Highlights:

Operational:

·      A strong recovery in airport operations exceeding pre-pandemic levels by year end.

·      Training business delivered record levels of revenues.

·      A strong recovery in our guarding business with a near doubling of revenues and return to profitability.  

·      Supplied products and solutions to 60 countries across the world.

·      Secured £300,000 contract to protect a West African Parliament building.

·      Under Martyn's Law (amended Protect Duty) forthcoming legislation, secured two important new mass screening contracts, an iconic building in London and a theatre and exhibition complex in Northern England.  

·      Secured a $300,000 3-year contract to provide aviation support services to the UN in Mali.

·      $1.7m airport security contract in Southeast Africa confirmed and underway.

·      Westminster Arabia achieved HCIS certification required for government regulated contracts.

Financial:

·      35% increase in revenues to £9.5m (2021: £7.1m)

·      65% increase in Technology Division revenues to £3.2m (2021: £2.0m)

·      23% increase in Services Division revenues to £6.3m (2021: £5.1m)

·      99% decrease in loss after tax to an effective break-even position £0.0 (2021: loss of £1.9m).

Post period end:

·      Q1 2023 trading ahead of internal budget.

·      Commenced 2023 with £1.8m of work in hand.

·      Commenced 2023 with more than £5m of annual recurring revenue from existing contracts.

·      West African airport operations currently running at record levels and new terminal opened April 2023.

·      Training & Guarding businesses performing well.

·      Land issue resolved and construction works due to commence on West African container port project.

Commenting on the results and prospects, Peter Fowler, Chief Executive said:

"I am pleased to report that, despite the challenges from the tail end of the Covid pandemic, the impact of the Ukraine conflict and the ensuing global economic turmoil, we still delivered a 35% increase in revenues to £9.5m (2021: £7.1m) and achieved an effective break-even position with a 99% improvement in losses to £0.0m (2021: loss £1.9m), demonstrating the recovery underway and that we are heading back to a growth trajectory.

"I am also pleased to report that all areas of our business delivered growth in the year. Our Technology Division delivered a 65% increase in revenues to £3.2m (2021: £2.0m) showing strong recovery from the pandemic challenges, whilst our Services Division delivered a 23% increase in revenues to £6.3m (2021: £5.1m) underpinning our growing recurring revenue businesses.

"Not only did we significantly increase year on year revenues, but we secured and delivered some notable and important accomplishments during the year such as providing an extensive screening solution for the late Queen Elizabeth II's funeral event in September 2022, which was a great honour. We secured important new contracts in the year, significantly increased our returning customers demonstrating brand loyalty, we continued to develop our pipeline of new large-scale opportunities including some exciting, long-term prospects and we continued to progress existing projects such as DRC and our West African Port project.

"Building on our 2022 results, we believe a record year of revenues and profitability are in sight for 2023. The key to achieving this, of course, is to secure new contracts with enough time to recognise revenues in the year and we are working hard to deliver that."

Investor Presentation: 3pm on Thursday 8 June 2023

Peter Fowler (CEO) and Mark Hughes (CFO) will provide a live presentation to review the results and update on prospects at 3pm on Thursday 08 June 2023.

The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard or at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet Westminster Group Plc via:

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

Annual Report and Accounts - The final results announcement can be downloaded from the Company's website (www.wsg-corporate.com).  The notice of the Annual General Meeting to be held on 28 June 2023 was posted to shareholders on 31 May 2023 and copies of the Annual Report and Accounts will be sent to shareholders on or before 16 June 2023 for approval at the Annual General Meeting and will be available from the Company's website (www.wsg-corporate.com) once posted.

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, 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. www.wg-foundation.org

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

Following the challenges of the previous two years due to the global pandemic, associated lockdowns and travel restrictions, we entered 2022 with optimism. We could see that the impact of the pandemic was coming to an end and business confidence was returning.

Sadly, the Russian invasion of Ukraine and the global economic turmoil that followed has created a number of new challenges, although also some opportunities.

Stock markets, particularly with small cap companies, have been impacted, access to capital has become more challenging, rising prices, inflation and global uncertainty all make for a more challenging business environment. Governments and corporations are reviewing budgets and spending plans, postponing capital expenditure and creating delays in some order placements, as we experienced with a delayed multi-million-dollar Technology project we were verbally awarded in early 2022 and was anticipated to be completed that year. Due to the country's currency issues causing budget constraints the project was delayed and will hopefully go forward in 2023.

Against that backdrop and despite the delayed Technology project mentioned above we still achieved a 35% increase in our revenues to £9.5m (2021: £7.1m) and a 99% reduction in losses to an effective break-even position £0.0 (2021: loss of £1.9m), with many areas of the business trading at new highs.

Despite other disappointments in the year, such as the continued delay in the ratification of our DRC contract, which is covered in the Chief Executive Officer (CEO) report, there were a number of notable successes and achievements. Of these I was particularly proud that Westminster was chosen to provide the security screening solution for our late Queen Elizabeth II's lying in state. This was a complex project for which Westminster had been identified and selected some time ago and we have been planning and rehearsing for the event for some time. I was impressed by the speed and professionalism with which we undertook the assignment and I wish to pay tribute to all our staff involved in that sad but prestigious event.

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 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 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 CEO 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. We have put in place processes and safe working practices, with a number of employees working from home.

We have not made any changes to the Board this year. I do however congratulate Lorraine Hellend on her promotion to Head of Sales as of 1 January 2023.

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

Focusing 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

2022 has been a year of both challenges and achievements.

Challenges from the tail end of the global pandemic and associated travel restrictions, the challenges from the impact of the Russian invasion of Ukraine in February 2022, the resulting global economic turmoil and financial uncertainty, has resulted in governments and businesses reviewing their spending plans with the inevitable knock-on delays on contract awards.

I am pleased to report that, despite the challenges, we still delivered a 35% increase in revenues to £9.5m (2021: £7.1m). This was however, circa £4.6m short of full year expectations, set at the beginning of the year which, as reported in our 1 November 2022 update, was predominantly due the slippage of a multimillion-pound Technology project, verbally awarded in 2022 but delayed due to the country's budget constraints as a result of the economic downturn and now expects to be formally awarded and largely delivered in 2023. Despite this however we still achieved an effective break-even position with a 99% improvement in losses to £0.0m (2021: loss £1.9m), demonstrating the recovery underway from the previous years' challenges.

I am also pleased to report that all areas of our business delivered growth in the year. Our Technology Division delivered a 65% increase in revenues to £3.2m (2021: £2.0m) showing strong recovery from the pandemic challenges, whilst our Services Division delivered a 23% increase in revenues to £6.3m (2021: £5.1m) underpinning our growing recurring revenue businesses.

In terms of achievements, not only did we significantly increase year on year revenues, but we secured and delivered some notable and important accomplishments during the year such as providing an extensive screening solution for the late Queen Elizabeth II's funeral event in September 2022, which was a great honour. We secured important new contracts in the year, significantly increased our returning customers demonstrating brand loyalty, we continued to develop our pipeline of new large-scale opportunities including some exciting, long-term prospects and we continued to progress existing projects such as DRC and our West African Port project as detailed in our Divisional Review below.

Divisional Review

Services Division

Our Services Division and the growing recurring revenue base we are building is a key element to our future growth and I am pleased to report therefore that the Division has performed well with a 23% increase in turnover to £6.3m for the period which is at a record level despite our airport business having not fully recovered from the impact of Covid on the travel industry.

Our West African airport operations, which, like aviation across the world, had been severely impacted by lockdowns and travel restrictions during the Covid pandemic of the previous years, experienced a strong recovery from around 84% of pre-pandemic passenger numbers at the start of the year to achieving record monthly numbers by the end of the year and this trend has continued into 2023 which augers well for the future.

In addition, Summa Airports, who took over the running of Freetown International Airport in early 2023 completed the construction of an impressive new terminal which opened in April 2023, further increasing passenger experience and capacity. Westminster's contract with the government for the airport security remains in force and Westminster will, under separate contract with Summa, provide the aviation security services at the new terminal for at least the duration of Westminster's existing contract with the government, although this may be extended. Under its contract with Summa, Westminster will no longer be responsible for the cost of new or replacement security equipment and has reduced its fee accordingly, whilst SUMMA will be responsible for the cost of all required equipment and the collection of the security fees from airlines and will remit the funds based on passenger numbers in the preceding month directly to Westminster's designated bank account on a monthly basis, thereby reducing Westminster's costs and accelerating receipts. These changes, which do not affect economics of the project, are beneficial and we look forward to continuing growth from this project.

Both our guarding and training businesses were heavily impacted during the global pandemic over the previous couple of years and I am pleased to report both have rebounded strongly in 2022.  Our training business has not only recovered to pre-pandemic levels but delivered record levels of revenues, securing new contracts from governments and organisations including a sizeable long-term contract for one of the UK's largest airports. The global pandemic demonstrated the importance of distance and online training and, we believe, 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.

Our guarding business equally produced a remarkable recovery, not only securing important new business in the year but also a near doubling of revenues over the previous year.

As previously announced, we expected to secure one more long-term, large-scale managed services contract in 2022 and were close to achieving that. By year end we were at the final stages of negotiating a sizeable long term airport security project in West Africa. However, it is always difficult to accurately predict timing for such projects, which are complex and can involve various bodies in bureaucratic processes, but we still expect that contract to be secured and delivering a material contribution to revenues in 2023.

Frustratingly, the long overdue ratification process of our DRC contract, signed in June 2021, has still not been completed. This matter has taken far longer than anticipated, largely due to the Governments' internal procedures. However, an important step in the process was completed towards the end of 2022. We know that not only is the delay in finalising this matter a frustration for us and our shareholders but has become a significant issue for the government who recognise the importance of the project and the urgent need to improve the security of the country's airports. I would like to pay tribute not only to the tireless pursuit of this project by our staff involved but also the tremendous support we have received from the British Ambassador and Embassy staff in Kinshasa.

As previously reported, we have been waiting for our client to resolve the land issues for the construction of the new container port storage and inspection complex in West Africa, for which Westminster have been contracted to provide the screening operations under a 10-year managed services agreement, signed in June 2021. I am pleased to report that the land issue has now been resolved and construction of the port is due to commence this year.

We announced in November 2022 that the relationship with our local partners, Scanport, regarding our Ghana port project had become increasingly strained and that we were looking to resolve matters through mediation to include accelerated receipt in recompense for early termination, which would free up resources for new large-scale projects expected in 2023.

The matter is still in process. We have not included any revenues from this project in our 2023 internal projections although we anticipate reaching a settlement in the year.  We will update the market on these various developments when appropriate.

Technology Division

We continue to experience healthy enquiry levels and during 2022 secured orders for our products and services from 60 countries (2021: 60) around the world.

The global economic turmoil and financial uncertainty created by the Russian invasion of Ukraine has resulted in governments and businesses reviewing their spending plans with the inevitable knock-on delays on contract awards. A case in point being the multi-million USD Technology project we were verbally awarded in 2022 and expected to be formally confirmed and completed by the end of the year but due to the economic situation and currency issues within the country concerned, the project keeps being delayed. This project is still a high priority for the client, and we have been informed by them that they expect to move forward in 2023. We also saw similar slippage with other large capital-intensive potential projects.

Notwithstanding the above the Division did still achieve a 65% increase in revenues to £3.2m (2021: £2.0m) and delivered some important successes.

In September 2022 we were honoured to have provided the extensive screening requirements at the late Queen Elizabeth II's lying in state. Westminster had been selected for this task some time ago and had been storing the required equipment and undertaking secret rehearsals with the police and authorities over the years in preparation. Within hours of the announcement of the Queen's passing we had mobilised and began preparations for deployment. It was a complex operation involving the deployment of a number of screening lanes and a Westminster team to be on duty at the event 24 hours a day for the duration. I am proud to say the everything ran smoothly, and credit is due to the exceptional service provided by our dedicated team. The fact we were chosen for this high profile, high security event is evidence of the reputation and professionalism associated with Westminster.

In January 2022 we announced that the $1.7m airport security contract for two airports in South-East Africa, provisionally awarded in 2021, had been formally issued. The contract, funded by the European Investment Bank, involved the upgrading of security equipment, including new x-ray screening & metal detection equipment, an advanced CCTV surveillance system and new control and command centres at both airports. Westminster is providing a full turnkey solution including the design, supply and installation of the systems and will be establishing an engineering presence in-country for future maintenance and support services. This project is well underway and will be completed in 2023. The client is extremely pleased with Westminster's performance and has expressed interest in a long-term managed services programme once the project has been completed.

Other important new contracts secured in the period include a £300,000 contract to supply and install an advanced people and baggage screening solution within a West African parliament building. This project was successfully delivered in the year, and we are now in discussions on a much larger project to upgrade security at that parliament. We also supplied a wide range of technology-based security products and solutions to clients around the world.

In 2022 we reported on the initiative we have been pursuing regarding the forthcoming new legislation in the UK, Martyn's Law (amended Protect Duty). Martyn's Law is named after Martyn Hett, who at 29 years was killed in the Manchester Arena terrorist attack in May 2017. Martyn's mother, Figen Murray, has been a tireless campaigner and the force behind 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. Martyn's Law 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 with appropriate levels of security. The Home Office estimates that 650,000 UK businesses could be affected by Martyn's Law, and this offers substantial business opportunities for Westminster's extensive portfolio of products and services.

Westminster has been supporting Figen and working on this opportunity for some time, and like many government related issues, the enactment of this legislation was delayed in 2022 it is now expected to become law in 2023. However, many organisations are proactively making arrangements to be compliant ahead of the legislation and in this respect, I am pleased that Westminster secured important new contracts. During 2022 we secured a contract to provide a 'Mass Screening' solution for an iconic building in London, and a similar contract, also for 'Mass Screening' to an important theatre and exhibition complex in the north of England. We are also in discussions with a number of important venues and sites in the UK for effective and large-scale security solutions ahead of the expected legislation.  For more information on Martyn's Law see here https://www.wg-plc.com/protect-duty# or to see the latest news and video from Figen Murray see here https://www.wg-plc.com/news/figen-murray-obe-martyns-law-amended-protect-duty

Our various high profile security projects, such as the Palace of Westminster and the Tower of London, are performing well and we are discussing expanded operations.

In September 2022 Westminster Arabia was, after a long process, finally officially certified by the Saudi Arabian High Commission for Industrial Security (HCIS) for the supply, installation and maintenance of security devices. This certification is important and is required to bid for government regulated and/or funded endeavours (such as Giga Projects, critical infrastructure, transport etc.) and for the supply of products & services to Government affiliated companies. Few (if any) Saudi companies which are formed through joint ventures with foreign entities have achieved this status and the award of the licence is an important step forward for our business. Westminster Arabia remains an important component in our growth strategy.

Our German subsidiary, GLIS, 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 continues to secure a number of important new clients including US military bases and is developing substantial business opportunities in the region. Through GLIS, we continue to monitor the Joint Comprehensive Plan of Action JCPOA talks and are maintaining discussions with stakeholders (including the UK and German governments) however, despite the optimism of an EU brokered deal in September 2022, the fallout from the Ukraine war and other issues have meant a deal in the short term is unlikely. However, should circumstances change and the US and international sanctions, including banking be lifted, there remains an opportunity for our German office to revisit the substantial opportunities previously created.

Our French business, Euro Ops, 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 currently being pursued. One example a $300,000 3-year contract, awarded in May 2022, to provide aviation support services and logistics for Swiftair and the UN in Mali.

Summary

On a wider front, despite the challenges 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 should they be 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. 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, however due to the nature of the projects and the numerous bodies involved it is notoriously difficult to forecast timing of any contract award. I know this can be frustrating at times but the upside of securing such contracts with long-term, high margin recurring revenues is worth the efforts. We obviously cannot provide regular updates or details on contract negotiations, but we will provide market updates on material developments when appropriate and in line with our regulatory responsibilities.  

In summary, despite the various challenges and in some cases because of them, 2022 was a busy year and whilst our results for the year were impacted largely by one multi-million USD Technology contract, delayed through budget constraints, our business has recovered strongly from the Covid impact, with some revenue streams now trading at record levels. We have continued to develop and deliver on business opportunities and during the year supplied goods and services to numerous countries around the world, including some notable achievements. 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. We believe the benefits from these achievements will begin to be seen in 2023 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 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.

As part of our strategy for growth, we will also continue to improve and enhance our Board and senior management team 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.

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 important contracts such as the Tower of London, Palace of Westminster, Scottish Parliament, HM Prisons, and the UK Border force, and we will be looking to materially increase such business through 2023 and beyond, not least by developing and delivering on opportunities created by the forthcoming Martyn's Law legislation, with two important mass screening contracts already delivered in relation to this strategy.

Given budget constraints for many companies resulting from the global economic situation 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. 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 optimistic this initiative will lead to material and additional long-term revenues.

We are also looking to expand our global footprint through the development of our agent network and through 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 cost-effective way.

Our risk strategies are developed from our Risk Committee who hold regular meetings and report to the Audit Committee. Mitigation and risk strategies are then developed to address potential risks, as we successfully did during the Covid pandemic. Covid 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 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.

The challenges of the last few years have impacted our performance against our stated goals and accordingly, the Board has reset its key goals for 2023 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 our global footprint with new offices, agents, and strategic alliances;

4.   Increase sales in the UK and other first world countries;

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

6.   Deliver another year of significant recurring revenue growth;

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

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

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

10.  Instigate an Investors in People programme.

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 2023 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 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.

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 recent pandemic lockdowns have 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, we intend to focus, where possible, on 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, maintenance and guarding contracts, and this is a key metric being monitored. Employment is the single largest cost base for the Group, the costs are strictly monitored to ensure best use of resources. Days Sales Outstanding is used to measure the cash conversion of revenue and identifies debtor aging issues this is low this year which is good but 2021 represents more normal levels.

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 served and number of return customers are monitored to give a view on the performance of the division. It is pleasing to see higher levels of return customers, demonstrating brand loyalty. The material increases in passengers served, training hours and guarding hours delivered are all indicators of the strong recovery from different parts of our business in 2022.

Current Trading & Business Outlook

We have commenced 2023 on a positive note with Q1 trading ahead of budget and, whilst remaining mindful of the global uncertainty which could yet have adverse impacts on trading, we expect 2023 to be a record year.

We commenced 2023 with £1.8m of work in hand which is a good start to the year, and we are experiencing increasing levels of enquiries from around the world for our products and services. Our business development teams are working on a number of exciting opportunities, and already we are seeing new contracts coming to fruition.

As mentioned in the Divisional Review above we believe the forthcoming Martyn's Law legislation which is due to become law in 2023 and which The Home Office estimates will affect circa 650,000 UK businesses, is a significant opportunity for our business and we look to build on the work we have done preparing for this and the successful contracts secured in 2022 and fully expect to secure further important new contracts in 2023.

Our West African airport operations have continued the growth we saw in 2022 and are currently running at record levels.

Our guarding and training businesses performed well in 2022 and we expect that to continue in 2023.

We traditionally secured one or two large-scale multi-million USD Technology solution sales projects each year although this has proved more challenging over the past couple of years due to customer spending constraints. However, we do have several potential projects in the pipeline, including the postponed project from 2022, which we expect to materialise in 2023.

We are focussed on building our recurring revenue base of contracted income, particularly from long term contracts, which is, and will continue to be, a key growing strength of our business. In this respect we commenced 2023 with over £5m of annual recurring revenues, which we expect materially increase through new contracts during the year.

As mentioned in the Divisional Review there are developments regarding the long overdue ratification of our DRC contract and we are hopeful this prolonged process will be finally concluded and the programme will move forward this year.

We are also encouraged that the land issue regarding our West African port project has been finalised and that construction on the new container storage and inspection area can commence.

As previously mentioned, we have not included any revenues from the Ghana port operation in our 2023 internal projections although we anticipate reaching a settlement during the year.

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. We believe that we will secure at least one, possibly two, long-term managed services contract in 2023, each producing a multi-million dollar step change in revenues.

The foregoing, outlining the recovery and growth we are seeing in our various businesses, together with our business model and the opportunities we have been developing over the years which, despite the challenges and setbacks we have experienced in recent years, underpin our confidence for the future growth of our business. Building on our 2022 results, we believe a record year of revenues and profitability are in sight for 2023. The key to achieve this, of course, is to secure new contracts with enough time to recognise revenues in the year and we are working hard to deliver that.

Peter Fowler

Chief Executive Officer

Revenue

2022 revenues of approximately £9.5m (2021: £7.1m) are up 35% with all areas showing increases despite the Ukrainian war and general turmoil in the world.  However, large projects continued to be delayed awaiting confidence that the world was returning back to more normal times.

Services revenues increased by 23% to £6.3m (2021: £5.1m).  This was because of the continuing strength of our West African Airport passenger levels during the year, combined with Guarding revenues up 35% and training hours over 5 times the number in 2021 as the world needs to train to recover from staff lost in the pandemic.

Westminster's Technology Division revenues were up 65% to £3.2m (2021: £2.0m).  2021 did not have any large solutions sales whereas in 2022 the market was returning albeit a number of expected contract awards were delayed.

Gross Margin

Despite an increase in Technology Solution sales (typically at 15% to 20%), which would normally bring down the average margin; better Technology margins and the increase in higher margin Services Division sales was enough to improve the Gross Margin Percent to 54% (2021: 46%). 

Operating Cost Base

Group administrative costs increased by 7% to £5.5m (2021: £5.2m) in total. A little over one third of the increase was because in 2021 we had £141,000 of support under the Covid furlough scheme whereas there was none in 2022. Approximately another third is the full year effect of growth initiatives started in 2021.  The rest is because of the general inflationary background despite strenuous efforts to control costs.

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.  This has continued into 2022 as the prevailing economic situation has not fully returned to pre-covid levels in our sectors.

Operational EBITDA^ from underlying operations

The Group's loss from operations was £0.3m (2021: £1.9m). 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 operations of £0.1m (2021: £1.7m loss).

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

Finance Costs

Total finance costs for 2022 £0.0m (2021: £0.0m), because the Group has very low debts. There was an underlying cash charge of £0.0m (2021: £0.0m).

Earnings Results for the Year

The Group loss before taxation was £0.4m (2021:  £1.9m). The Group loss after tax was £0.0m (2021: £1.9m loss) and the loss per share was 0.00p (2021: 0.62p). 

Statement of Financial Position

The Group's gross assets amounted to £10.0m on 31 December 2022 compared with £9.3m on 31 December 2021.  The main movement was a reduction in cash offsetting a £0.6m decrease in working capital and funding the losses.

The Group's current assets amounted to £5.6m on 31 December 2022 (2021: £5.3m) for the same reasons as the change in total Group assets.

The Group's trade and other receivables balance as at 31 December 2022 was £4.8m (2021: £3.7m). Average days sales outstanding at the year-end were 30 (2021: 57).  This was improved by the large solution sale close to the year end.

Cash and cash equivalents were £0.3m at 31 December 2022 compared with £0.9m at 31 December 2021.  The decrease is mainly due to losses and movement in working capital.

Trade and other payables were £2.6m (2021: £1.8m) and average creditor days were 51 (2021: 43). 

A deferred tax asset of £1.3m (2021: £1.0m) was held at the year end the movement related to the increase in expected tax rate.

Total equity on 31 December 2022 stood at a surplus of £7.4m (2021: £7.5m).

Again, the large solution sale close to the year-end has distorted the figures.

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.

Equity Issues

There were no equity issues in 2022 (2021: Funds raised £2.51m).

Summary of Warrants

As at 31 December 2022 the warrants outstanding were:

The S P Angel warrants have now lapsed.

For further details on warrants, refer to Note 21.

Cash Flow Statement

During the year, the Group had an operating cash outflow of £0.7m (2021: outflow £3.3m) which arose from the loss and an adverse working capital movement of £0.6m (2021: £1.6m adverse) which was a decrease in receivables, investment in the new projects and an increase in payables.

During the year, the Group raised nothing from the issue of new equity (2021: £2.51m gross).

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

^ 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 2022

Peter Fowler                                                                                        Mark L W Hughes

Director                                                                                                  Director