TIDMWSG
RNS Number : 4762B
Westminster Group PLC
21 September 2018
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014
Westminster Group Plc
('Westminster', the 'Group' or the 'Company')
Interim Results for the six months to 30 June 2018
Westminster Group Plc (AIM: WSG), a leading supplier of managed
services and technology based security solutions, announces its
unaudited interim results for the six months ended 30 June
2018.
Operational Highlights:
-- Major long-term contract signed in May 2018 relating to one
of 60 airports in Iran. Significant progress has been made in
overcoming challenges posed by the US withdrawal from the Joint
Comprehensive Plan of Action (JCPOA) Agreement and the Board is
committed to the exchange of letters and commencement of the
project as soon as possible.
-- $4.5m Middle Eastern advanced vehicle screening solutions
contract awarded to the Technology Division in March 2018 which is
currently underway and expected to be largely, if not wholly,
completed by year end.
-- H1 2018 showed a 34% increase in Technology Division sales
enquiries received at 1,008 (H1 2017: 753) resulting from
refocussed sales activity.
-- H1 2018 sales order intake increased by 389% to GBP3.9m (H1
2017: GBP0.8m) including new contract awards for equipment,
training and services to a number of airports around the world.
-- We still expect to be EBITDA positive for the full year.
-- West Africa airport operations performing broadly in line
with expectations. The extended elections in Sierra Leone impacted
airport passenger numbers in H1 2018, but a strong start to the
year and recovery from June have largely balanced this. With new
carriers such as Turkish Airlines commencing operations in 2018 we
expect full year passenger numbers to be ahead of 2017.
-- New Managing Director appointed for Technology Division in February 2018.
-- Further PLC board changes in accordance with our ongoing
strategic review. Sir Tony Baldry moved from Non-Executive to
Executive Chairman in January. Patsy Baker appointed as a
Non-Executive Director from 1 June 2018. Martin Boden will be
leaving the Company as Chief Financial Officer on 31 October 2018
to pursue new opportunities. Mark Hughes BSc MBA FCA has been
appointed to replace Martin and he joins the Company as Chief
Financial Officer on 1 November 2018.
Financial Highlights:
-- Group revenues of GBP2.6m (H1 2017: GBP2.9m). These revenues
exclude GBP0.7m (H1 2017 GBP0.1m) of unrecognised revenue from the
Middle Eastern screening and other projects held in Work in
Progress (WIP) that will be largely recognised along with the full
ME screening project value in H2 2018.
-- Change in accounting classification on Gross Margin to
classify direct project costs within Cost of Sales. Gross Margin
unchanged at 36% (H1 2017: 36%).
-- Reduction of adjusted EBITDA loss to GBP0.4m (H1 2017: loss GBP0.6m).
-- Reduction in reported loss before tax to GBP1.2m including
GBP0.3m relating to a non-cash financing charge associated with the
CLN extension (H1 2017: loss of GBP1.4m).
-- Loss per share reduced to 1.0p (H1 2017: 1.4p).
-- GBP0.8m new equity before expenses raised in January 2018 and
a further GBP0.7m raised since June 2018, including $250k (GBP191k)
from convertible redeemable unsecured loan notes carrying a 5%
coupon from a strategic investor.
-- Convertible loan notes extended in May 2018 to 30 June 2019
at a coupon of 12%; the Company has an option to extend to 31
December 2019 at a coupon of 15%.
-- Cash balance of GBP0.3m at 30 June 2018 and GBP0.8m at 14
September 2018 (30 June 2017: GBP0.8m).
Commenting on the results and current trading, Peter Fowler,
Chief Executive of Westminster Group, said:
"Both our Managed Services and Technology businesses have
performed in line with expectations and our financial results for
the period show an improved performance compared to the first half
of 2017. This, together with around GBP0.7m of unrecognised revenue
already in WIP and the balance of the $4.5m Middle Eastern vehicle
screening contract, which we expect to deliver in H2 2018 of this
year, producing a strong year on year revenue growth, keeps us on
track to deliver an EBITDA positive result for the full year to 31
December 2018.
"The first six months of the financial year have been defined by
our intense focus, efforts and achievements in developing our
Managed Services business, which has the potential to deliver
transformational growth. Not least in this respect was the signing
of the large scale, long term contract for one of 60 airports in
Iran and I am pleased to report that we continue to work with our
Iranian customer and the EU Authorities in order to address the
challenges created by the US unilateral withdrawal from the JCPOA
and with a view to commencing the project at the earliest
opportunity once the remaining issues have been resolved.
"Our West Africa airport operations performed broadly in line
with expectations. The extended elections in Sierra Leone impacted
airport passenger numbers for a few months in H1 2018 however a
strong start to the year and recovery in latter months have largely
balanced this. With new carriers such as Turkish Airlines
commencing operations we expect full year passenger numbers to be
ahead of 2017.
"Our Managed Services business has a growing portfolio of
opportunities it is pursuing and has in the period secured a number
of new contract awards for equipment, training and services to a
number of airports around the world. We continue to work towards
signing at least one further long term Managed Services contract
this year although, as always, there is never certainty as to
timing or outcome in these matters.
"Our Technology Division continues to win business from
countries across the world and is developing a number of large
scale opportunities in addition to the $4.5m Middle East contract
secured earlier this year.
"We have identified complementary new potential business
opportunities that will assist our growth into new markets which
are being actively pursued.
"We expect to secure funding in Q4 2018 for our Iranian contract
and to support the further growth of the business, for which
planning is already in place.
"We have a strong board with diverse skills and expertise. Sir
Tony Baldry moved from Non-Executive to Executive Chairman in
January. In June I was delighted to welcome Patsy Baker to the
Board, Patsy has enormous experience of companies growing their
global business and brings considerable public relations experience
to the Board. Martin Boden will be leaving the Company as Chief
Financial Officer on 31 October 2018 to pursue new opportunities.
Mark Hughes BSc MBA FCA has been appointed to replace Martin and he
joins the Company as CFO on 1 November 2018. Mark's wide-ranging
international experience, particularly in emerging markets together
with his considerable experience in capital markets and in M&A
work as CFO of listed (main market and AIM) venture capital,
private and private equity owned companies, will be a great asset
in assisting the Company achieve its growth potential. I would like
to express my thanks to Martin Boden for his support during his
time with the business and we wish him well for the future."
For further information please contact:
Westminster Group Plc Media enquiries via Walbrook
PR
Rt. Hon. Sir Tony Baldry - Chairman
Peter Fowler - Chief Executive Officer
Martin Boden - Chief Financial Officer
S. P. Angel Corporate Finance LLP (NOMAD
& Broker)
Stuart Gledhill 020 3470 0470
Lindsay Mair
Caroline Rowe
Walbrook (Investor Relations)
Tom Cooper 020 7933 8780
Paul Vann 0797 122 1972
tom.cooper@walbrookpr.com
Notes:
Westminster Group plc is a specialist security and services
group operating worldwide via an extensive international network of
agents and offices in over 50 countries.
Westminster's principal activity is the design, supply and
ongoing support of advanced technology security solutions,
encompassing a wide range of surveillance, detection, tracking and
interception technologies and the provision of long-term managed
services contracts such as the management and running of complete
security services and solutions in airports, ports and other such
facilities together with the provision of manpower, consultancy and
training services. The majority of its customer base, by value,
comprises governments and government agencies, non-governmental
organisations (NGO's) and blue chip commercial organisations.
Chief Executive Officer's Review
Overview
Both our Managed Services and Technology businesses have
performed in line with expectations and our financial results for
the period show an improved performance compared to the first half
of 2017. This, together with around GBP0.7m of unrecognised revenue
already in WIP and the balance of the $4.5m Middle Eastern vehicle
screening contract, which we expect to deliver in H2 2018 of this
year producing a strong year on year revenue growth, keeps us on
track to deliver an EBITDA positive result for the full year to 31
December 2018.
Managed Services
The first six months of the financial year have been defined by
our intense focus, efforts and achievements in developing our
Managed Services business, which has the potential to deliver
transformational growth. Not least in this respect was the signing
in May of the large scale, long term contract for one of 60
airports in Iran.
Following the US unilateral withdrawal from the Joint
Comprehensive Plan of Action (JCPOA) we had to put the project
temporarily on hold whilst we worked with our Iranian customer and
the EU Authorities in order to address a number of challenges
created by the US action. Despite the fact that none of the
proposed equipment or services related to this project are covered
by existing or proposed, new primary or secondary sanctions, the US
position has created some uncertainty in the business world.
Westminster does not have any significant US business activities
and the US is not a target market for us and so the US position is
not a threat to our business. Unfortunately, some of the proposed
equipment manufactures in the supply chain do have US exposure and
so we have had to address this and in some cases source alternative
suppliers.
Equally the restrictions on financing and banking being promoted
by the US have created challenges and we have had to put various
measures in place to deal with these which have included changes to
our UK banking arrangements and ensuring we have robust payment and
receipt processes in place that do not involve any funds coming
from or going to Iran. The project is a Euro denominated contract
and there will be no USD transactions.
Insurance is another area that has been affected by the US
position however I am pleased to report we are making good progress
in this respect.
We have been working closely with our Iranian client on
addressing all these issues and are currently preparing an addendum
to the contract covering proposed changes in equipment, order of
the rollout programme and the financial and payment structures.
Both parties remain committed to the project and are eager to
exchange board letters to commence the project at the earliest
opportunity.
On a wider front our Managed Services business has a growing
portfolio of opportunities it is pursuing and has, in the period,
secured a number of new contract awards for equipment, training and
services to a number of airports around the world and we continue
to work towards signing at least one further long term Managed
Services contract this year although, as always, there is never
certainty as to timing or outcome in these matters. These
opportunities represent a major step in the transition of
Westminster into a long-term managed services business.
Our West Africa airport operations performed broadly in line
with expectations. The extended elections in Sierra Leone impacted
airport passenger numbers for a few months in H1 2018 however a
strong start to the year and recovery in latter months have largely
balanced this. With new carriers such as Turkish Airlines
commencing operations we expect full year passenger numbers to be
ahead of 2017. The new government of Sierra Leone is also keen on
encouraging new airlines and more passenger traffic to the country
and we are exploring with them ideas on how this may be
achieved.
Whilst airport security remains the key focus of our Managed
Services Division, there are also other opportunities such as port
security and other infrastructure security solutions that we are
pursuing.
Technology Division
The Technology Division continues to secure orders for a wide
range of products and services delivered to clients all over the
world. We are not a manufacturer and are product agnostic, enabling
us to deliver the best solution for any given application.
In February we appointed a new and experienced Managing
Director, Stuart Gilbert, to head up the Technology business and we
are already seeing the benefit of this appointment with increased
sales activity and order intake significantly ahead of the same
period last year.
In March the Technology Division secured a $4.5m advanced
vehicle screening solutions contract for an important client in the
Middle East which is currently underway and expected to be largely,
if not wholly, completed by year end.
The expertise of the Technology Division underpins the proposals
from our Managed Services Division where we can offer best in class
equipment and solutions for our potential customers in emerging
markets.
Ferry Operation
Having exited the ferry operations at the end of September 2017,
we continue to operate and manage the ferry terminals in accordance
with our 21-year agreement although revenues currently are not
material. We still have the Sierra Queen and are seeking to sell
her at the earliest opportunity. The book value was written down to
nil at 31 December 2017.
Strategic Review & Board Changes
In our Annual Report issued in June we provided an update on our
ongoing strategic review to ensure we are well positioned to
maximise opportunities going forward and successfully take the
business to a new level. As part of this review we have identified
complimentary new potential business opportunities that will assist
our growth into new markets which are being actively pursued.
As part of the review process we have made a number of changes
and new appointments to our senior management and the Board. Sir
Tony Baldry moved from Non-Executive to Executive Chairman in
January. In June I was delighted to welcome Patsy Baker to the
Board, Patsy has enormous experience of companies growing their
global business and brings considerable public relations experience
to the Board. Martin Boden will be leaving the Company as Chief
Financial Officer on 31 October 2018 to pursue new opportunities.
Mark Hughes BSc MBA FCA has been appointed to replace Martin and he
joins the Company as CFO on 1 November 2018. Mark's wide-ranging
international experience, particularly in emerging markets together
with his considerable experience in capital markets and in M&A
work as CFO of listed (main market and AIM) venture capital,
private and private equity owned companies, will be a great asset
in assisting the Company achieve its growth potential. I would like
to express my thanks to Martin Boden for his support during his
time with the business and we wish him well for the future.
Our business is set to benefit from unprecedented growth
opportunities and it is essential we have the right strategies,
people and processes in place to successfully deliver such growth.
Accordingly, the changes we have made to date and intend to make
over the coming months will, I believe, serve the Company well and
greatly assist our planned growth.
Financial
Revenues for the first half year were in line with the Boards'
expectations at GBP2.6m (H1 2017: GBP2.9m). Managed Services
revenues were GBP1.7m (H1 2017: GBP1.8m). The Managed Services
revenues were impacted by the elections in Sierra Leone earlier
this year and, as expected, have picked up again from June onwards.
Technology Division revenues, excluding GBP700k of unrecognised
revenue held in WIP, were GBP0.9m (H1 2017: GBP1.0m). Around 16%
(H1 2017: 10%) of the Technology Division revenues were from
maintenance and service as we continue to build the recurring
revenue base of the Technology Division. Technology Division
revenues are lumpy and will be strongly ahead of last year in H2
2018 following delivery of the $4.5m Middle Eastern vehicle
screening contract.
We have changed our accounting classification on gross margin in
2018 to classify direct project costs within cost of sales. This
change in classification reduces gross margin but has no impact on
operating loss or EBITDA. The Group generated a gross profit of
GBP0.9m (H1 2017: GBP1.0m) which equates to a gross margin of 36%
(H1 2017: 36% restated on a like for like basis).
Administrative expenses reduced by 26% to GBP1.6m (H1 2017:
GBP2.2m). Exceptional items amounted to GBP0.2m (H1 2017: GBP0.3m).
In both H1 2018 and H1 2017 the exceptional items primarily related
to the pre-contract costs of the new Iranian contract.
The loss from operations of GBP0.7m was GBP0.5m lower than the
loss of GBP1.2m in H1 2017 and the EBITDA loss of GBP0.4m compares
to an EBITDA loss of GBP0.6m in H1 2017.
Our underlying cash interest cost was GBP0.2m (H1 2017: GBP0.1m)
reflecting primarily the interest on the convertible loan notes. A
further GBP0.3m (H1 2017: GBP0.1m) of non-cash financing charges
arose from the amortisation and extension of the convertible loan
notes. In total, the financing costs amounted to GBP0.5m (H1 2017:
GBP0.2m).
Earnings per share were a loss of 1.0 pence (H1 2017: loss of
1.4 pence). Although the number of shares in issue increased, the
loss after tax decreased resulting in the reduced loss per share
over H1 2017.
Statement of Financial Position and Cash Flow
The Group ended the period with a GBP0.3m cash balance, and at
14 September 2018 the cash balance was GBP0.8m. The net cash used
in operating activities was GBP0.7m (H1 2017: GBP0.7m). No cash was
used in investing activities (H1 2017: GBP0.1m) and GBP0.75m of
cash was generated from financing activities being the GBP0.8m of
new equity raised in January 2018 before expenses (H1 2017: GBP1.7m
equity).
At the end of the period, the Group had a convertible loan note
outstanding with a principal of GBP2.2m (H1 2017: GBP2.2m). The
coupon is 12% payable quarterly in arrears, it has a conversion
price of 25 pence and is repayable in June 2019. The Company has an
option to extend repayment to 31 December 2019 with an increased
coupon of 15% from July to December 2019.
We raised GBP0.8m of new equity in January and a further GBP0.7m
raised since June 2018 including $250k from convertible redeemable
unsecured loan notes carrying a 5% coupon from a strategic
investor. These funds provide financing for the pre-contract costs
of the Iranian project and for the other contracts we are working
on. Plans are in place to raise further funds to support the
Iranian contract and the other expected new Managed Services
airport contract and we expect to complete this exercise in Q4.
Outlook
Our vision is to build a global business with strong brand
recognition delivering niche security solutions and long-term
managed services to high growth and emerging markets around the
world.
Whilst operating in emerging markets does carry a higher risk of
delays and disruption, is time consuming and involves a degree of
frustration and bureaucracy, with perseverance and diligence the
potential rewards are substantial.
The signing of the large scale long term Iranian airport
contract and the $4.5m Middle Eastern vehicle screening contract
together with numerous smaller contracts around the world so far
this year demonstrate the Company's market reach and ability to
pursue and close complex project opportunities. Over the next few
months and years we have an opportunity to achieve unprecedented
growth from the prospects we are pursuing around the world, and I
believe we are closer now than we have ever been in delivering on
our vision. The Board and I remain committed to delivering on this
potential and we thank our shareholders and other stakeholders for
their continued support.
Peter Fowler
Chief Executive Officer
Consolidated Statement of Comprehensive Income (unaudited)
for the six months ended 30 June 2018
Six months ended 30 June 2018 Six months ended 30 June 2018 Six months ended 30 June 2018 Six months ended 30 June 2017 Six months ended 30 June 2017 (restated) Six months ended 30 June 2017 (restated) Year ended Year ended Year ended
Note (restated) 31 December 2017 (restated) 31 December 2017 (restated) 31 December 2017 (restated)
Continuing Operations Discontinued Operations Total Continuing Operations Discontinued Operations Total Continuing Operations Discontinued Operations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 7 2,586 - 2,586 2,868 51 2,919 5,330 66 5,396
Cost of sales 3 (1,664) - (1,664) (1,733) (137) (1,870) (3,358) (191) (3,549)
Gross profit 3 922 - 922 1,135 (86) 1,049 1,972 (125) 1,847
Administrative
expenses (1,622) (14) (1,636) (1,759) (443) (2,202) (3,790) (3,544) (7,334)
Operating loss 7 (700) (14) (714) (624) (529) (1,153) (1,818) (3,669) (5,487)
Analysis of
operating loss
Add back
depreciation
and
amortisation 77 - 77 105 102 207 170 144 314
Add back share
option expenses - - - - - - 63 - 63
Add back
impairment
charges - - - - - - 397 2,491 2,888
Add back
exceptional
items 9 215 14 229 305 - 305 653 335 988
EBITDA loss from
underlying
operations (408) - (408) (214) (427) (641) (535) (699) (1,234)
----------------- ----- ------------------------------ ------------------------------ ------------------------------ ------------------------------ ----------------------------------------- ----------------------------------------- ------------------------------ ------------------------------ ------------------------------
Finance Costs 10 (484) - (484) (230) - (230) (630) - (630)
Loss before
taxation (1,184) (14) (1,198) (854) (529) (1,383) (2,448) (3,669) (6,117)
Taxation (5) - (5) - - - - - -
Total
comprehensive
expense for the
period (1,189) (14) (1,203) (854) (529) (1,383) (2,448) (3,669) (6,117)
Loss and total
comprehensive
loss
attributable to:
Owners of the
parent (1,192) (14) (1,206) (854) (529) (1,383) (2,248) (3,669) (5,917)
Non-controlling
interest 3 - 3 - - - (200) - (200)
Loss and total
comprehensive
loss (1,189) (14) (1,203) (854) (529) (1,383) (2,448) (3,669) (6,117)
Loss per share
(pence) 8 (0.96) (0.01) (0.97) (0.85) (0.52) (1.37) (2.24) (3.36) (5.60)
Consolidated Statement of Financial Position (unaudited)
As at 30 June 2018
As at 30 June 2018 As at 30 June 2017 As at 31 December 2017
Note GBP'000 GBP'000 GBP'000
Goodwill - 397 -
Other intangible assets 112 173 129
Property, plant and equipment 1,916 4,488 1,952
Total Non-Current Assets 2,028 5,058 2,081
Inventories 42 48 39
Trade and other receivables 1,256 786 693
Cash and cash equivalents 318 759 392
Total Current Assets 1,616 1,593 1,124
Total Assets 3,644 6,651 3,205
Called up share capital 12 12,503 11,324 12,074
Share premium account 9,597 9,136 9,226
Merger relief reserve 299 299 299
Share based payment reserve 598 594 621
Equity Reserve on Convertible Loan Note 506 186 186
Revaluation reserve 134 134 134
Retained earnings (24,033) (18,155) (22,853)
(Deficit)/Equity attributable to
Owners of the parent (199) 3,518 (113)
Non-controlling interest (197) - (200)
Total Shareholders' (Deficit)/Equity (396) 3,518 (313)
Non-current borrowings 14 2,200 - 2,184
Total Non-Current Liabilities 2,200 - 2,184
Current borrowings 14 - 2,073 -
Trade and other payables 1,049 1,055 1,096
Deferred income 639 5 -
Total Current Liabilities 1,688 3,133 1,096
Liabilities of disposal group classified as
held for sale 152 - 238
Total Liabilities 4,040 3,133 3,518
Total Liabilities and Shareholders' Equity 3,644 6,651 3,205
Consolidated Statement of Changes in Equity (unaudited)
for the six months ended 30 June 2018
Called Share
up Share Merger based Equity Total
share premium relief payment reserve Revaluation Retained Non-controlling share-holders'
capital account reserve reserve on CLN reserve earnings interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1(st)
January 2018 12,074 9,226 299 621 186 134 (22,653) (200) (313)
Issue of new
shares 341 409 - - - - - - 750
Costs of new
share issues - (38) - - - - - - (38)
CLN extension - - - - 320 - - - 320
Warrants
exercised 88 - - (23) - - 23 - 88
Total
transactions
with owners 429 371 - (23) 320 - 23 - 1,120
-------------- -------- -------- -------- -------- -------- ------------ --------- ---------------- ---------------
Loss for the
period - - - - - - (1,206) 3 (1,203)
As at 30(th)
June 2018 12,503 9,597 299 598 506 134 (23,836) (197) (396)
-------------- -------- -------- -------- -------- -------- ------------ --------- ---------------- ---------------
As at 1(st)
January 2017 8,711 9,169 299 569 186 134 (16,772) - 2,296
Issue of new
shares 1,542 84 - - - - - - 1,626
Costs of new
share issues - (117) - - - - - - (117)
Warrants
exercised 4 - - - - - - - 4
CLN
conversion 1,067 - - - - - - - 1,067
Warrants
issued in
the period - - - 25 - - - - 25
-------------- -------- -------- -------- -------- -------- ------------ --------- ---------------- ---------------
Total
transactions
with owners 2,613 (33) - 25 - - - - 2,605
-------------- -------- -------- -------- -------- -------- ------------ --------- ---------------- ---------------
Loss for the
period - - - - - - (1,383) - (1,383)
As at 30(th)
June 2017 11,324 9,136 299 594 186 134 (18,155) - 3,518
-------------- -------- -------- -------- -------- -------- ------------ --------- ---------------- ---------------
As at 1(st)
January 2017 8,711 9,169 299 569 186 134 (16,772) - 2,296
Issue of new
shares 2,291 - - - - - - - 2,291
Cost of share
issues - (76) - - - - - - (76)
Share options
lapsed - - - (34) - - 34 - -
Exercise of
share
options 5 - - (2) - - 2 - 5
CLN
conversion 1,067 133 - - - - - - 1,200
Share based
payment
charge - - - 88 - - - - 88
Total
transactions
with owners 3,363 57 - 52 - - 36 - 3,508
-------------- -------- -------- -------- -------- -------- ------------ --------- ---------------- ---------------
Loss for the
year - - - - - - (5,917) (200) (6,117)
As at 31(st)
December
2017 12,074 9,226 299 621 186 134 (22,653) (200) (313)
-------------- -------- -------- -------- -------- -------- ------------ --------- ---------------- ---------------
Consolidated Cash Flow Statement (unaudited)
for the six months ended 30 June 2018
Six months ended Six months ended Six months ended Six months ended Six months ended Six months ended Year ended Year ended Year ended
30 June 2018 30 June 2018 30 June 2018 30 June 2017 30 June 2017 30 June 2017 31 December 2017 31 December 2017 31 December 2017
Continuing Discontinued Total Continuing Discontinued Total Continuing Discontinued Total
Operations Operations Operations Operations Operations Operations
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss after
taxation (1,189) (14) (1,203) (854) (529) (1,383) (2,448) (3,669) (6,117)
Non-cash
adjustments 11 562 - 562 335 102 437 1,294 2,635 3,929
Net changes
in working
capital 11 26 (85) (59) 307 (16) 291 435 206 641
Cash outflow
from
operating
activities (601) (99) (700) (212) (443) (655) (719) (828) (1,547)
Investing
activities
Purchase of
property,
plant and
equipment (26) - (26) (43) (4) (47) (69) (4) (73)
Purchase of
intangible
assets - - - (54) - (54) (56) - (56)
Proceeds
from the
sale of
fixed
assets - - - - - - 1 - 1
Cash outflow
from
investing
activities (26) - (26) (97) (4) (101) (124) (4) (128)
Financing
activities
Gross
proceeds
from the
issue of
ordinary
shares 838 - 838 1,626 - 1,626 2,376 - 2,376
Costs of
share
issues in
the period (38) - (38) (117) - (117) (160) - (160)
Borrowing
repayments - - - (34) - (34) (36) - (36)
Interest
paid (148) - (148) (112) - (112) (265) - (265)
Cash inflow
from
financing
activities 652 - 652 1,363 - 1,363 1,915 - 1,915
Change in
cash and
cash
equivalents
in the
period 25 (99) (74) 1,054 (447) 607 1,072 (832) 240
Cash and
cash
equivalents
at the
beginning
of the
period 392 152 152
Cash and
cash
equivalents
at the end
of the
period 318 759 392
Notes to the financial statements
for the six months ended 30 June 2018
1. General information and nature of operations
Westminster Group Plc (the "Company") was incorporated on 7
April 2000 and is domiciled and incorporated in the United Kingdom
and quoted on AIM. The Group's financial statements for the six
month period ended 30 June 2018 consolidate the individual
financial information of the Company and its subsidiaries. The
Group designs, supplies and provides advanced technology security
solutions and services to governmental and non-governmental
organisations on a global basis.
2. Basis of preparation
These unaudited condensed consolidated interim financial
statements are for the six months ended 30 June 2018. They have
been prepared following the recognition and measurement of
principles of IFRS as adopted by the European Union. The statements
do not include all of the information required for full annual
financial statements and should be read in conjunction with the
consolidated financial statements of the Group for the year ended
31 December 2017.
These consolidated interim financial statements have been
prepared in accordance with the accounting policies adopted in the
last annual financial statements, which were for the year ended 31
December 2017, with the exception of the change in accounting
policy for Administration Expenses and Cost of Sales as described
in note 3 below.
These consolidated interim financial statements for the six
months ended 30 June 2018 have neither been audited nor reviewed by
the Group's auditors. The financial information for the year ended
31 December 2017 set out in this interim report does not constitute
statutory accounts as defined in section 435 of the Companies Act
2006. The statutory financial statements for the year ended 31
December 2017 have been reported on by the Company's auditors and
delivered to the Registrar of Companies. The report of the auditors
was unqualified in accordance with Section 495 of the Companies Act
2006.
3. Change in accounting classification
During the period, the directors have reviewed the
categorisation of certain contract related costs which have
historically been classified within Administration Expenses and
concluded that it would be more appropriate for these costs to be
classified within Cost of Sales within the Consolidated Statement
of Comprehensive Income. The prior periods have been restated
within this document for this change in accounting classification.
This change in accounting classification only affects Cost of Sales
and Administration Expenses and there is no impact on Profit Before
Tax or Retained Earnings. The impact on the year to 31 December
2017 and the six months to 30 June 2017 is shown in the table
below.
Six months ended Six months ended Six months ended Year ended Year ended Year ended
30 June 2017 30 June 2017 30 June 2017 31 December 2017 31 December 2017 31 December 2017
Continuing Discontinued Continuing Discontinued
operations Operations Total operations Operations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Impact of
change in
accounting
classification
Revenue - - - - - -
Cost of sales 653 9 662 1,343 9 1,352
Gross profit 653 9 662 1,343 9 1,352
Administration
expenses (653) (9) (662) (1,343) (9) (1,352)
Operating loss - - - - - -
Profit after - - -
tax - - -
4. Going concern
The directors have, at the time of approving this interim
report, a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. Thus they continue to adopt the going concern basis of
accounting in preparing the financial statements.
5. Basis of consolidation
These Group financial statements consolidate those of the Group
and its subsidiary undertakings drawn up to 30 June 2018.
Subsidiaries are entities over which the Group has the power to
control the financial and operating policies so as to obtain
benefits from their activities. The Group obtains and exercises
control through voting rights. Consolidation is conducted by
eliminating the investment in the subsidiary together with the
parent's share of the net equity of the subsidiary.
6. Functional and presentational currency
The financial information has been presented in pounds sterling,
which is the Group's presentational currency. All financial
information presented has been rounded to the nearest thousand.
7. Segment reporting
Operating segments
The Board considers the Group on a Business Unit basis. Reports
by Business Unit are used by the chief decision-makers in the
Group. The Business Units operating during the period are the main
operating companies, Westminster Aviation and Westminster
International. In 2017 the operating business units also included
Sovereign Ferries. This split of business segments is based upon
the products and services each offer.
Six months ended 30 June Managed Technology Managed Group and Group
2018 Services Services Central Total
Aviation Sovereign Costs
Ferries
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Supply of products and
solutions - 708 - - 708
Supply and installation
contracts - 13 - - 13
Maintenance and service - 136 - - 136
Airport security fees 1,616 - - - 1,616
Training and consultancy 113 - - - 113
Segment revenue 1,729 857 - - 2,586
----------------------------- ---------- ----------- ----------- ---------- --------
Segmental underlying
EBITDA 610 (47) - (971) (408)
Exceptional items (215) - (14) - (229)
Depreciation & amortisation (39) (6) - (32) (77)
Segment Operating result 356 (53) (14) (1,003) (714)
----------------------------- ---------- ----------- ----------- ---------- --------
Finance cost - - - (484) (484)
Segment profit/(loss)
for the period before
taxation 356 (53) (14) (1,487) (1,198)
----------------------------- ---------- ----------- ----------- ---------- --------
Six months ended 30 June Managed Technology Managed Group and Group
2017 Services Services Central Total
Aviation Sovereign Costs
Ferries
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Supply of products and
solutions - 906 - - 906
Supply and installation
contracts - 15 - - 15
Maintenance and service - 99 - - 99
Airport security fees 1,755 - - - 1,755
Training and consultancy 93 - - - 93
Ferry ticket sales - - 51 - 51
Segment revenue 1,848 1,020 51 - 2,919
----------------------------- ---------- ----------- ----------- ---------- --------
Segmental underlying
EBITDA 683 (12) (427) (885) (641)
Exceptional items (255) - - (50) (305)
Depreciation & amortisation (73) (8) (102) (24) (207)
Segment Operating result 355 (20) (529) (959) (1,153)
----------------------------- ---------- ----------- ----------- ---------- --------
Finance cost - - - (230) (230)
Segment profit/(loss)
for the period before
taxation 355 (20) (529) (1,189) (1,383)
----------------------------- ---------- ----------- ----------- ---------- --------
Geographical areas
The Group's international business is conducted on a global
scale, with agents present in all major continents. The following
table provides an analysis of the Group's sales by geographical
market, irrespective of the origin of the goods/services.
Six months Six months
ended 30 ended 30
June 2018 June 2017
GBP'000 GBP'000
United Kingdom and Europe 554 489
Africa 1,842 2,033
Middle East 3 129
Rest of the World 187 268
Total revenue 2,586 2,919
8. Loss per share
Earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period. For
diluted earnings per share the weighted average number of ordinary
shares in issue is adjusted to assume conversion of all dilutive
potential ordinary shares. Only those outstanding options that have
an exercise price below the average market share price in the
period have been included. For each period, the issue of additional
shares on exercise of outstanding share options would decrease the
basic loss per share and therefore there is no dilutive effect.
The weighted average number of ordinary shares is calculated as
follows:
Year ended
Six months ended 30 June 2018 Six months ended 30 June 2017 31 December 2017
'000 '000 '000
Number of issued ordinary shares
at the start of period 120,743 87,107 87,107
Effect of shares issued during
the period 3,710 13,822 22,087
Weighted average basic and
diluted number of shares for
period 124,453 100,929 109,194
9. Exceptional items
Year ended
Six months ended 30 June 2018 Six months ended 30 June 2017 31 December 2017
GBP'000 GBP'000 GBP'000
Middle East contract pre-contract
costs 215 255 603
Ferry closure costs 14 - 335
Other - 50 50
Total exceptional items 229 305 988
10. Finance costs
Year ended
Six months ended 30 June 2018 Six months ended 30 June 2017 31 December 2017
GBP'000 GBP'000 GBP'000
Interest payable on bank and
other borrowings (36) (9) (44)
Cash interest expenses on
convertible loan notes (117) (106) (225)
Underlying finance costs (153) (115) (269)
Non-cash amortised finance cost
on convertible loan notes (56) (115) (361)
Non-cash finance cost upon (275) -
extension of convertible loan
notes -
Total finance costs (484) (230) (630)
11. Cash flow adjustments and changes in working capital
The following non-cash items and adjustments for changes in
working capital have been made to loss before tax to arrive at
operating cash flow:
Six months ended Six months ended Six months ended Six months ended Six months ended Six months ended Year ended Year ended Year ended
30 June 2018 30 June 2018 30 June 2018 30 June 2017 30 June 2017 30 June 2017 31 December 2017 31 December 2017 31 December 2017
Continuing Discontinued Total Continuing Discontinued Total Continuing Discontinued Total
Operations Operations Operations Operations Operations Operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Adjustment for
non-cash items
Depreciation,
amortisation and
impairment of
non-financial assets 77 - 77 105 102 207 567 2,635 3,202
Finance costs 484 - 484 230 - 230 630 - 630
Loss on disposal of
non-financial assets 1 - 1 - - - 9 - 9
Share-based payment
expenses - - - - - - 88 - 88
Total adjustments 562 - 562 335 102 437 1,294 2,635 3,929
Net changes in working
capital:
Decrease/(increase)in
inventories (3) - (3) 150 - 150 159 - 159
Decrease/(increase) in
trade and other
receivables (562) - (562) 178 (44) 134 162 39 201
Increase/(decrease) in
trade and other
payables (48) (85) (133) (21) 28 7 141 167 308
Increase in deferred
income 639 - 639 - - - (27) - (27)
Total changes in
working capital 26 (85) (59) 307 (16) 291 435 206 641
12. Called up share capital
6 months to 30th
June 6 months to 30th Year to 31st December
Ordinary Share Capital 2018 June 2017 2017
----------------------------- ---------------------- ----------------------- ------------------------
Number GBP'000 Number GBP'000 Number GBP'000
----------------------------- ------------ -------- ------------- -------- -------------- --------
At the beginning of the
period 120,743,420 12,074 87,107,903 8,711 87,107,903 8,711
Arising on conversion
of convertible loan notes - - 10,669,227 1,067 10,669,227 1,067
Shares issued to Beaufort
Securities in settlement
of their annual fee - - 250,000 25 250,000 25
Arising on exercise of
Warrants and Share Options 875,000 88 55,000 4 55,000 5
Other issues for cash 3,409,091 341 15,161,290 1,517 22,661,290 2,266
At the end of the period 125,027,511 12,503 113,243,420 11,324 120,743,420 12,074
----------------------------- ------------ -------- ------------- -------- -------------- --------
13. Share Options and Warrants
The Company adopted a revised Westminster Group Plc 2017 Share
Option Scheme on 31 May 2018 that is in accordance with the EMI
Code. The Scheme provides for the granting of both Enterprise
Management Incentives and unapproved share options and is open to
all full time employees and Directors of the Company.
On 1 June 2018, the Company granted a total of 7,500,000 share
options over ordinary shares of 10p each in the Company at a price
of 13 pence per Ordinary Share, being the closing middle market
price of an Ordinary Share on 31 May 2018.
The Share Options 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 26
pence per Ordinary Share at any time, being twice the middle market
price on the date of grant. No consideration was paid by the option
holders in respect of the grant of their awards.
The Share Options were granted to Directors of the Company as
follows:
Peter Fowler (Chief Executive Officer) 1,750,000
Martin Boden (Chief Financial Officer) 1,250,000
Sir Tony Baldry (Chairman) 750,000
Stuart Fowler (Operations Director) 750,000
The remaining 3,000,000 options were granted to all UK based
employees and to key employees based overseas. Following the grant
of the Share Options, there are currently a total of 11,143,000
director and employee share options outstanding, representing 8.6%
of the current issued share capital of the Company.
In August 2018, the February 2016 Warrants (589,330 with a three
year life and a strike price of 20.15p per Ordinary Share) were
sold by Darwin Capital Limited ("Darwin") to a new holder. Darwin
sold their remaining warrants (1,100,000 with a three year life and
a strike price of 28.0p per Ordinary Share) to the same buyer in
April 2018 and Darwin no longer hold any warrants in Westminster
Group Plc.
14. Borrowings
Year ended
Six months ended 30 June 2018 Six months ended 30 June 2017 31 December 2017
GBP'000 GBP'000 GBP'000
Current borrowings (due < 1 year)
Convertible loan note - 2,073 -
Total current borrowings - 2,073 -
Non-current borrowings (due > 1
year)
Convertible loan note 2,200 - 2,184
Total non-current borrowings 2,200 - 2,184
Total borrowings 2,200 2,073 2,184
15. Events after the Reporting Period
On 31 July 2018, the Company raised $250,000 (GBP190,961) by way
of an issue of GBP190,961 of convertible redeemable unsecured loan
notes ("CULN"). The CULN have a maturity date of 31 July 2021 and
an annual coupon of 5%. The CULN may be converted at any time in
whole or in multiples of GBP10,000 at a conversion price of 10p per
share. The investor who subscribed for the CULN is known to the
Company and assists in business development.
On 31 August 2018, the Company raised GBP0.5m (gross) through a
placing of 5,000,000 new Ordinary Shares of 10p each at 10 pence
per Ordinary Share. The placing was undertaken by SVS Securities
Plc. The total number of voting rights in the Company is currently
130,027,511.
16. Approval of interim financial statements
The interim financial statements were approved by the Board of
Directors on 20 September 2018.
17. Copies of interim financial statements
A copy of these interim financial statements is available on the
Company's website, www.wsg-corporate.com and from the Company
Secretary at the company's registered office, Westminster House,
Blacklocks Hill, Banbury, Oxfordshire, OX17 2BS.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR SEMFWSFASEEU
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