Company 2019
Cost or valuation
At 1 January 2019
Additions
At 31 December 2019
Accumulated amortisation and impairment
At 1 January 2019
Charge for the year
Adjustment
At 31 December 2019
Freehold
property
Plant and
equipment
Office
equipment,
fixtures
and fittings
Right
of use
assets
£'000
£'000
£'000
£'000
1,039
34
-
6
1,079
38
21
-
59
1,020
15
3
-
-
18
15
1
-
16
2
195
25
(18)
-
202
175
10
(18)
167
35
84
-
(8)
-
76
26
19
-
45
31
Freehold
property
Plant and
equipment
Office
equipment,
fixtures
and fittings
Right
of use
assets
£'000
£'000
£'000
£'000
Total
£'000
1,333
62
(26)
6
1,375
254
51
(18)
287
1,088
Total
£'000
1,031
15
185
76
1,307
8
-
10
8
26
1,039
15
195
84
1,333
17
15
174
7
213
21
-
7
19
47
-
-
(6)
-
(6)
38
15
175
26
254
Net book value at 31 December 2019
1,001
-
20
58
1,079
92
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
The freehold property was valued professionally
by White Commercial, Chartered Surveyors, as at
31 December 2020, which provided a valuation of
£1,020,000. The valuation was made on the basis
of recent market transactions on arm’s length terms
and on an alternative use basis. The Revaluation
Reserve is not available for distribution to shareholders.
No depreciation has been charged on the freehold
land only building additions have been depreciated.
The difference between the net book value of the
total freehold property if depreciation, at 2%, had
been charged as shown in the financial statements
is not materially different to the value the asset is
recorded at the balance sheet date.
The freehold property is stated at valuation, the
comparable historic cost and depreciation values
are as follows. This depreciation is charged on
historical cost only:
Historical cost
Accumulated depreciation
At 1 January
Charge for the year
At 31 December
Net book value as at 31 December
2020
£'000
756
293
15
308
448
2019
£'000
722
279
14
293
429
13. LEASE COMMITMENTS
The Group accounts for operating leases under
IFRS 16. There are some leases of small value or
less than one-year duration which have been charged
to expenses as incurred, but the aggregate commitment
of these leases is immaterial.
Right to use assets
At 1 January 2020
Expensed in the year
As at 31 December 2020
Of which
Current lease
Non-current
As at 31 December 2020
2020
£'000
158
(91)
67
38
29
67
2019
£'000
216
(58)
158
60
98
158
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
93
Financial statements
Notes to the Financial Statements
14. INVESTMENT IN SUBSIDIARIES
The Group has reviewed its disclosure on investments
in subsidiaries.
All loans relate to cash movements between Group
companies and are repayable on demand. It has been
decided that loans and other intercompany accounts
will, going forward, be included in the Company’s
respective current payables or receivables. This is
because they are more in the nature of current assets
and current liabilities than longer term investments.
Therefore this note now deals solely with investments:
Company
Cost
At 1 January 2019
Movement in Year
At 31 December
Accumulated impairment
At 1 January 2019
Movement in Year
At 31 December
Investment in subsidiaries
2020
Investments
2019
Restated Investments
£'000
389
-
389
(389)
-
(389)
-
£'000
378
11
389
(378)
(11)
(389)
-
A sum of £7,915,000 (2019: £8,650,000) has been
recognised in receivables; and £735,000 (2019:
£2,398,000) has been recognised in payables.
Had the Company continued to report as in prior years,
this would have been the result:
Company
Cost
At 1 January 2019
Movement in Year
At 31 December
Accumulated impairment
At 1 January 2019
Movement in Year
At 31 December
2020
Investments
£'000
389
-
389
2020
Loans
£'000
14,901
(114)
14,787
2020
Total
£'000
2019
Investments
£'000
15,290
378
(114)
11
15,176
389
(389)
(8,649)
(9,038)
-
1,042
1,042
(389)
(7,607)
(7,996)
(378)
(11)
(389)
2019
Loans
£'000
15,458
(557)
14,901
(8,552)
(97)
(8,649)
2019
Total
£'000
15,836
(546)
15,290
(8,930)
(108)
(9,038)
Investment in subsidiaries
-
7,180
7,180
-
6,252
6,252
94
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
15. SUBSIDIARY UNDERTAKINGS
The subsidiary undertakings at 31 December 2020 were as follows:
Name
Westminster International
Limited
Country of
incorporation
Principal activity
England
Advanced security technology. (Technology division)
Westminster Security
Limited (formerly 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
Euro Ops SARL
Westminster Managed
Services Limited (formerly
Westminster Facilities
Management Limited)
CTAC Limited
Longmoor Security
Services Limited (formerly
Westminster Aviation
Security Services (ME)
Limited)
Westminster International
(Ghana) Limited
Germany
Managed Services
Germany
Dormant
France
England
Managed Services infrastructure
Dormant
England
England
Dormant
Dormant
Ghana
Dormant
% of nominal ordinary
share capital and
voting rights held
100
100
100
100
100
100
100
90
49
100
85
85
100
100
100
100
90
Subsidiary company registered addresses:
England
Westminster House, Blacklocks Hill, Banbury, Oxfordshire, OX17 2BS, United Kingdom.
Sierra Leone
60 Wellington Street, Freetown, Sierra Leone.
Germany
Chiemseestrasse 25, 83233 Bernau am Chiemsee, Germany.
France
Ghana
3 Rue de Bischwihr, 68280 Andolsheim. France.
2nd Floor, Emerald House, Gowa Lane, Roman Ridge, Accra.
* Consolidated due to de facto control. These results do not have a material effect on the financial statements.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
95
Financial statements
Notes to 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
Financial liabilities measured at amortised cost
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)
Group
2020
£'000
Group
2019
£'000
Company
2020
Company
2019
£'000
£'000
2,647
2,143
2,279
9,059
557
1,716
4,790
2,836
10,775
29
2,308
2,337
2,510
2,405
4,915
13
1,246
1,259
8,650
28
8,678
212
2,655
2,687
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.
96
| ANNUAL REPORT 2020
| 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
£2.245m repaid or converted during 2020.
Secured Convertible Loan Notes (“CLN”)
Conversion Price
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.
Security
Secured fixed and floating released at the end of the year.
Redemption Date
1 May 2021 however all repaid or converted in 2020.
Management Fee
£25,000 per annum.
Coupon
Conversion Detail
12 % until 31 March 2019 then 15% paid quarterly in arrears. Listed on the CISX during
the year; but delisted once all were repaid or converted.
Company could make repayment without penalty at any time. The holder could convert
at any time.
These were either converted or repaid during 2020 with the process being completed on 31 December 2020. See also Note 23.
At 1 January
Amortised finance cost
Interest paid
Fair Value adjustment on extension
Repaid in the year
Converted in the year
At 31 December
2020
2019
CULN
£’000
179
20
(9)
-
(190)
-
-
CLN
£’000
2,233
265
(253)
-
(2,032)
(213)
-
Total
£’000
2,412
285
(262)
-
(2,222)
(213)
-
CULN
£’000
171
18
(10)
-
-
-
179
CLN
£’000
2,216
357
(312)
(28)
-
-
2,233
Analysis of movement in debt at principal value (excluding IFRS impacts), memorandum only.
At 1 January
Fair value adjustment on conversion /
repayment
Conversion
Repaid
At 31 December
CULN
£’000
171
2020
CLN
£’000
2,245
Total
£’000
2,416
CULN
£’000
171
2019
CLN
£’000
2,245
19
-
19
-
-
-
-
(190)
-
(213)
(2,032)
-
(213)
(2,222)
-
-
-
171
-
-
2,245
-
-
2,416
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
97
Total
£’000
2,387
375
(322)
(28)
-
-
2,412
Total
£’000
2,416
Financial statements
Notes to the Financial Statements
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. Reviews performed since then, including as
at 31 December 2020, confirmed those expectations.
The tax losses against which this deferred tax asset is
being recognised are in the group’s holding company
and its principal UK based subsidiaries. Evidence, both
positive and negative, primarily the Group’s projections
of future profits have been considered. The critical
judgement has been the timing of new contracts. The
deferred tax asset is expected to be used in the period
up to the end of 2022.
The Group believes it has a total potential deferred
tax asset of £2,557,000 (2019: £1,904,000). It has
recognised a deferred tax asset of £956,000 (2019:
£907,000) due to budgeted future profits of the business
beyond 2021. There remains £1,601,000 (2019:
£991,000) of unrecognised deferred tax asset.
Opening balance as at 1 January
Credit / (debit) to income
statement
Deferred tax asset as at
31 December
2020
2019
£'000
£'000
907
49
889
18
956
907
18. INVENTORIES
Group
2020
Group
2019
Company
2020
Company
2019
£'000
£'000
£'000
£'000
Finished
goods
773
773
47
47
-
-
-
-
Deferred tax assets and liabilities have been calculated
using the expected future tax rate of 19% (2019: 17%).
Any changes in the future would affect these amounts
proportionately.
The cost of inventories recognised as an expense
within cost of sales amounted to £2,782,000 (2019:
£3,210,000). No reversal of previous write-downs was
recognised as a reduction of expense in 2020 or 2019.
19. TRADE AND OTHER RECEIVABLES
Amounts falling due within one year:
Trade receivables, gross
Allowance for credit losses
Trade receivables
Amounts recoverable on contracts
Intercompany receivables
Other receivables
Financial assets
Other taxes and social security
Prepayments
Non-financial assets
Trade and other receivables
Non-current receivable (financial asset)
98
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Group
2019
£'000
759
(52)
707
135
-
1,321
2,163
211
64
275
2,438
484
Group
2018
£'000
851
(116)
735
Company
2019
Company
2018
£'000
£'000
1
(1)
1
(1)
-
-
1,430
-
-
-
114
2,279
-
246
246
2,525
7,915
1,144
9,059
63
25
88
8,650
-
8,650
-
70
70
9,147
8,720
-
-
-
The average credit period taken on sale of goods in
2020 was 19 days (2019: 38 days). An allowance has
been made for estimated credit losses of £52,000
(2019: £116,000). This allowance has been based on
the knowledge of receivables at the reporting date
together with forecasts of future economic impacts
and their collectability. There are no expected credit
losses on amounts recoverable on contracts.
Expected credit losses on intercompany receivables
assume that repayment of the loan is demanded at
the reporting date. If the subsidiary has sufficient
accessible highly liquid assets to repay the loan if
demanded at the reporting date, the expected credit
loss is likely to be immaterial. If the subsidiary could not
repay the loan if demanded at the reporting date, the
Group consider the expected manner of recovery to
measure expected credit losses. This is a ‘repay over
time’ strategy (that allows the subsidiary time to pay),
Non-trading subsidiaries will not be able to repay loans
over time and are therefore deemed to be impaired. A
loan to Sovereign Ferries (SL) Limited which was fully
impaired was written off in the period.
Other receivables include a sum of £1,130,000
due from the RiverFort Equity Placing and Sharing
Agreement detailed in note 23. It is expected that it
will be recovered from the sale of shares currently
still held by RiverFort. However, refer also note 26 on
Contingent Liabilities.
The following table provides an analysis of trade
receivables at 31 December. The Group believes that
the balances are ultimately recoverable based upon a
review of past payment history and the current financial
status of the customers.
Current
Not more than 3 months
More than 3 months
Allowances for Credit Losses
Opening balance at 1 January
Amounts written off
Amounts provided
Written back (no longer required)
Closing balance at 31 December
2020
£'000
463
130
166
759
116
(48)
46
(62)
52
2019
£'000
474
197
180
851
127
(113)
102
-
116
There are no significant expected credit losses from
financial assets that are neither past due nor impaired.
At 31 December 2020 £307,000 (2019: £510,000)
of receivables were denominated in US dollars and
£167,000 (2019: £ Nil) were denominated in
Ghanaian Cedi. 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
2020
£'000
2,143
-
2,143
Group
2019
£'000
605
(48)
557
Company
2020
Company
2019
£'000
1,716
£'000
28
-
-
1,716
28
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 2020
| WESTMINSTER GROUP PLC
|
99
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:
Ordinary Share Capital
2020
2019
At 1 January
Arising on exercise of share options and warrants
Issued under the RiverFort EPSA
Number
£’000
Number
145,402,511
14,540
130,027,511
2,125,000
14,000,000
213
375,000
1,400
-
Share capital reorganisation to create deferred shares
-
(15,991)
-
Other issue for cash
At 31 December
125,000,000
286,527,511
125
287
15,000,000
145,402,511
£’000
13,003
37
-
-
1,500
14,540
Deferred Share Capital
2020
2019
Number
£’000
Number
£’000
At 1 January
-
-
-
Share capital reorganisation to create deferred shares
161,527,511
15,991
-
At 31 December
161,527,511
15,991
-
Total Share Capital
2020
2019
Ordinary Share Capital
Deferred Share Capital
Number
£’000
Number
286,527,511
161,527,511
448,055,022
287
145,402,511
15,991
-
16,278
145,402,511
During the year the following equity issues took place:
Date
23 January 2020
01 April 2020
02 June 2020
02 October 2020
07 October 2020
Comment
Equity placing
Conversion of Loan Note
Conversion of Loan Note
Conversion of Loan Note
Conversion of Loan Note
22 December 2020
Equity placing
Shares Issued
14,000,000
62,500
937,500
937,500
187,500
125,000,000
-
-
-
£’000
14,540
-
14,540
Issue price
12.5p
10p
10p
10p
10p
4p
100
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Share Capital Reorganisation
22. SHARE OPTIONS AND WARRANTS
During the year the company undertook a share
capital reorganisation in order to facilitate a placing
of shares. As at 3 December 2020 the Company’s
Existing Ordinary Shares were trading at around 6.3
pence and had a nominal value of 10 pence. Under the
Companies Act 2006 the Company is not permitted
to issue shares with an issue price which is below
their nominal value. In order to enable the Company
to issue shares pursuant to the placing at 4 pence per
share and also going forwards in the future at an issue
price which exceeds their nominal value, the Company
undertook a reorganisation of its ordinary share
capital. Under the share capital reorganisation each of
the Existing Ordinary Shares that were in issue were
subdivided into 1 new ordinary share of 0.1 pence
each and 1 deferred share of 9.9 pence each.
After the Share Capital Reorganisation had taken place
and before the placing, there were the same number
of New Ordinary Shares in issue as there were Existing
Ordinary Shares in issue. There were 161,527,511
Existing Ordinary Shares in issue as at 3 December
2020. Immediately following the share capital
reorganisation and before completion of the placing,
161,527,511 New Ordinary Shares and 161,527,511
Deferred Shares were issued, and the Existing
Ordinary Shares cancelled.
The New Ordinary Shares have the same rights as
those currently accruing to the Existing Ordinary
Shares currently in issue under the articles of
association of the Company, including those relating
to voting and entitlement to dividends.
Holders of options or warrants over Existing Ordinary
Shares maintained the same rights as currently
accruing to them.
The Deferred Shares will have no substantive rights
attached to them and, accordingly, will not carry the
right to vote or to participate in any distribution of
surplus assets. Furthermore, they were not admitted
to trading on AIM. The Deferred Shares effectively
carry no value.
The holders of the Deferred Shares shall be deemed
to have conferred an irrevocable authority on the
Company at any time to: (i) appoint any person, for
and on behalf of such holder, to, inter alia, transfer
some or all of the Deferred Shares (without making
any payment therefor) to such person(s) as the
Company may determine (including without limitation
the Company itself); and (ii) repurchase or cancel
such Deferred Shares without obtaining the consent
of the holders thereof. In addition, the Company may
repurchase all of the Deferred Shares, at a price not
exceeding 1 penny in aggregate.
As part of this process, the Company’s articles of
association were amended to set out the rights and
restrictions attaching to the Deferred Shares.
The Company adopted the 2007 Share Option Scheme
on 3 April 2007 that provides for the granting of both
Enterprise Management Incentives and unapproved
share options (Westminster Group Individual Share
Option Agreements). The main terms of the option
scheme are as follows:
• Although no special conditions apply to the options
granted in 2007, the model form agreement allows
the Company to adopt special conditions to tailor an
option for any particular employee.
• The scheme is open to all full-time employees and
Directors except those who have a material interest in
the Company.
• For the purposes of this definition, a material interest is
either beneficial ownership of, or the ability to control
directly, or indirectly, more than 30% of the ordinary
share capital of the Company.
• The Board determines the exercise price of options
before they are granted. It is provided in the scheme
rules that options must be granted at the prevailing
market price in the case of EMI options and must not
be granted at an exercise price that is less than the
nominal value of a share.
• There is a limit that options over unissued shares
granted under the scheme and any discretionary
share option scheme or other option agreement
adopted or entered into by the Company must not
exceed 10% of the issued share capital.
• Options can be exercised on the second anniversary
of the date of grant and may be exercised up to the
10th anniversary of granting. Options will remain
exercisable for a period of 40 days if the participant
is a good leaver
The Company adopted the 2017 Share Option Scheme
on 21 September 2017 that provides for the granting of
both Enterprise Management Incentives and unapproved
share options (Westminster Group Individual Share
Option Agreements). The main terms of the option
scheme are as follows:
• Although no special conditions apply to the options
granted in 2017, the model form agreement allows
the Company to adopt special conditions to tailor an
option for any particular employee.
• The scheme is open to all full-time employees and
Directors except those who have a material interest in
the Company.
• For the purposes of this definition, a material interest is
either beneficial ownership of, or the ability to control
directly, or indirectly, more than 30% of the ordinary
share capital of the Company.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
101
Financial statements
Notes to the Financial Statements
• 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.
During the year, no employee options were granted
(2019: Nil), none were exercised (2019: none) and 93,750
lapsed (2019: 496,000). The weighted average price of
the options lapsed in the year was 28.5p (2019: 20.3p).
The weighted average exercise price of exercisable
options at the end of 2020 was 18.0p (2019 18.1p).
• There is a limit that options over unissued shares
granted under the scheme and any discretionary
share option scheme or other option agreement
adopted or entered into by the Company must not
exceed 10% of the issued share capital.
• Options can be exercised on the second anniversary
of the date of grant and may be exercised up to the
10th anniversary of granting. Options will remain
exercisable for a period of 40 days if the participant is
a “good leaver”.
Options have subsequently been granted on this basis.
These options are valued by the use of the Black-Scholes
model using a volatility of 70%, interest free rate of 0.5%
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 (2019: 18.2p). The average
life of the unexpired share options was 7.1 years
(2019: 8.4 years).
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.
Grant Date
28 June 2012
01 July 2014
10 December 2014
09 October 2015
01 June 2018
01 November 2018
31 December 2020
31 December 2019
Exercise
Price
Number
Outstanding
Average Life
Outstanding
(Years)
0.365
0.510
0.285
0.140
0.130
0.130
225,000
225,000
2,187,500
40,000
6,150,000
750,000
9,577,500
1.5
3.5
3.9
4.8
7.4
7.8
6.4
Number
Outstanding
225,000
225,000
2,281,250
40,000
6,150,000
750,000
9,671,250
Average Life
Outstanding
(Years)
2.5
4.5
4.9
5.8
8.4
8.8
7.1
102
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Warrants
The Company has historically issued the following warrants, which are still in force at the balance sheet date:
Date issued
Reason for issue
Number of warrants
Exercise price pence per share
Life in years
31 January 2018
Placing Commission
25 July 2019
£1m Share Issue
22 January 2020
RiverFort EPSA
22 December 2020
£5m Share Issue
170,455
9,625,000
3,499,222
25,000,000
22.0
12.5
5.2
7.0
5
2
4
2
On 23 January 2020, the Company announced that it
had agreed to issue to the RiverFort Global Opportunities
PCC and YA II PN Ltd as part of the RiverFort Equity
Placing and Sharing Agreement (EPSA) 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 December 2020 following the placing of the
125,000,000 New Ordinary Shares referred to in
Note 21 and below; the strike price was adjusted
under the terms of the EPSA to 5.2p.
On 3 December 2020, the Company announced a
placing of 125,000,000 New Ordinary Shares to various
holders. These were admitted to AIM on 22 December
2020. Subscribers in the Placing were granted warrants
to subscribe for New Ordinary Shares on a 1 warrant for
each 5 Placing Shares basis. These Placing Warrants are
exercisable at 7p per New Ordinary Share for a period of
24 months from Admission. The Placing Warrants were
not admitted to trading on AIM or any other stock market
and are not transferable.
23. BORROWINGS
The Warrants issued on 31 January 2018 and 22 January
2020 are valued in accordance with IFRS 2 that is for
equity-settled share-based payment transactions, the
Company measures the goods or services received, and
the corresponding increase in equity, directly, at the fair
value of the goods or services received, unless that fair
value cannot be estimated reliably. Warrants are recorded
at fair value at inception and are not remeasured.
The fair value of £88,000 (2019 restated: £27,000) for the
issue of these warrants was recognised in the year.
The Warrants issued with Share Issues on 25 July 2019
and 22 December 2020 have been determined as equity
instruments under IAS 32. Since the fair value of the
shares issued at the same time is equal to the price paid,
these warrants, by deduction, are considered to have
been issued at nil value.
Non-current
Convertible loan note (note 16)
Convertible redeemable unsecured loan notes (Note 16)
Non-current lease debt
Total borrowings
Group
2020
£'000
Group
2019
£'000
Group
2020
£'000
Group
2019
£'000
-
-
29
29
2,233
-
-
179
98
2,510
-
13
13
179
33
212
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
103
Financial statements
Notes to the Financial Statements
RiverFort Loan Facility
On 22 January as part of the RiverFort Equity Placing
and Sharing Agreement (EPSA) the Company entered
into a £3.0m Mezzanine Loan Facility with the RiverFort
Global Opportunities PCC and YA II PN Ltd. (together
the “Investor”) and elected to drawdown an initial
£1.5m to fund the commencement of the staged
Convertible Loan Notes (CLN) redemption programme
and provide additional working capital. 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.
The Mezzanine Loan Facility is subject to a 0.75%
Commitment Fee and each drawdown had a term of
18 months at a 6.5% rate of interest and a 5% drawdown
fee. Repayments commenced 3 months after drawdown
and were to be followed by 15 equal monthly payments.
The Company could if it wishes, elect to convert any
of its monthly payments or amounts due by issuing
the Investor with a convertible note giving conversion
rights equal to the amount concerned, in which case
the Investor will have 12 months to convert the note
into ordinary shares of the Company at the lower of
14.54p or the 90% 5 day volume weighted average
price immediately preceding the date of such notice.
The Company may also elect to make early repayment
of any outstanding amount subject to a 5% early
redemption premium.
On 22 December 2020 following the equity placing the
company elected to repay the remaining amount due
on the Mezzanine Loan. As such there was no balance
outstanding at 31 December 2020 (2019 £Nil).
Convertible Loan Notes
For full details of these notes see note 16.
From 31 December 2019 holders were able elect to
convert their CLNs at 10p per share in place of cash
redemption. From May 2019 the Group was allowed
to redeem the CLNs in whole or in part at any time
before the maturity date (1 May 2021) without restriction
or penalty.
On 22 January the Group commenced a staged
redemption programme of the Company’s existing
£2.245m Convertible Loan Notes with an offer to
convert or redeem 25% of the outstanding balance.
In February 2020 CLNs to the value of £555,000 were
redeemed and £6,250 were converted to Ordinary
Shares. In March, June and October CLNs to the value
of a further £212,500 in total were converted. Finally,
in December 2020 the remaining £1,471,250 of CLNs
were redeemed.
Convertible redeemable unsecured loan notes
On 31 December 2019, the convertible redeemable
unsecured loan notes carried a coupon of 5% payable
quarterly in arrears, had a conversion price of 10p and
matured on 31 July 2021. On 22 December 2020, this
note was fully redeemed for a value of USD $250,000.
Non-current lease debt
As described in Note 13, all leases that fall under IFRS
16 are recorded on the balance sheet as liabilities, at the
present value of the future lease payments, along with an
asset reflecting the right to use the asset over the lease
term. The non-current lease debt is the part of that debt
which falls due after 12 months.
The average credit period taken
for trade purchases in 2020 was
50 days (2019: 66 days)
104
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
24. TRADE AND OTHER PAYABLES
Current
Trade payables
Accruals and other creditors
Intercompany payables
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
688
1,582
-
38
Group
Restated
2018
Company
2019
Company
Restated
2018
£'000
£'000
£'000
99
140
2,398
18
2,655
16
-
16
1,385
960
-
60
125
366
735
20
2,308
2,405
1,246
-
100
100
2,408
100
2,308
2,408
51
73
124
2,529
73
2,456
2,529
-
-
-
1,246
2,671
-
1,246
1,246
-
2,671
2,671
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 2020 was 50 days (2019: 66 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 2020 £438,000 (2019: £1,243,000)
of payables were denominated in US dollars, £2,000
(2019: £16,000) were denominated in Euros, £1,000
(2019: Nil) were denominated in Ghanaian Cedi and
Nil (2019: £22,000) were denominated in Sierra Leone
Leones.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
105
Financial statements
Notes to the Financial Statements
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 2020
Group 2019
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
225
Effect of assets / liabilities acquired
-
Finance costs
Revaluation of fixed assets
Loss on disposal of non-financial assets
Non-cash accounting for CLN & CULN
Conversion of CLN
Increase in Deferred Tax Asset
Share-based payment expenses
Total adjustments
(17)
(6)
33
(119)
(213)
(49)
87
(59)
-
-
-
-
-
-
-
-
-
-
225
-
(17)
(6)
33
(119)
(213)
(49)
87
(59)
215
2
620
2
-
35
-
(18)
368
-
-
-
-
-
-
-
-
-
215
2
620
2
-
35
-
(18)
368
1,224
-
1,224
Group 2020
Group 2019
Continuing
Operations
Discontinued
Operations
Total
Continuing
Operations
Discontinued
Operations
Total
£’000
£’000
£’000
£’000
£’000
£’000
Net changes in working capital:
(Increase)/Decrease in inventories
Decrease in trade and other receivables
Increase in long term receivables
Increase/(decrease) in contract liabilities
Decrease in trade and other payables
Decrease in assets of disposal group
classified as held for sale
Decrease in liabilities of disposal group
classified as held for sale
(726)
128
(484)
27
(148)
-
-
-
-
-
-
-
(726)
128
(484)
27
(148)
170
170
-
-
27
2,091
-
(2,365)
(113)
-
-
Total changes in working capital
(1,203)
170
(1,033)
(360)
-
-
-
-
-
-
(151)
(151)
27
2,091
-
(2,365)
(113)
-
(151)
(511)
106
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Adjustments:
Depreciation, amortisation and impairment of non-financial assets
Finance costs
Revaluation of fixed assets
(Profit) / loss on disposal of non-financial assets
Non-cash accounting for CLN
Share-based payment expenses
Other non-cash items
Total adjustments
Net changes in working capital:
Increase in trade and other receivables
Decrease in trade and other payables
Increase in asset held for sale
Total changes in working capital
26. CONTINGENT ASSETS AND CONTINGENT
LIABILITIES
The RiverFort EPSA has already been described in Notes
21, 22 and 23. In summary, the company issued 14m
ordinary shares and received a £1.5m mezzanine loan.
At the same time under the EPSA the company issued
14m shares and booked a sundry debt of £1.75m. The
loan was to be repaid and the sundry debt settled by
selling down the shares. As disclosed in note 23 the
mezzanine loan was fully repaid in December 2020.
As at the 31 December 2020 there remained shares still
to be sold and a residual sundry debt for those shares.
Because of the low share price caused primarily by the
market reaction to Covid-19, had the remaining shares
been sold at the end of 2020 there would have been a
loss of £936,000 on this debt. However, the shares do
not have to be fully sold until at least 31 December 2021
and there is reason to believe that it will be at a price
higher during 2021 than the 31 December 2020 price
level and enough to recoup the losses.
There were no material contingent assets and contingent
liabilities in 2019.
Company
2020
£'000
Company Restated
2019
£'000
113
376
(6)
8
(1)
87
6
583
£'000
(427)
(1,425)
-
(1,852)
90
458
-
-
(90)
368
103
929
£'000
623
(59)
-
564
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 (EUR)
and US dollar (USD) but also the Sierra Leone Leone
(SLL) and Ghanaian Cedi (GHS). The Group’s policy
is to match the currency of the order with the principal
currency of the supply of the equipment. Where it is
not possible to match those foreign currencies, the
Group might consider hedging exchange risk through
a variety of hedging instruments such as forward rate
agreements, although no such transactions have ever
been entered into.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
107
Financial statements
Notes to the Financial Statements
Group
31 December 2020
Financial assets
Financial liabilities
Total exposure
31 December 2019
Financial assets
Financial liabilities
Total exposure
Short-term
exposure
USD
Short-term
exposure
EUR
Short-term
exposure
SLL
Short-term
exposure
GHS
£'000
£'000
£'000
£'000
307
-
-
(438)
(131)
(2)
(2)
-
-
510
-
-
(1,243)
(733)
(16)
(16)
(22)
(22)
167
(1)
166
-
-
-
If the US dollar were to depreciate by 10% relative to its
year end rate, this would cause a gain of profits in 2020
of £15,000 (2019: £81,000 Gain).
If the Ghanaian Cedi were to depreciate by 10% relative
to its year end rate, this would cause a loss of profits in
2020 of £18,000 (2019: £ Nil).
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 were the convertible
loans and the RiverFort EPSA. These are detailed in
note 16. All had fixed interest rates. Interest on the cash
holdings of the Group and “other” loans noted in note
23 is both not material and also has fixed interest rates.
Therefore no calculation of interest rate sensitivity has
been undertaken.
Credit risk analysis
Credit risk refers to the risk that a counterparty will
default on its contractual obligations resulting in financial
loss to the Group. The Group has adopted a policy of
only dealing with creditworthy counterparties and where
possible working on a “cash with order”.
The Group has a credit policy in place and the exposure
to credit risk is monitored on an ongoing basis. Credit
evaluations are performed on all customers requiring
credit over a certain amount. In the case of material
sales transactions, the Group usually demands an initial
deposit from customers and generally seeks to ensure
that the balance of funds is secured by way of a letter of
credit or similar instruments.
None of the Group’s financial assets are secured by
collateral or other credit enhancements. Details of
allowance for credit losses are shown in note 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.
108
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
As at 31 December 2020, the Group’s financial liabilities have contractual maturities (including interest payments, where
applicable) as summarised below:
2020
2019
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
Group
Convertible loans
-
-
-
-
2,233
179
Trade and other payables
Total
Company
2,308
2,308
-
-
-
-
2,456
2,456
-
-
2,233
179
Convertible loans
-
-
-
-
Trade and other payables
Total
1,246
1,246
-
-
-
-
2,671
2,671
-
-
-
179
-
179
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
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.
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
Investing cash flows
2020
£'000
-
-
-
-
-
-
-
-
-
2019
£'000
-
-
-
28
28
-
28
0.02p
28
-
-
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
109
Financial statements
Notes to the Financial Statements
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
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:
Assets held for sale:
Tangible fixed assets at cost
Accumulated depreciation
Assets held for sale
The Sierra Queen was sold in February 2020.
30. RELATED PARTY TRANSACTIONS
2020
£'000
-
-
-
2019
£'000
2,820
(2,650)
170
Balances and transactions between the Company and its subsidiaries, which are related parties, are listed below:
Balance at
31 December
Movement
in Year
Balance at
31 December
Movement
in Year
Balance at
31 December
2018
2,265
2019
2019
2020
2020
64
2,329
(1,483)
-
-
-
Westminster Aviation Security Services Limited
5,466
(1,487)
Westminster International Limited
Westminster Security Limited
(formerly Longmoor Security Limited)
Sovereign Ferries Limited
Westminster Operating Limited
Keyguard U.K Limited
Longmoor (SL) Limited
Facilities Operations Management Limited
Westminster Sierra Leone Limited*
Westminster Group GMBH
GLIS Gesellschaft für Luftfahrt- und
Infrastruktur-Sicherheit GmbH
-
(2,381)
31
(29)
959
23
2
3,979
45
(2,398)
-
45
(17)
(31)
(767)
192
(23)
-
793
795
-
-
-
10
6
503
2,156
68
846
10
3,985
548
(242)
68
(6)
(60)
63
(50)
186
(60)
858
(50)
29
-
-
-
Westminster Sicherheit GMBH
593
(593)
-
-
-
Euro Ops SARL
-
-
-
104
104
Westminster Managed Services Limited
(formerly Westminster Facilities
Management Limited)
Longmoor Security Services Limited
(formerly Westminster Aviation Security
Services (ME) Limited)
(22)
1,332
1,310
-
1,310
-
-
-
-
-
Westminster International (Ghana) Limited
-
-
-
6,907
(655)
6,252
(383)
928
(383)
7,180
110
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
The remuneration of the Directors, who are the key
management personnel of the Group is set out in the
Remuneration Committee report on pages 56 to 59
as are details of pension contributions for Directors.
In the year to 31 December 2020 fees and expenses
of £18,619 (2019: £16,180) plus VAT were accrued to
Cattaneo LLP a Limited Liability Partnership under
the control of Charles Cattaneo. On the 31 December
2020 Cattaneo LLP was owed £1,600 including VAT
(2019: £1,600).
Certain members of the Fowler family, other than
directors, have been employed by the Group on
normal arms-length terms for between 11 and
23 years. Their remuneration, in aggregate, for
the year ended 31 December 2020 was £182,830
(2019: £171,659)
31. PRIOR YEAR ADJUSTMENT
Changes to the way investments and loans in
subsidiaries have been displayed are reported in
note 14.
The 2019 statement of profit and loss, other
comprehensive income and financial position has
been restated to account for net gains amounting
to £147,000 (Company: £184,000) that were not
recognised in the prior year accounts following reviews
of policies and reconciliations during 2020. No third
balance sheet is presented as the error occurred
solely in the prior period and effects that year only.
Statement of profit or loss and other comprehensive
income (extract)
Loss per signed accounts 2019
Review of accounting for Share based payments
Correction of error in accounting for Warrants
Write off of uncollectable VAT balance
Other immaterial difference
Restated loss for 2019
Year ended
31 December 2019
Note
Group
Company
i)
ii)
iii)
iv)
£'000
(1,398)
(110)
298
(41)
-
£'000
(2,652)
(110)
298
-
(3)
(1,251)
(2,467)
Earnings per Share
Note
Signed accounts as at
31 December 2019
Adjustment
Restated as at
31 December 2019
Per-share amount pence
Per-share amount pence
Basic and diluted EPS
Group statement of financial
position (extract)
Share based payment reserve
Trade and other receivables
(Loss)/profit for the year
Company statement of financial
position (extract)
Share based payment reserve
Trade and other receivables
(Loss)/profit for the year
i) & ii)
iii)
i), ii) & iii)
i) & ii)
iii)
i), ii) & iii)
(1.02p)
1,166
2,566
(1,398)
1,166
2,668
(2,652)
(188)
(41)
147
(188)
3
185
(0.91p)
978
2,525
(1,251)
978
2,671
(2,467)
i. Following a review by the Group of the reserve for share based payments going back to first principles, it was determined that this
reserve had been under stated by £110,000.
ii.
In discussion with the new auditors, PKF, a more appropriate treatment of warrants issued as part of a placing was determined.
To be consistent £298,000 charged in 2019 has been written back.
iii. An accounting error left an unrecoverable balance of £41,000 on the VAT account. This is written off.
iv. There was a sundry immaterial rounding difference on the Company’s P&L account which has now been corrected.
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
111
Financial statements
Notes to the Financial Statements
32. EVENTS AFTER THE REPORTING PERIOD
In February 2021, Clydesdale Bank PLC trading as
Yorkshire Bank offered the Group an overdraft and
other banking facilities. As a condition of these facilities
the Company entered into a multilateral charge and
guarantee in respect of bank overdrafts and other
facilities of all companies within the Group.
112
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
|
113
Westminster Group PLC
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 &
Financial Adviser
Strand Hanson Limited
26 Mount Row
Mayfair
London
W1K 3SQ
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
Clydesdale Bank Plc
trading as Yorkshire Bank
94-96 Briggate
Leeds
West Yorkshire
LS1 6NP
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
Stockbroker
Arden Partners plc
125 Old Broad Street
London
EC2N 1AR
Auditor
PKF Littlejohn LLP
15 Westferry Circus
Canary Wharf
London
E14 4HD
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
114
| ANNUAL REPORT 2020
| WESTMINSTER GROUP PLC
Westminster Group plc
Westminster House
Blacklocks Hill
Banbury
Oxfordshire
OX17 2BS
United Kingdom
www.wsg-corporate.com