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')

Final Results for 12 months to 31 December 2021

& Investor Presentation

Westminster Group Plc (AIM: WSG), a leading supplier of managed services and technology-based security solutions worldwide, announces Final Results for the 12 months ending 31 December 2021.

Highlights

Operational:

·      Continued to navigate Covid-19 pandemic successfully despite declining market confidence and delays of Technology Division's projects.

·      Services Division delivered a robust performance.

·      Recognised for excellence in International Trade with a Queen's Award for Enterprise.

·      Supplied products and solutions to 60 (2020: 78) countries across the world.

·      Secured prestigious contract for the Tower of London.

·      Entered strategic partnership with Covid-19 testing company, Certific.

·      Secured 20-year managed services contract for airport security in DRC (subject to ratification).

·      Secured 10-year managed services contract for port security in West Africa.

·      Secured $1.7m airport security contract in Southeast Africa.

·      Kept all our employees safe during Covid-19 and maintained full employment utilising the UK Government furlough scheme, where appropriate.

 Financial:

·      Despite continuing material impact from the effects of Covid-19, achieved revenues of £7.1m (2020: £9.9m).

·      Loss after tax £1.9m (2020: loss of £0.7m).

·      Total Equity / Net Assets increased from £7.1m in 2020 to £7.5m in 2021.

·      Commenced year debt free and remained so (other than operating lease debt under IFRS 16).

·      Reduction in capital approved and implemented.

Post period End:

·      West African airport ahead of expectations and nearing pre-pandemic revenue levels, with March 2022 being the highest ever March figure.

·      Ghana Port performing to expectations and with the fourth berth opened late 2021, further growth is expected.

·      Training & Guarding businesses recovering well and winning new business.

·      Product and solution sales showing signs of significant improvement, with several delayed projects once again back in discussion.

·      Successfully completed Palace of Westminster project (now in 5 year maintenance programme).

·      Westminster Arabia finally established we fully expect to see KSA provide a material contribution to our 2022 and future revenues.

·      $1.7m airport security contract secured December 2021 underway and expected to be completed in the year. 

·      Continue to work on DRC ratification process, expected to be completed by Q4 2022

·      The logistics, licencing and planning phase of our new 10 year West African port project secured in 2021 is nearing completion and the operational phase is expected to begin in H2 2022.

·      Closely monitoring US Iranian talks regarding JCPOA.

Commenting, Peter Fowler, Chief Executive of Westminster, said:

"The defining aspect of 2021 was, of course, the ongoing global impact of the Covid-19 pandemic, whilst one of the main highlights of the year was the prestigious Queen's Award for Enterprise in recognition of Westminster's outstanding contribution to International Trade, which recognised Westminster's many achievements, particularly given the challenges presented by the global pandemic.

"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 Covid-19 pandemic.

"I am proud of how our staff have pulled together and how we have managed to navigate the crisis. We have continued to keep our people safe, fully employed (utilising the UK government's furlough scheme where appropriate) and maintained our global operations, albeit some on reduced levels.

"We continued to deliver on business opportunities and, in 2021, we supplied goods and services to 60 countries around the world, including some notable contract wins. 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.

"I am pleased to report therefore that, the outlook for 2022 is looking positive as the worst impact of the global Covid-19 pandemic recedes, travel restrictions are being lifted and business confidence is beginning to return.

"Building on 2021's recorded revenue we are targeting a number of incremental revenue growth opportunities for 2022 which, if delivered, will be a step change for the business. Our West Africa airport operations are recovering strongly returning to pre-pandemic levels. Our port security business is growing and we are targeting new opportunities to be delivered in the year. We are seeing recovery and anticipate healthy growth in both our guarding and training businesses. Our enquiries remain buoyant, and we are targeting material growth both in our product sales and larger-scale solutions business.

"In conclusion therefore, the recovery we are seeing in existing revenue streams and new contracts, together with our business model and the opportunities we have been developing over the years, despite the challenges and setbacks we have experienced from the global Covid-19 pandemic, underpin our confidence for the future growth of our business. Whilst there is still uncertainty in the world, not least with evolving global events, we remain optimistic that we can meet 2022 financial year market expectations."

Investor Presentation: 15:00hrs on Tuesday 10 May 2022

The presentation will be hosted through the digital platform Investor Meet Company at 15:00hrs on Tuesday 10 May 2022. Investors can sign up to Investor Meet Company for free and add to meet Westminster Group plc via the following link:

https://www.investormeetcompany.com/westminster-group-plc/register-investor.

Investors who have already registered and added to meet the Company will automatically be invited.

Peter Fowler, Chief Executive Officer, and Mark Hughes, Chief Financial Officer, will review the results for 2021 and update on prospects for the Group.

Questions can be submitted pre-event to westminster@walbrookpr.com, or in real time during the presentation via the "Ask a Question" function.

Annual Report and Accounts - The final results announcement can be downloaded from the Company's website (www.wsg-corporate.com).  Copies of the Annual Report and Accounts (in addition to the notice of the Annual General Meeting) will be sent to shareholders on or before 1 June 2022 for approval at the Annual General Meeting to be held on 28 June 2022.

For further information please contact:

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 (including Fever 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.

The Westminster Group Foundation is part of the Group's Corporate Social Responsibility activities.

The Foundation's goal is to support the communities in which the Group operates by working with local partners and other established charities to provide goods or services for the relief of poverty and the advancement of education and healthcare particularly in the developing world.

The Westminster Group Foundation is a Charitable Incorporated Organisation, CIO, registered with the Charities Commission number 1158653.

Overview

2021 was a year of great challenges, but also of great success for Westminster.  We saw the signing of two major managed services contracts in the Democratic Republic of Congo and West Africa, but also the frustration of projects right shifting into 2022 and beyond.  Against a difficult year dominated by the uncertainty caused by the Covid-19 pandemic, I am pleased to present the Westminster Group PLC Final Results for the year ended 31 December 2021.

In April 2021, Westminster was recognised for its excellence in International Trade given its outstanding growth in overseas sales in the last 3 years.  It was one of just 205 organisations nationally for which Her Majesty the Queen has approved the Prime Minister's recommendation that Westminster be awarded the prestigious Queen's Award for Enterprise. The significance of this prestigious award is recognised worldwide and is an indication of the growth and momentum we have achieved with our world-wide business over the past few years. To have now 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 was formally presented by the Lord Lieutenant of Oxfordshire, Sir Tim Stevenson CVO OBE, on behalf of Her Majesty the Queen, at a ceremony at Westminster House on Friday, 3 September 2021.

I am proud that the Group is recognised globally for its specialist security and services expertise, operating worldwide via an extensive international network of agents and offices in over 50 countries.  Britain has always been at the forefront of innovation in security and defence solutions and this Queen's Award accolade further validates the position Westminster holds in that marketplace.

The last two years have been dominated by Covid-19, which was declared a global pandemic in March 2020, creating a worldwide healthcare crisis with hundreds of millions of citizens infected and millions tragically losing their lives. Governments around the world reacted in various ways with many closing borders, some putting large parts of their populations on lockdown and imposing 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 that operates internationally with staff around the world, and we are heavily involved in international travel, as such we have been affected by the impact of the global disruption caused by the pandemic. During 2021, Covid-19 has had a profound impact on the global economy with much uncertainty and many travel restrictions. This did have a negative impact on the Company, with sales dropping to just under £7m and losses commensurately increased.

Corporate Conduct

As a company whose shares are traded on the AIM market of the London Stock Exchange, we recognise the importance of sound corporate governance throughout our organisation, giving our shareholders and other stakeholders including employees, customers, suppliers and the wider community confidence in our business. We endeavour to deliver on our corporate Vision and Mission Statements in an ethical and sensitive manner irrespective of race, colour or creed. This is not only a requirement of a well-run public company but makes good commercial and business sense.

In my capacity as Executive Chairman, I have ultimate responsibility for ensuring the Board adopts and implements a recognised corporate governance code in accordance with our stock market status. Accordingly, the Board has adopted, and is working to, the Quoted Companies Alliance (QCA) Corporate Governance Code 2018. The Chief Executive Officer (CEO) has responsibility for the implementation of governance throughout our organisation, commensurate with our size of business and worldwide operations.

The QCA Corporate Governance Code 2018 has ten key principles and we set out on our website how we apply those principles to our business, and more detailed information is provided in these accounts.

We operate worldwide with a focus on emerging markets and in a sector where discretion, professionalism and confidentiality are essential. It is vitally important that we maintain the highest standards of corporate conduct. The Corporate Governance Report in this annual 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.

Corporate and Social Responsibility

As a Group, we take our corporate and social responsibilities very seriously, particularly as we operate in emerging markets and in some cases in areas of poverty and deprivation. As highlighted in the Chief Executives Report we are building on our environment, social and governance strategies. 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 reductions 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.

In June 2021, Simon Barrell replaced Charles Cattaneo as a Non-Executive Director and Chairman of the Audit Committee. Simon's wealth of experience gained from a variety of business sectors, in particular working in AIM quoted companies and serving on boards of growing and successful companies, is of great value to our business as we expand and deliver on our significant potential.  He has worked in groups in adjacent sectors who also serve emerging markets.  This gives him an understanding which will be invaluable to Westminster in the next stage of its growth.

After several years' valuable service, Lady Patricia Lewis (Patsy Baker) stepped down from her role as Non-Executive Director as of 1 November 2021.  To replace her, we appointed Major General (Retired) Graham Binns, CBE, DSO, MC.  Graham is a highly decorated retired British Army officer with over 10 years' experience as a senior board level executive in the commercial security sector.  He served as General Officer Commanding 1st (UK) Armoured Division and then Commandant Joint Services Command and Staff College, retiring in 2010. He had previously commanded the 7th Armoured Brigade (the Desert Rats) during Operation Telic 1 when the brigade took Basra in southern Iraq.  Following his military career, Graham was recruited as Chief Executive Officer of Aegis Defence Services Ltd. providing security services to governments and major corporations throughout the Middle East and Africa, with revenues of £300m and a staff of over 3,000. Following the acquisition of Aegis by GardaWorld, the world's largest privately owned security group with 122,000 employees and a turnover of $3 billion, Graham served for several years as Senior Managing Director of GardaWorld International Protective Services, and more recently as their senior advisor on strategic client relationships.

Both Lady Patricia Lewis and Charles Cattaneo stepped down in order to spend more time on their other commitments. I would like to thank them both for their dedication and hard work over the past few years. They made a positive contribution to the Group and were valued board members.

I would finally like to extend my appreciation to our investors for their continued support and to our strategic investors who are bringing their expertise to help deliver value for all.

Rt. Hon Sir Tony Baldry DL

Chairman

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.

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

The defining aspect of 2021 was, of course, the ongoing global impact of the Covid-19 pandemic, whilst one of the main highlights of the year was the prestigious Queen's Award for Enterprise in recognition of Westminster's outstanding contribution to International Trade, which recognised Westminster's many achievements, particularly given the challenges presented by the global pandemic.

In January 2021, the UK entered its third national lockdown from the ongoing Covid-19 pandemic, which lasted until March 2021. Many areas of the world similarly had ongoing travel restrictions, all of which impacted large parts of our business. However, with such restrictions beginning to ease in Q2 2021, the expectation was that we would see a recovery in H2 2021 and that some of our delayed projects would once again begin to come on stream. Ultimately, this was not to be the case. With lockdowns and travel restrictions continuing in many parts of the world, together with a lack of business confidence causing many companies to defer capital expenditure etc., exasperated by the Omicron variant outbreak sweeping the world in the later part of the year, the events materially impacted parts of our business for the full year, with resultant reductions in revenues.

However, 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 Covid-19 pandemic and despite the challenges we did manage to secure a number of notable achievements, not least of which was the Queen's Award for Enterprise in recognition of Westminster's outstanding contribution to International Trade.

This prestigious award was formally presented by the Lord Lieutenant of Oxfordshire, Sir Tim Stevenson CVO OBE on behalf of Her Majesty the Queen, at an Award Ceremony and Open Day at Westminster House on Friday, 3 September 2021. The event proved to be a huge success and was attended by over 100 guests including many Ambassadors, High Commissioners, Embassy staff and Government representatives from countries around the world, as well as customers, partners, and shareholders. In presenting the award Sir Tim Stevenson said, "The Queen's Award for Enterprise is not an easy award to achieve, and Westminster's performance has been extraordinarily impressive demonstrating impressive sales growth."

^ This is an Alternative Performance Measure - refer to Note 2 of the financial statements for further details

The significance of this prestigious award is recognised worldwide and is an indication of the growth and momentum we have achieved with our world-wide business over the past few years.

Given the ongoing worldwide impact of the global Covid-19 pandemic, 2021 has been another 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 continued to keep our people safe, fully employed (utilising the UK government's furlough scheme where appropriate) and maintained our global operations, albeit some on reduced levels.

Notwithstanding the many challenges, we continued to deliver important new business and develop new opportunities, with parts of our business performing well but with other parts, particularly Technology Division sales, being materially impacted. The Services Division increased revenues by 16% to £5.1m (2020: £4.4m), despite still being impacted by Covid-19 travel and lockdown restrictions which shows the value of this division, particularly the long-term managed services, as recovery gets underway.  However, the Technology Division revenues reduced to £2.0m (2020: £5.6m). This was largely due to a lack of business confidence and uncertainty through the Covid-19 pandemic and a reluctance from many companies to commit to capital expenditure resulting in a number of expected contract awards being delayed and the ensuing revenues being delayed.

We have continued to deliver on business opportunities and, in 2021, we supplied goods and service to 60 countries around the world, including some notable contract wins. 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.

Divisional Review

Services Division

Our Services Division has performed well and delivered some notable achievements in the period.

In our 2020 Annual Report, we stated one of our key goals for 2021 was to secure at least one more long-term managed services contract and in that respect, I am delighted that we have secured two significant new long-term contract wins.

On 15 June 2021, we signed a 20-year manged services contract to provide security services to 5 airports in the Democratic Republic of the Congo ("DRC"), Central Africa. The contract is subject to a formal ratification process and whilst this process has taken far longer than anticipated, largely due to the client's internal procedures, the contract is an exciting development for the company. There is considerable pressure on the airport authority to conclude this process and we expect this to be finalised by Q4 this year. Once the process is completed, it will not only deliver meaningful long-term revenues but means we will have established an important presence in a new region of Africa.

In addition, on 16 June 2021, we further announced that we had signed another long-term managed service contract to provide port screening services in West Africa for the next 10+ years. We had been pursuing and developing this opportunity for several years and it is another important win for the Company that further extends our global footprint and profile in the port screening sector. The majority of preliminary works required at the port, such as acquisition of the required land for the port security operations and export licencing requirements, have now largely been completed and we anticipate revenues from this long-term project will commence in H2 2022.

Furthermore, in early July, we announced that we had been awarded yet another high-profile contract to supply security services to help protect the historic Royal Palace and Fortress of the Tower of London.‍ Security of such a landmark building, which is open to the public, is paramount and Westminster has been contracted to provide, inter alia, professional security services to the pedestrian and vehicular entrances.

These important new contract wins demonstrate our global reach but, as we have stated on a number of occasions, that large-scale projects such as these do take time to develop and negotiate and in securing such contracts, we equally demonstrate that we have the skills and resources required to successfully deliver on such opportunities. Together these new contracts alone will add, once fully operational, several million pounds to our annual revenues and together with our other managed services and recurring revenue contracts, underpin confidence in our future forecasts and growth.

In addition to these important new contracts, we are encouraged in the recovery and growth of our existing operations during the latter part of 2021 as the worst of the Covid-19 challenges are hopefully put behind us.

Our West African Airport managed services operation which, like aviation across the world, had been severely impacted by lockdowns and travel restrictions but encouragingly has seen a strong bounce back through 2021. In January 2021, we were running at 39% of the pre-Covid-19 pandemic 2019 levels but, by the end of the year in December 2021, we were running at around 84% of pre-pandemic levels and I am pleased to say this trend has continued into 2022 with the first few months of the year ahead of budget expectations and nearing pre-pandemic levels.

Overall, in 2021, the Services Division revenue achieved around 60% of pre-pandemic revenues and due to the operational gearing of these projects, most of the 40% lost revenues would have flowed through to the bottom line and in turn would have materially improved the performance for the year.

Our port managed services operations in Ghana have not been materially affected by Covid-19 and continue to perform well. The 4th berth became operational in late 2021 and we expect to see further growth with this important project.

Both our guarding and training businesses were heavily impacted by Covid-19 lockdowns and travel restrictions, but we are encouraged by the recovery we are seeing in both businesses, and we expect this to continue into 2022 as travel restrictions around the world continue to ease.

Our guarding business has already secured important new business in 2021 that will benefit future years and we are currently pursuing a number of interesting new opportunities which could see revenues from this business increase dramatically.

We are also pleased to see our training business securing new contracts from governments and organisations and is now operating ahead of budget. The global Covid-19 pandemic has demonstrated the importance of distance and online training and the strategic decision we took some time ago to invest in building an online training capability, both in house and through strategic partnerships, will prove to be very beneficial and we expect this part of our business to continue to grow.

As the pandemic impacted parts of our business, we continued to develop new opportunities and initiatives such as our partnership with Certific in its Covid-19 testing programme for which Westminster is providing verification services. This new initiative delivered six figure revenues in 2021 although, as the requirements for Covid-19 testing reduce, we anticipate this service will cease to be material going forward.

Technology Division

We continue to experience healthy enquiry levels and during 2021 have secured orders for our products and services from 60 countries around the world, although effects of Covid-19, including travel restrictions, have caused some delays in delivery.

The caution on spending by many companies during 2020 continued into 2021 which meant that purchasing decisions regarding some of our larger technology project opportunities have been deferred. We are encouraged however that several of these opportunities are once again beginning to move forward.

An example of such delayed projects was the $1.7m airport security contract for two airports in Southeast Africa, which we announced in December 2021. This contract, which is being funded by the European Investment Bank, was expected to be announced in early 2021 after a lengthy international competitive tender process and involves the upgrading of security equipment, including new x-ray screening and metal detection equipment, an advanced CCTV surveillance system and new control and command centres at both airports. Had the contract been awarded, as expected in 2021, it would have been completed that year, however, it is now expected to be undertaken and completed in 2022.

In the UK, we were pleased to report the Palace of Westminster contract, however it is another project that suffered delays due to the Covid-19 pandemic. It was initially secured in 2020 but could not be started until later in 2021. The project was successfully completed in early 2022 and we are already in discussions regarding extensions to this project.

As previously advised, we have been working on the establishment of Westminster Arabia in the Kingdom of Saudi Arabia jointly with our partners Hazar International and this process, which had been delayed by various lockdowns and restrictions. I am delighted to report that this has now been completed and we expect Saudi Arabia to be an important contributor to future revenues with some substantial project opportunism already being discussed and pursued.

Our German subsidiary, situated to the Southeast 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 has secured a number of important new clients including US military bases and is developing substantial business opportunities in the region.

In addition, a key project opportunity for the team is the 15 year, €24 million per annum contract for airport security at Tehran International Airport in Iran, which was signed, with the full support of the British Government, in 2019 but was put on hold when President Trump unilaterally withdrew from JCPOA. We are closely monitoring geo-political events with regards to the US and Iran regarding the JCPOA agreement. We remain in close contact with our partners and the UK Government regarding current talks regarding resumption of the JCPOA agreement and potential outcomes. Should circumstances change and US and international sanctions, including banking, be lifted, there remains an opportunity for our German office to revisit this prospect and other opportunities.

Our French business, Euro Ops, which we acquired in May 2019, continues to be a valuable strategic addition to the Group. The company provides aviation focussed services such as humanitarian flights and logistics, emergency flights, flight operations, charter and storage management. 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. Our DRC contract was secured as a direct result of this enhanced access to Francophone countries and is just one of several such opportunities in the region we are pursuing.

Summary

On a wider front, despite all the challenges we continued to face in 2021, 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 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 ongoing challenges created by Covid-19, and in some cases because of it, 2021 was a busy year and whilst our results for the year have been impacted by lockdowns, travel restrictions and lack of business confidence around the world, we continued to make progress on a number of fronts, and it was pleasing that some of our achievements were recognised by the Queen's Award. We continued to deliver on business opportunities and during the year supplied goods and services to countries around the world, including some notable contract wins. 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. The benefits from these achievements will begin to be seen in 2022 and beyond and the Board and I remain excited by our growth prospects.

Strategy

Our vision is to build a global business with strong brand recognition delivering advanced security solutions and long-term managed services, on Land, at Sea and in the Air, primarily 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 has been able to maintain and grow revenues from parts of the business helping to offset reductions in other parts, such as its airport security, training and guarding businesses, all of which were materially impacted by the Covid-19 pandemic.

The Board considers strategy at each regular Board Meeting and has at least one 'off-site' strategy day each year to review the Company's rolling five-year Strategic Growth Plan and to consider new short-, medium- and long-term strategies that could be implemented to achieve our goals and to deal with changing global and economic issues.

The last two years of the global Covid-19 pandemic have demonstrated the challenges and impact global events can have on businesses and our flexible and proactive approach to strategy has helped us mitigate some of the adverse impacts on our business. For example, in 2020, we took early action to stock up with and market suitable products and systems, such as fever screening and sanitisation systems, greatly increasing our sales in this respect helping to offset other impacted areas of the business. In 2021, whilst demand for fever screening and certain other Covid-19 related products diminished, our strategic alliances in the field of Covid-19 testing systems also proved a valuable new revenue stream offsetting reduction elsewhere.

Covid-19 is of course not the first and will not be the last external challenge for which we need to have strategies in place to deal with. In 2014, the world experienced the West African Ebola outbreak which caused huge problems for the region, and now, in 2022, the Russian invasion of Ukraine has world-wide implications. I am confident the strategies we have now and will further put in place, together with our diverse business model, will help us not only manage the challenges but seek new opportunities from them.

Whilst we still believe that the opportunities we have been developing, primarily in emerging and high growth markets, are what will deliver exponential growth over the next few years, these can and do take time to develop and as we have seen, can be disproportionately impacted by global, regional and local events. Accordingly, one of the strategies we are now developing is to balance some of that risk by building more core business in the UK and developed world areas. We have made a good start with prestigious contracts such as the Tower of London, Palace of Westminster, Scottish Parliament, HM Prisons, UK Border force, and we will be looking to materially increase such business through 2022 and beyond.

One initiative we are pursuing regarding building our UK business relates to the forthcoming new legislation in the UK, Protect Duty. Protect Duty was born out of Martyn's Law, named after Martyn Hett, who at 29 years was killed in the Manchester Arena terrorist attack in May 2017. Martyn's mother, Figen Murry, has been a tireless campaigner and the force behind Protect Duty, formally Martyn's Law legislation that will require many businesses giving access to the general public, to formally assess and take measures to address terrorism risks for the first time.

Protect Duty is set to have a profound and lasting effect on security provision in the UK - encompassing Publicly Accessible Locations (PALs) and requiring them to actively protect visitors and staff. The Home Office estimates that 650,000 UK businesses could be affected by Protect Duty, and this offers substantial business opportunities for Westminster's extensive portfolio of products and services. The Westminster Group has been working on this opportunity for over a year, in collaboration with a number of stakeholders, including public figures, magazines, industry experts and the police, in readiness for the upcoming legislation and can not only provide support and consultancy to assist venues understand the requirements but can provide all the equipment, training and support services required.

As part of our strategy for growth, we will also continue to improve and enhance our Board and senior management team and have made a number of key appointments broadening our range of experience and expertise. If we are to maximise the substantial growth opportunities we are developing, particularly with our managed services operations, it is essential we have the right strategies, people, processes and systems in place to successfully deliver such growth.

Given budget constraints for many companies resulting from the global Covid-19 pandemic, another strategy we are exploring is with debt funding and leasing providers to transition large scale projects from a 'capital' purchase to a longer term, 5+ years, revenue model, which would also include maintenance and training, along with value-add services such as Big Data acquisition for applications such as border crossings. Given that some of these project opportunities can be multi-million dollars in value, we believe that this model brings added value which sets us apart from the competition and will be attractive to many potential clients; indeed, we are already in discussions with a few government bodies on this basis. With large scale projects such as these, there is never certainty of outcome or timing, but we are very optimistic this initiative will lead to material and additional long-term revenues.

Whilst we continue to pursue our many organic growth opportunities, we continue to identify potential acquisitions and strategic joint ventures (JVs) in key markets and regions, and we believe that this strategy will enable the Company to expand its sphere of operations in a controlled and effective way.

The challenges of the last two years have impacted our performance against our stated goals and accordingly, the Board has reset its key goals for 2022 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.     Increase sales in the UK and other first world countries;

4.     Secure at least one more long-term managed services contract;

5.     Deliver another year of significant recurring revenue growth;

6.     Deliver a material improvement in revenue and a move to profitability;

7.     Deliver a sustained and material improvement in our share price;

8.     Develop a more formal and structured Environment, Social, and Governance (ESG) strategy;

9.     Instigate an Investors in People programme; and

10.  Deliver on Market Expectations.

Environment, Social, and Governance (ESG) Strategy

The Westminster Group takes its corporate and social responsibilities very seriously and recognises that sustainability across our various business sectors is important to us and our future growth, important to our shareholders and wider stakeholders. In this respect, one of our key goals for 2022 is to develop our existing corporate social responsibility and governance activities into a more formal and focussed ESG strategy.

Our people are our most valued asset, and we recognise that a happy and motivated workforce is important. We are an equal opportunities employer and endeavour to treat all our staff, equally, fairly and to assist them reach their maximum potential. We do this by having structured systems to support staff in their job roles and in providing training programmes to improve their skills. We hold regular meetings and appraisals with staff and welcome input and feedback suggestions.

We provide flexible working arrangements, including home working where possible. We provide free fruit and refreshments, allow gym time to help keep our staff healthy and provide medical support where appropriate. We organise team building and social events across our business units (although this has been challenging over the past 2 years). We are looking to implement an Investors in People programme.

We take our social responsibilities very seriously including supporting the communities in which we operate and, in this respect, have our own registered charity - the Westminster Group Foundation - see here www.wg-foundation.org

Equally, we take our environmental responsibilities seriously and look to minimise our carbon footprint, for example by use of electric vehicles where possible. As an international business, travel has always featured heavily in our business activities. One thing the lockdown has demonstrated is that some of this travel can be replaced by remote meetings and conference by systems such as Microsoft Teams and Zoom, which has now become commonplace and far more accepted across the world. Accordingly, as the pandemic subsides, we intend to focus, where possible, of reducing travel by continuing with remote meetings. Where international travel is still necessary, we are investigating carbon offset programmes. We are also working towards ISO 14001 Environmental Management (EMS).

Performance Indicators

The Group constantly monitors various key performance indicators for factors affecting the overall performance. At Group level, the revenues and gross margin are monitored to give a constant view of the Group's operational performance. A key focus for the Group is in building its recurring revenue base from contracted income relating to its managed services projects, our maintenance and guarding contracts and this is a key metric being monitored. As employment costs are the single largest cost base for the Group, the number of employees and employee costs are also monitored to ensure best use of resources. Day's sales outstanding is used to measure the cash conversion of revenue and identifies debtor aging issues this has returned to more normal levels following an unusually low 2020 year end position.

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.

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. It is pleasing that we are seeing higher levels of return customers even though overall market activity is down due primarily to the uncertainty caused by the pandemic.

Current Trading & Business Outlook

The outlook for 2022 is looking positive as the worst impact of the global Covid-19 pandemic recedes and travel restrictions are lifted in many areas, although we remain mindful that global outlook remains uncertain, not least with the Russian invasion of Ukraine.

Building on 2021's Covid impacted revenues, we are targeting a number of incremental revenue growth opportunities and anticipate increases in our various services, solutions and product sales revenue streams. We are targeting growth in product sales (£2.5-£3.5m), solution sales (£3.5m-£4.5m), existing services (3.5m-£4.5m) and new services (£5.5-£6.5m). These growth targets are based on the recovery and growth we are seeing in our various business sectors as shown below.

We are encouraged to see our West African airport operations have recovered strongly ahead of expectations. The recovery we saw in the latter part of 2021 has continued into 2022 and we start the year nearing pre-pandemic levels and with March 2022 passengers exceeding pre-pandemic levels, being the highest March volume ever.

Our Ghana port security operations continue to generate healthy revenues and with the fourth berth having come on stream at the end of 2021 we expect this to continue, which demonstrates the value of this long-term managed services contract. In addition, our business in Ghana is growing and we are now securing other important new business in the country and are pleased to be the Gold Sponsors of the Queen's Platinum Birthday Celebration in Ghana on 26 April 2022 organised by the British High Commission, which will be a high-profile event and an excellent opportunity to expand our profile.

Due to the delays we have encountered with the DRC ratification process we now expect revenues will commence in Q4 2022, although given the momentum we are seeing elsewhere in the business we do not anticipate this will have a material impact on market expectations.

The logistics, licencing and planning phase of our new 10 year West African port project secured in 2021 is nearing completion and the operational phase is expected to begin in H2 2022.

Our guarding and training businesses continue to recover from the impact of lockdowns and travel restrictions and both businesses are not only delivering on existing contracts, such as the Tower of London, but also winning important new business.

We continue to receive a healthy flow of enquiries for our products and services and are already seeing improved product sales and in the first quarter of 2022, we have already supplied goods and services to 31 countries.

Over the past couple of years, we have not seen any large-scale solution sales due to the economic impact of Covid-19, however we are now once again seeing movement in a number of the large-scale opportunities we have been pursuing and, in this respect, the $1.7m contract for security solutions at two airports in Southeast Africa, we secured at the end of 2021, and which will be fully delivered in 2022 is an encouraging example.

We are pleased to have successfully completed in Q1 2022 the installation phase of the Palace of Westminster contract and for which we are now providing maintenance services and we are already in discussions on other matters and extensions.

We are pleased to report that Westminster Arabia is now finally established and together with our local partners, Hazar we are working on a number of exciting project opportunities, and we fully expect to see Westminster Arabia provide a material contribution to our 2022 revenues.

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 and our expectation is that we will secure at least one more long-term managed services contract in 2022 with the potential to secure more.

The foregoing, outlining the recovery we are seeing in existing revenue streams and new contracts, together with our business model and the opportunities we have been developing over the years, despite the challenges and setbacks we have experienced from the global Covid-19 pandemic, underpin our confidence for the future growth of our business. Whilst there is still uncertainty in the world, particularly with evolving global events, we remain optimistic that we can meet 2022 financial year market expectations.

Peter Fowler

Chief Executive Officer

Revenue

2021 revenues of approximately £7.1m (2020: £9.9m) reduced on 2020 levels because we suffered a full year of Covid-19 pandemic trading (2020 was 9 months) without the benefit of a surge in fever detection sales, which happened in 2020.  Projects continued to be delayed awaiting confidence that the world was returning back to more normal times.

Services revenues increased by 16% to over £5.0m (2020: £4.4m), despite being impacted by Covid-19 travel and lockdown restrictions.  This was partly as a result of a strong bounce back of our West African Airport passenger levels during the year.  In January 2021, we were running at 39% of the pre-pandemic 2019 passenger numbers but by December 2021, we were close to 84%.  This improvement has continued into 2022, reaching just over 100% of 2019 in Q1 2022.

Westminster's Technology Division revenues reduced to £2.0m (2020: £5.6m).  This was largely due to a lack of business confidence and uncertainty through the pandemic and a reluctance from many companies to commit to capital expenditure resulting in a number of expected contract awards being delayed.

Gross Margin

The higher margin Services Division sales dominated the Company's 2021 revenue, increasing the Gross Margin Percent to 46% (2020: 40%).  Another reason for the increase in the Gross Margin for 2021 was the lack of large solutions sales which typically operate at a lower margin level of approximately 15%.  Thus, we had a better margin mix.

Operating Cost Base

Group administrative costs increased to £5.2m (2020: £4.7m) in total. When the Covid-19 pandemic began, the Group made redundancies and other cost cuts.  In 2021 continuing into 2022, we are "building back better", increasing our sales force to be ready to take advantage of the expected pent-up demand. However, the long lead time on our sales cycle means that this investment will not fully bear fruit until 2022 and beyond. We also benefited from more government furlough support in 2020. 

We have taken advantage of the UK Government furlough scheme, receiving £141,000 in 2021, which is less than 2020 (£214,000).  This has meant that we were able to keep key staff such as trainers employed who had no work due to lockdowns and other restrictions imposed. 

Effect of Covid-19

Whilst Westminster has mitigated certain effects of the Covid-19 pandemic 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 2021.

Operational EBITDA^ from underlying operations

The Group's loss from operations was £1.9m (2020: £0.7m). When adjusted for the exceptional and non-cash items and depreciation and amortisation, as set out below, the Group recorded an EBITDA^ loss from underlying continuing and discontinued operations of £1.67m (2020: £0.52m loss).

^ This is an Alternative Performance Measure refer to Note 2 for further details

Finance Costs

Total finance costs for 2021 were £0.0m (2020: £0.0m), because the Group has remained debt free other than the debt imputed from leased assets under IFRS 16. There was an underlying cash charge of £0.0m (2020: £0.3m).

Earnings Results for the Year

The Group loss before taxation was £1.9m (2020: Loss before tax of £0.8m) and the loss per share was 0.62p (2020: Loss per share of 0.45p). 

Statement of Financial Position

The Group's gross assets amounted to £9.3m on 31 December 2021 compared with £9.5m on 31 December 2020.  The main movement was a reduction in cash offsetting a £1.6m increase in working capital and funding the losses.

The Group's net current assets amounted to £5.3m on 31 December 2021 (2020: £5.4m) for the same reasons as the change in total Group assets.

The Group's trade and other receivables balance as at 31 December 2021 was £3.7m (2020: £2.4m). Average days sales outstanding at the year-end were 57 (2020: 19).  This represents a return to more normal levels of debtor days.

Cash and cash equivalents were £0.9m at 31 December 2021 compared with £2.1m at 31 December 2020.  The decrease is mainly due to losses and an unfavourable movement in working capital.

Trade and other payables were £1.8m (2020: £2.3m) and average creditor days were 43 (2020: 50). 

A deferred tax asset of £1.0m (2020: £1.0m) was held at the year end.

Total equity on 31 December 2021 stood at a surplus of £7.5m (2020: £7.1m).

Key Performance Indicators

The Key Performance Indicators by which we measure performance of our business are set out in the Chief Executive Officer's Report.

Convertible Loan Notes (CLN) and Convertible Unsecured Loan Notes (CULN)

The unsecured CLN's capital was fully repaid on 22 December 2020.

Equity Issues

Summary of Warrants

As at 31 December 2021 the warrants outstanding were:

127,500 of the 7p warrants issued on 22 December 2020 were exercised in October 2021.

For further details on warrants, refer to Note 21.

Capital Reduction

At the AGM on 24 June 2021, the Shareholders voted to approve reduction of capital.  This was subsequently ratified by court order in November 2021.

The reduction of capital involved a cancellation of the deferred shares, cancellation of the share premium account, capitalisation and immediate cancellation thereafter of the share merger reserve account which then enabled the creation of distributable reserves in order to enhance the Company's ability to pay dividends and/or to make other forms of distributions to its shareholders in the future. 

Prior Year Adjustment

The 2021 financial statements include restated balances for both 2020 and 2019. A prior year adjustment has been made in respect of the minority interest in a Sierra Leonean subsidiary, Facilities Operations Management Limited, which had erroneously been recorded as being 90% owned but investigations have revealed that it is wholly owned by the group.  Note 28 identifies the changes from the signed financial statements of 2020 and 2019 to the restated balances in these financial statements.

Cash Flow Statement

During the year, the Group had an operating cash outflow of £3.3m (2020: outflow £1.9m) which arose from the loss and an unfavourable working capital movement of £1.6m (2020: £1.0m) which was primarily an increase in receivables and investment in the new projects.

During the year, the Group raised £2.51m gross from the issue of new equity (2020: £6.96m).

Net cash used in underlying operating activities is presented excluding exceptional items, share options expense, and depreciation and amortisation.

Mark L W Hughes

Chief Financial Officer

^ This is an Alternative Performance Measure refer to Note 2 for further details

Westminster Group PLC

The accompanying notes form part of these financial statements.

^ This is an Alternative Performance Measure refer to Note 2 for further details

Westminster Group PLC

Consolidated and Company Statements of Financial Position

As at 31 December 2021

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 £2,348,000 in 2021, (2020: £2,545,000 restated loss).  The Group and Company financial statements were approved by the Board and authorised for issue on 28 April 2022 and signed on its behalf by:

Peter Fowler                                                                                           Mark L W Hughes

Director                                                                                                   Director