THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014 ("MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN

Westminster Group Plc

('Westminster', the 'Group' or the 'Company')

Final Results

Westminster Group Plc (AIM: WSG), a leading supplier of managed services and technology-based security solutions worldwide, announces its Final Results for the 12 months to 31 December 2019.

Highlights include:

Operational:

·      EBITDA^ profit of £0.1m from underlying continuing and discontinued operations (2018 restated* loss of £0.4m)

·      Strong performance by both Managed Services and Technology Divisions

·      Secured new Managed Services project in Tema Port, Ghana

·      Secured a $3.48m USD contract for the provision of advanced container screening solutions to two separate ports in an Asian country

·      West Africa airport operations performed at record levels

·      Acquired French security and support services company, Euro Ops

·      Successfully delivered the remainder of the $4.5m USD vehicle screening contract in the Middle East, that the Company secured in 2018

·      Significant progress with several large-scale project opportunities

·      Supplied products and solutions to 66 countries across the world

·      Formed Strategic Joint Venture, Westminster Arabia, in Saudi Arabia

·      Entered into strategic alliance with the Gulf Aviation Academy in Bahrain

·      Entered into strategic alliance with the Tunisian Academy for Civil Aviation Safety and Security Training

·      Provided training throughout 2019 to various airports, including several major hubs, across the Middle East, Africa and Asia

·      Board strengthened in terms of skills and experience with the appointment of two new Non-Executive Directors Charles Cattaneo in January 2019 and Mawuli Ababio in November 2019

Financial:

·      Revenues up by 63% to £10.9m (2018: £6.7m)

·      Recurring Revenue^ (such as Managed Service contracts) in the year up by 46% to £5.6m (2018: £3.8m)

·      Fourth consecutive year of double-digit percentage revenue growth

·      EBITDA^ profit from underlying continuing and discontinued operations of £0.1m (2018: restated* loss £0.4m)

·      Total Equity / Net Assets grows from £1.1m in 2018 to £1.9m in 2019

Post period End:

·      2020 commenced on a strong and profitable note with Q1 orders and revenues ahead of budget

·      Q1 2020 revenues increased by 22% to over £4.5m (Q1 2019: £3.7m), producing a healthy profit at both pre and post-tax levels

·      Q1 2020 passenger numbers for our West Africa airport operations at record levels before airport closed end of March due to Coronavirus

·      5-year main contract signed relating to Ghana port managed services project awarded in June 2019

·      Completed balance of $3.48m USD of advanced container screening solutions for two ports in Asia secured in 2018

·      Reduced the Group's convertible loan notes by £561,250 to £1,683,750, maturity date for the balance extended to 1 May 2021

·      Coronavirus (COVID-19) Pandemic causing disruption to airport security and training operations but effect mitigated by significant increase in fever screening product sales.

* restated as a result of the implementation of IFRS16

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

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

"I am delighted to report that 2019 was a record year for the Group with a 63% (£4.2m) year on year increase in revenues to £10.9m (2018: £6.7m), our fourth year of double-digit percentage revenue growth and shows the momentum we are building.

"Both the Managed Services and Technology divisions delivered an impressive performance during the year, both financially and operationally. Financially our Managed Services Division achieved a 50% increase in revenues to £5.5m (2018: £3.7m) whilst our Technology Division achieved an impressive 80% increase in revenues to £5.4m (2018: £3.0m). Operationally both Divisions had a busy year and made excellent progress on a number of fronts.

"2020 has started on an equally positive note, building on the success of 2019 with both order intake and revenues ahead of budget. Q1 delivered revenues of over £4.5m, an increase of more than 22% over the same period in 2019 (Q1 2019: £3.7m), and I am pleased to report our management accounts show we made a healthy profit of several hundred thousand GBP in the quarter at both pre and post-tax levels as we begin to benefit from new contracts and the investment we have been making in our business over the years.

"The current Coronavirus (COVID-19) pandemic, in addition to the tragic loss of life, is of course having a profound impact on the global economy and businesses across the globe. As a company operating globally the pandemic has affected parts of our business in various ways. The business model we have been developing is based on multiple revenue streams, many of which are from long term or recurring contracts, from diverse sources in varying parts of the world and this has proved invaluable during the current pandemic. Whilst some parts of our business have been adversely affected and others have seen little impact, some have experienced significant growth, particularly our sales of fever screening and safety solutions.

"We entered 2020 with visibility of over £8m of annual recurring revenue for the year from long term managed services, guarding and maintenance contracts and because of the nature of our long term contracts, where we have experienced reductions in such revenue streams during the COVID-19 disruption these are expected to resume quickly once the pandemic passes. We not only have more large-scale project opportunities under discussions than ever before but in view of the COVID-19 situation we continue to expand our online and non-contact sales opportunities and are developing new opportunities as our business model evolves.

"Over the next few months and years, we have an opportunity to achieve unprecedented growth from the prospects we are pursuing, and the Board and I remain committed to delivering on this potential."

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 was formed in 2014 as an initiative of Westminster Group plc. during the West African Ebola Crisis.

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

I am pleased to present the Westminster Group plc. Final Results for the year ended 31 December 2019 which was a record year for the Group both in terms of revenue and growth.

I am also pleased to report we achieved a record 63% growth in revenues to £10.9m, an increase of £4.2m over the £6.7m reported in 2018. This is the fourth consecutive year of double-digit percentage revenue growth and the highest growth rate since Westminster's shares were admitted to trading on AIM in 2007. Encouragingly our recurring revenue^ also rose strongly, up by 46% to £5.6m (2018: £3.8m). Accordingly, we have delivered an improved financial position with an EBITDA^ profit from underlying continuing and discontinued operations of £0.1m (2018: loss £0.4m restated). This bodes well for our future trading and demonstrates what the Group is capable of. Q1 2020 has already commenced on a strong footing ahead of budget with revenues of over £4m, being around 30% up on Q1 2019 (£3.1m).

A key achievement in the year was that within only two weeks from receiving a letter of intent in June 2019 and our being appointed as technical partner running the container screening operations in the new $1.5bn container port in Ghana, we mobilised, set up and were running a complex screening operation in time for the port opening. As Chairman, I was impressed by our team's ability to deliver such a complex operation in a short timescale.

Both our operating divisions are performing well. Enquiry levels remain healthy and levels of interest in the Group's services are growing. Both divisions are developing and pursuing sizeable business opportunities and it is encouraging to see our Technology division securing important contracts such as $3.48m USD contract announced in April 2019. More detail on the strategic developments, projects and opportunities we are undertaking is covered in the CEO's Strategic Report.

During the year the Group raised £1.55m gross from the issue of new equity to support the development of the Group. In January 2020 we announced we had secured a flexible financing facility consisting of a £3.0m mezzanine loan supported by a £1.75m Equity Placing and Sharing Agreement and elected to draw down an initial £1.5m to commence a redemption programme of the Company's £2.245m Convertible Loan Notes. This was due to be completed before 30 June 2020 but due to the Coronavirus pandemic this was extended with the support and consent of noteholders to 1 May 2021. With the option to draw down further funds at our discretion, this financing facility provides us with the necessary flexibility needed to support the continued growth of the business.

Corporate Conduct

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

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

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

We operate worldwide with a focus on emerging markets and in a sector where discretion, professionalism and confidentiality are essential. It is vitally important that we maintain the highest standards of corporate conduct. The Corporate Governance Report sets out the detailed steps that we undertake to ensure that our standards, and those of our agents, can stand any scrutiny by Government or other official bodies.

Social Responsibility

As a Group, we take our corporate social responsibilities very seriously, particularly as we operate in emerging markets and in some cases in areas of poverty and deprivation. I am proud of the support and assistance we as a company provide in many of the regions in which we operate, and I would like to pay tribute to our employees and other individuals and organisations for their generous support and contributions to our registered charity, the Westminster Group Foundation. We work with local partners and other established charities to provide goods or services for the relief of poverty or advancement of education or healthcare making a difference to the lives of the local communities in which we operate. For more information or to donate please visit www.wg-foundation.org.

Employees and Board

It is with great sadness that in 2019 we marked the passing of Lt Col Sir Malcolm Ross GCVO, OBE, GCStJ, DL.

Sir Malcolm was Westminster's Chairman from 2007 and was an inspirational and supportive leader. Sir Malcolm was a true Gentleman in every sense of the word and a hard-working public servant. In 2017 Sir Malcolm moved to Deputy Chairman in order to allow more time for his public duties and yet he continued to devote considerable support to the Company.

Sir Malcolm was a former member of the Royal Household of the Sovereign of the United Kingdom, and from 2006, that of the Prince of Wales (retired March 2008). He was made an OBE in 1988 and joined the Royal Victorian Order in 1994 as a CVO. He was knighted as a KCVO in 1999, and advanced to GCVO in 2005. He had been a member of the Royal Company of Archers since 1981, and a Freeman of the City of London since 1994. In 2006, he was made Her Majesty's Lord Lieutenant of the Stewartry of Kirkcudbright. Until recently Sir Malcolm was also the Lord Prior of The Order of St John. 

He was a wonderful man and will be greatly missed by a great many people, not least all at Westminster.

The vacancy left by Sir Malcolm's passing was filled in November 2019 by Mawuli Ababio stepping up from our international advisory board to Non-Executive Director. Mawuli is based in Accra, Ghana and has extensive board and corporate governance experience having served on several listed and unlisted boards over the last 20 years, both as an Executive and Non-Executive Director.  His experience across the whole of sub-Saharan Africa is already proving to be invaluable to the Group. Mawuli has taken over the chair of the Remuneration Committee.

In January 2019 Charles Cattaneo joined the board as a Non-Executive Director. Charles has been a director of a number of public and private companies and is currently the Chairman of the Midlands Regional Advisory Group of the London Stock Exchange.   His wealth of City and corporate finance knowledge and experience gained from a variety of business sectors, in particular advising AIM companies and serving on boards of growing and successful companies, is of great value to our business as we expand and deliver on our significant potential.   As a Chartered Accountant he has taken over as Chair of the Audit Committee.

Also, in January 2019, James Sutcliffe, by agreement, left the Westminster Group Plc board to take on the role as Chairman of the International Advisory Board, where the benefit of his extensive international experience and high-level Government contacts overseas can be of significant value to the Company's business development and expansion going forward.

We continue to work closely with and receive excellent support from the Foreign Office and UK Diplomatic Missions around the world and I am very grateful for the support these and other governmental departments provide to our teams and our operations worldwide.

At the time of writing we are in the midst of the global Coronavirus (COVID-19) pandemic which, in addition to the tragic loss of life, has major implications for the global economy creating material uncertainty and challenges. The duration and full impact of this pandemic is difficult to predict at the present time although we are seeing encouraging signs that the worst now appears to be over in some parts of the world with some countries looking to gradually relax restrictions. As a company operating globally the pandemic has affected parts of our business in various ways. Some parts of our business have been adversely affected, others have seen little impact, whilst some have seen significant growth.  The Chief Executive Officer's Report provides some detail on the challenges this pandemic has created and how we have responded to the situation.

Meeting with the Group's ever-expanding team of consummate professionals is one of the Board's more pleasurable responsibilities. As a service-based business, our employees are key to delivering success. On behalf of the Board, I want to congratulate Westminster's management and employees around the globe for their achievements and the vital contribution they have made to our success in 2019 and the way in which they have risen to the challenges and opportunities presented by COVID-19.

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

Rt. Hon Sir Tony Baldry DL

Chairman

Business Description

The Westminster Group is a global integrated security services company delivering niche security solutions and long-term managed services to high growth and emerging markets around the world, with a particular focus on long term recurring revenue^ business.

Our target customer base is primarily governments and governmental agencies, critical infrastructure (such as airports, ports & harbours, borders and power plants), and large-scale commercial organisations worldwide.

We deliver our wide range of Land, Sea and Air solutions and services through a number of operating companies that are currently structured into two operating divisions; Managed Services and Technology; both primarily focused on international business as follows:

Managed Services division

Focusing on long term (typically 10 - 25 years) recurring revenue^ managed services contracts such as the management and operation of security solutions in airports, ports and other such facilities, together with the provision of manpower, consultancy and training services.

Technology division

Focussing on providing advanced technology led security solutions encompassing a wide range of surveillance, detection, tracking, screening and interception technologies to governments and organisations worldwide.

In addition to providing our business with a broad range of opportunities, these two divisions offer cost effective dynamics and vertical integration with the Technology division providing vital infrastructure and complex technology solutions and expertise to the Managed Services division. This reduces both supplier exposure and cost and provides us with increasing purchasing power. Our Managed Services division provides a long-term business platform to deliver other cost-effective incremental services from the Group.

We have a successful track record of delivering a wide range of solutions to governments and blue-chip organisations around the world. Our reputation grows with each new contract delivered - this in turn underpins our strong brand and provides a platform from which we can expand our business.

Business Review

As highlighted in the Chairman's Statement, 2019 was a record year for the Group with 63% (£4.2m) year on year increase in revenues to £10.9m (2018: £6.7m), our fourth year of double-digit revenue growth and shows the momentum we are building. We are greatly encouraged that within this revenue growth, recurring revenue^ from our managed services, guarding and maintenance contracts (including 6 months of contribution from our Ghana operations and 8 months of Euro Ops) grew by 46% (£1.8m) to £5.6m (2018: £3.8m). This is significant as our growing base of contracted recurring revenue^ is what underpins the future growth of the business.

We continue to invest in our worldwide business development programmes in order to deliver on our growth potential, particularly in our long-term major managed services projects. Operating in frontier markets is time consuming, complex and costly but the potential rewards are substantial. Despite the cost of business development, the set up costs for our Ghana project and the costs associated with setting up our various strategic alliances and joint ventures around the world, we are pleased to report a greatly improved EBITDA^ performance for the full year with a profit from underlying continuing and discontinued operations of £0.1m as compared with 2018 which was a £0.4m (restated) EBITDA^ loss from underlying continuing and discontinued operations. As a business we are operationally geared in that we have relatively fixed operating costs and as our revenues continue to grow our profitability will grow proportionally faster. In this respect we believe we are now approaching an inflection point.

Both the Managed Services and Technology divisions delivered an impressive performance during the year, both financially and operationally. Financially our Managed Services Division achieved a 50% increase in revenues to £5.5m (2018: £3.7m) whilst our Technology Division achieved an impressive 80% increase in revenues to £5.4m (2018: £3.0m). Operationally both Divisions had a busy year and made excellent progress on a number of fronts.

Enquiry levels remain healthy and levels of interest in the Group's services continues to grow across both Divisions. However, whilst our Technology Division provides the technological resources and platform to expand our operations around the world and is capable of delivering large scale projects, it is our Managed Services Division, with its potential for delivering large scale, long term, recurring revenue^ and transformational growth, which is increasingly our core focus, particularly within the transportation security sector.

Passenger numbers for our West Africa airport operations for the year are at record levels and the last few months of 2019 were consistently some of the highest monthly traffic numbers experienced since we commenced operations there.

Building on the growing success of our aviation training business we have constructed a training facility at our UK Headquarters in Banbury so that we can conduct specialist technical and operational training courses for airline and airport delegates from around the world. The facility was completed and opened in early 2019 and has undertaken numerous training courses including for one of the largest airlines in Europe.

In February we delivered the remainder of the $4.5m USD vehicle screening contract in the Middle East, which the Company secured in 2018.

In March 2019 we had entered into a Technical Partnership Agreement with a Ghanaian company, Scanport Ltd. In June 2019, we announced a letter of intent had been received acknowledging Westminster as the Technical Partner and setting out the preliminary terms regarding the appointment and scope of work relating to a container screening project at the new container port, Terminal 3 at Tema, Ghana.

Terminal 3 is a new $1.5 billion investment project by Meridian Port Services ('MPS') which is creating one of the most advanced port operations in Africa, if not the world. The first two berths opened on 28 June 2019 and the first commercial vessel successfully docked on 3 July 2019. The third berth became operational in Q1 2020 and the fourth berth is due for completion at the end of 2020. When complete it will expand the port's capacity from around 1 million Twenty-foot Equivalent Units ('TEU') p.a. to over 3.5 million p.a.

Despite not having formal contracts in place due to unrelated issues within the port, Scanport-Westminster were officially appointed and have been successfully running the container screening and secondary search operations since the port opened on 28 June 2019, with Westminster providing the technical management and operations and Scanport responsible for local costs, management and employment.

The formal contract confirming the appointment for a renewable 5-year term was eventually signed in March 2020 naming Westminster as the designated Technical Partner for the duration of the contract. Revenues are based on a percentage of the relevant port tariffs which are shared between Scanport and Westminster and are driven by container traffic volumes passing through the Port. Westminster's share of revenues during the soft opening and start-up phase of operations in 2019 amounted to several hundred thousand USD and we look forward to the operation producing a meaningful contribution to our revenues in 2020 as the port continues to expand, the new berths come on stream, capacity and throughput increases, and new tariffs come into operation.

We are excited by the prospects of this long-term managed services project and we expect Ghana to be an important and growing part of our business.

In April 2019, our Technology division announced the award of a $3.48m USD contract for the provision of advanced container screening solutions to two separate ports in an Asian country. Following manufacture and site preparation works the first of these was delivered in November 2019 and the second unit was dispatched in January 2020.

In May 2019, we announced we had acquired Euro Ops, a French based aviation security and support services company which, through its sister company, Euro Ops International (also trading as ICare), provides aviation support services such as Airport Security, Aircrew Management, Humanitarian Logistics, Operations & Dispatch, Ground Handling etc. Euro Ops has been fully integrated into the Group and is developing meaningful business and opportunities within Francophone territories. Our new French operation joins our existing German subsidiary, which is also developing a number of sizeable business opportunities, in providing us with a European footprint. Whilst Westminster is not likely to be materially affected by Brexit, having European operating companies will be beneficial.

In June 2019, we announced we will be forming a joint venture, in Saudi Arabia, under the name Westminster Arabia. Our JV partners are Hazar International who, under their impressive Chairman, Sheikh Salman Bin Mohammed Bin Khalid Bin Hethlain, are strong and influential partners.

An experienced business development team is now in place within the country and is already involved in several large-scale project opportunities in the Kingdom. One of several projects already being pursued in the Kingdom is Saudi ports and in 2019 at the request of the authorities we conducted detailed operational and vulnerability assessments at certain ports following which, the Westminster team met with the port authorities in February 2020 for more detailed discussions regarding port security solutions. The follow up activity from these meetings and discussions have been delayed due to the COVID-19 effects and the travel restrictions in the Kingdom however these will resume once restrictions are lifted. The business opportunities for Westminster's products and services within Saudi Arabia are substantial and the formation of Westminster Arabia represents an important strategic development for the Group.

Westminster's international reputation and expertise in the field of aviation security continues to grow and, in addition to our direct contracts with airports and governmental bodies around the world, and the opening of the training centre in the UK in 2019, we have entered into two important Strategic Alliances. In July 2019, we announced we had signed a strategic alliance agreement with the Gulf Aviation Academy ('GAA'), a leading provider of professional aviation training in Bahrain and the wider Middle East and North Africa ('MENA') region. This alliance has already produced tens of thousands USD in new business and in January 2020 GAA secured an important new contract with the Bahrain Airport Company ('BAC'), the operator and managing body of Bahrain International Airport ('BIA') to provide civil aviation security training to hundreds of airport-stationed Ministry of Interior ('MOI') personnel each year and which will involve Westminster in the delivery of this service. 

In November 2019, Euro Ops entered into a strategic alliance with the Tunisian Academy for Civil Aviation Safety and Security Training ('AFSAC'). From its impressive training centre in Tunisia AFSAC provides certified aviation security training workshops on behalf of the International Civil Aviation Organization (ICAO) and is an AACO Approved Training Centre (Organization of Arab Air Carriers) and an AFRAA Approved Training Centre (African Airlines Associations). This strategic alliance is a major step forward in the delivery of aviation security training and will allow each party to offer, collaborate, market and deliver an expanded certified training program.

In December 2019, we finalised the sale of the Sierra Queen which had a book value of £170,000. The vessel has been sold. As at December total consideration was $643,000 over 36 instalments and subsequently after the year end the consideration was significantly improved to $676,500 over 38 instalments. Under the sale agreement the Company agreed to ship the vessel at its own cost to the purchaser in Greece and the vessel left Sierra Leone waters in February 2020 and was delivered to the purchasers on 6 March 2020. The vessel will be secured by a mortgage charge over the vessel until final payment has been received.

Keyguard U.K Ltd, the UK based security and risk management company we acquired in November 2018, was fully integrated into the Group during 2019 and is now operating from our corporate HQ in Oxfordshire. Whilst Keyguard performed below budget during the year the integration into the Group has opened up a number of new business opportunities which will lead to improved performance and higher margins particularly within the aviation and critical infrastructure market where we now have joint marketing and sales activities with other parts of the business underway.

In 2019 our Technology Division supplied a wide a diverse range of products and services to numerous clients in 66 countries around the world, including in the UK, Middle East, Africa, Europe, Asia, the Americas and the Caribbean.  By way of example of the diverse range of contracts secured by the Group in 2019 we delivered Westminster's unique diver communication system for Middle Eastern navy, vehicle screening solutions to a customs organisation in the Caribbean, bomb disposal equipment in Europe, body scanners to a prison service in Latin America, advanced screening equipment to an Iconic building in the UK. Explosive and Narcotic Detection solutions saw an increase in sales across various geographies. As in previous years we continued to supply security equipment and services to Government facilities across the UK.

On a wider front we continue to progress various existing and new large-scale managed services project opportunities around the world. No two opportunities are the same and each can have their own idiosyncrasies and challenges. As we have previously advised, project opportunities of this size and nature, particularly in emerging markets, are not only time-consuming and involve complex negotiations with numerous commercial and political bodies but discussions can ebb and flow over many months, with periods of intense activity which can be followed by long periods of inactivity. It is however precisely because of such challenges that competition is limited and the opportunities offer transformational growth opportunities.

We operate in a market that requires strict confidentiality and we are not able to provide detailed updates or explanations for delays which, if made public, may cause issues with our clients and be prejudicial to discussions. However, whilst there is never certainty as to timing or outcome of the many project opportunities we are pursuing, we are making progress on a number of fronts and we will provide market updates on material developments when appropriate and in line with our regulatory responsibilities.  

In summary, 2019 was a busy year and a year of growth during which we have made significant strides forward.

Strategy

Our vision is to build a global business with strong brand recognition delivering advanced security solutions and long-term managed services to high growth and emerging markets around the world, with a particular focus on building multiple revenue streams, many of which involve long term recurring revenue^ business, from diverse sources in varying parts of the world, providing a degree of resilience to external events and enhancing shareholder value. The value of this strategy has been demonstrated during the COVID-19 pandemic where Westminster is able to maintain and grow certain revenues mitigating reductions in its airport business.

To deliver on this vision the Company has in place a 5-year Strategic Growth Plan which is reviewed annually, and which includes a number of strategies to be pursued to achieve our goals. As part of that strategy for growth we continue to improve and enhance our board and senior management team and have made a number of key appointments broadening our range of experience and expertise. If we are to maximise the substantial growth opportunities we are developing, particularly with our airport security operations, it is essential we have the right strategies, people, processes and systems in place to successfully deliver such growth.

We have a growing number of companies within the Group as we expand our international operations and offices around the world which together with recent acquisitions such as Keyguard and Euro Ops, both of which are now consolidated into our Group operations, means we are operating under a range of business identities and with a number of different websites etc.

A key strategy for commenced in 2019 and running into 2020 is redefining our diverse businesses in line with our "One Company, One Vision" approach. This will involve rebranding parts of our business to better reflect the Westminster brand and regardless of what company or division or what product or service is involved it will be undertaken and recognised as Westminster. As part of this exercise we are undertaking a complete overhaul of our extensive web presence bringing all our various websites into a new and expanded Westminster Group website. Our extensive portfolio of products and services will all be brought together into one large but easily navigable site and categorised in three key focus sectors - Land, Sea and Air.

Whilst we continue to pursue our many organic growth opportunities the expansion strategy, we commenced in 2019 of targeted acquisitions and strategic joint ventures (JVs) in key markets and regions continues and we believe this strategy will enable the Company to expand its sphere of operations in a controlled and effective way.

We entered 2020 with our business in a stronger position than it has been for some time and with renewed optimism for the future and as part of our growth strategy the Board has set 10 priority goals to be delivered although we accept the unpredictability of the present COVID-19 pandemic and the uncertainty of its duration may impact the delivery of some of these goals:

1.   Improve ratio of enquiries received/quotations issued by number and quotations issued/orders received by value;

2.   Increase product portfolio and sales achieved;

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

4.   Enter into at least one more strategic alliance/joint venture in key markets;

5.   Deliver another year of double-digit revenue growth;

6.   Deliver another year of significant recurring revenue^ growth;

7.   Deliver a material improvement in profitability;

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

9.   Instigate an Investors in People programme;

10.  Deliver a companywide 'One Vision, One Company' ethos and our new website focussed on Land, Sea and Air business activities.

Performance Indicators

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

The Managed Services division measures its performance in the four key areas of its deliverables - passengers served in its airport operations, vehicles and containers served in its port and border operations, the number of days training delivered by our training businesses and the number of guarding hours delivered by our guarding businesses.

The Technology division measures its sales activity by reference to the number of enquiries received per month and the number of orders received. The number of countries and number of return customers are monitored to give a view on the performance of the Division.

Current Trading & Business Outlook

The Coronavirus (COVID-19) outbreak was declared a Public Health Emergency of international Concern on 30 January 2020 and on the 11 March 2020 the World Health Organisation (WHO) elevated the outbreak to a global pandemic. In just a few weeks the COVID-19 virus had spread from a single city in China right across the globe, creating a worldwide healthcare crisis with millions of citizens infected and a tragic toll of life. Governments around the world reacted in various ways with many closing borders, some putting large parts of their populations on lockdown and imposed travel restrictions. This has had a profound impact on the global economy and businesses across the globe, the like of which has not been experienced in a generation.

At the time of writing, the duration and full extent of the impact on the global economy cannot be determined with any accuracy although there are green shoots of optimism with some countries appearing to be over the worst of the disruption and some, including the UK, easing lockdowns. The expectation is that the global economy will begin to recover from the second half of 2020 although it is suspected the virus will be with us for some time and that some countries may yet face renewed outbreaks.

In the current business climate COVID-19 pandemic does therefore create some uncertainty and has impacted our business in varying ways, as explained more fully below.

We are a business which operates internationally with staff around the world and we are heavily involved in international travel. We therefore carefully monitor global events for anything that could be a threat to, or an opportunity for, our business. We identified the COVID-19 as one such event and began to take early action in January before the WHO had declared it a Public Health Emergency. We undertook risk assessments of our various operations and prepared plans for repatriation of overseas staff if necessary. We increased our stocks of fever screening and safety equipment and began to look for alternative sources of supply in case of supply chain issues, as well as new products we could add to our portfolio of safety equipment. We also instigated a marketing campaign, increased the prominence of our fever screening capabilities on our website and used our international network and reach to begin promoting ways in which we could assist governments and organisations protect against the pandemic.

We have been closely monitoring the situation and as the outbreak developed, we continued to update our risk assessments and began implementing logistical and organisational changes. We reduced costs and put planned capital expenditure on hold. We worked with our loan note holders to defer the planed redemption programme and extend the maturity date to May 2021. We worked with our suppliers and supply chains to ensure we can continue to supply our clients and the early action we had taken in this respect has proved invaluable. We instigated safe working practices including social distancing, provision of Personal Protective Equipment (PPE) and home working for a number of staff.

We have put in place new procedures for deliveries and despatch of goods and we have reorganised our engineering teams so that they have no direct personal contact with each other to limit any disruption should any of them develop the virus. These measures and others, including utilisation of governmental support schemes, has meant that our business has so far managed to maintain operations, keep our employees safe and successfully trade through this global crisis.

Westminster is fortunate in that the business model we have been developing is based on multiple revenue streams, many of which are from long term or recurring contracts, from diverse sources in varying parts of the world. As such Westminster is in a better position than many companies to weather the impact of the crisis. Whist the COVID-19 crisis is likely have an impact on our airport security operations for some months our sales of screening and safety equipment have risen significantly. In this respect in Q1 2020 we saw over $2.1m USD of online product orders of which $1.7m USD were in March 2020 and over $1.2m USD of that was the last two weeks of March demonstrating the benefit of multiple revenue streams, mitigating the reductions elsewhere in our airport business.  We have seen no reduction in demand for our services in this respect and we believe that the significant increase in our fever detection and safety equipment will continue for quite some time yet and is a real opportunity for the business. We are already seeing businesses and organisations planning to introduce more permanent screening systems into their operations and the aviation industry, which has been hard hit by the global restrictions on air travel, are now looking at introducing fever screening and testing as a means to get air travel operational, with Westminster's experience in the aviation screening sector and our market reach we believe this represents a significant opportunity for our business.

The impact of COVID-19 on the aviation industry is expected to last for some time and will almost certainly lead to changes in the way air travel is conducted however we believe airports in emerging markets, which is where we are focussed, are likely return to more normal passenger volumes much quicker due to the essential nature of air travel in such regions.

As reported, passenger numbers for our West Africa airport operations were at record levels for 2019 and this trend had continued into 2020 with passenger numbers continuing at the highest levels since we commenced operations until the COVID-19 impact caused the government to suspend flights for a period of 90 days commencing 22 March 2020. the government is currently still working to reopen the airport towards the end of June.  Whilst this will have an inevitable impact on our revenues from this part of our business for much of the remainder of 2020 providing the contagion is under control. We therefore expect that passenger numbers will begin to recover in the second half of the year regaining more normal levels by year end. We are carrying out regular local risk assessments and have put in place social distancing and procedural processes to protect staff and others using the airport. We do however believe it is important that we also support our staff and the local community through these challenging times for the country, as we did during the Ebola epidemic a few years ago. In this respect we are maintaining employment of our local staff to preserve security at the airport and will be using time between flights to undertake additional training for staff and to carry out comprehensive servicing and maintenance of all equipment. This is not only the right and moral thing to do but it will enable us to ramp up operations at very short notice once flights recommence.

Our aviation training business has been adversely affected by COVID-19 and currently all planned courses have been put on hold due to social distancing and travel bans. We expect our training business to begin to recover as airports recommence operations and travel restrictions are eased. One of our important governmental framework agreements relating to international aviation training programmes we run around the world has now been extended and is due to run to September 2021 with a provision to extend for a further year.

Container volumes and revenues relating to our container screening operations in Ghana continued to increase into 2020 with the daily averages in Q1 2020 being a 56% increase on the 2019 daily average. We did see a slight reduction in volume during the 3-week lockdown period in Ghana which ended on 20 April 2020 but volumes since then have risen back to the 2020 daily averages and whilst we may yet see further disruption during the COVID-19 crisis, we expect volumes overall to increase further during 2020 as the port continues to expand and new berths become operational.

Our Managed Services division not only has more large-scale project opportunities under discussions than ever before but we are also securing an increasing number of smaller contracts to assist airport authorities around the world with their equipment and security needs, and this enhances our future prospects for our large scale, long term airport opportunities post COVID-19 and are hopeful of securing at least one more major contract in the year.

Our guarding business has been affected by some site closures during the COVID-19 shutdowns although there is a likelihood that some guarding requirements may increase during site closures to ensure sites remain secure and in this respect we have secured an important new guarding contract since the COVID-19 shutdown occurred.

Our operations in Saudi Arabia have been restricted whilst the country is on COVID-19 lockdown and curfew, but we anticipate this will resume after Ramadan towards the end of May and we are excited by the prospects from this venture.

We have achieved impressive year on year revenue growth over the past few years and we expect this to continue albeit impacted in the short term depending on how long the COVID-19 pandemic lasts. Both our Managed Services and Technology divisions continue to have a healthy and active enquiry bank and given on our expected annual recurring revenue^ base and our current order book, together with the improvement in our airport passenger numbers and our run rate business, we expect 2020 to be another successful year.

In view of the COVID-19 crisis we continued to investigate new opportunities to expand our online and non-contact sales opportunities. We believe that there will now be a growing demand for more permanent fever screening systems to be installed not just at major facilities such as airports, ports, stadiums and shopping malls etc. but we are seeing increasing demand for such systems from factories, offices, mines and other commercial organisations and we believe this is likely to be a growing part of our business in the future. 

One such development is an extension of our COVID-19 PPE sales through medical vending machines. We have recently secured exclusive rights to specialised medical vending machines for use in the UK to be used for dispensing packs of face coverings, sanitiser and other safety equipment for deployment at key locations around the and transport hubs country and we are already in discussions with major transport organisations. With the drive to now have the travelling public wear protective face covering on public transport etc this initiative could greatly increase our distribution of PPE and safety equipment.

Our overriding priority however is and has been the safety and wellbeing of our people around the world and to continue to provide a valuable service to our customers. To those ends we put in place various precautionary measures, including cost reduction and are undertaking regular risk assessments for all areas of our business.

Notwithstanding the impact of COVID-19, trading for 2020 has started on a positive note, building on the success of 2019 with both order intake and revenues ahead of budget. Q1 delivered revenues of over £4.5m, an increase of more than 22% over the same period in 2019 (Q1 2019: £3.7m), and I am pleased to report we made a healthy profit in the quarter both before and after tax as we begin to benefit from new contracts and the investment we have been making in our business and we have a healthy order book going forward.

We are also fortunate in that much of our revenues are generated from long-term and recurring revenue^ contracts (we entered 2020 with visibility of over £8m of annual recurring revenue^ for the year from long term managed services, guarding and maintenance contracts ) and because of the nature of our long term contracts, where we have experienced reductions in such revenue streams during the COVID-19 disruption these are expected to resume quickly once the pandemic passes.

Over the next few months and years, we have an opportunity to achieve unprecedented growth from the prospects we are pursuing, and the Board and I remain committed to delivering on this potential.

Peter Fowler

Chief Executive Officer

Revenue

Revenues of £10.9m were 63% higher than the £6.7m reported in 2018.

Managed Services has moved forward strongly in the year to £5.5m (2018: £3.7m) an increase of 50%.  This is primarily a combination of three factors, record passenger numbers at our West African Airport, a full year of Keyguard and initial revenues from our new Tema Port Ghana operation.

We have also reported on Euro-Ops for the first time.  Further information on this is contained in Note 30.

Technology revenues increased by 80% to £5.4m (2018: £3.0m).  This is continuing a focus on, and success at, obtaining larger sized contracts such as the $3.48m USD contract for the provision of advanced container screening solutions to two separate ports in an Asian country mentioned in the Chief Executive Officer's statement. 

Gross Margin

A significant amount of the increase in turnover was from the increase in lower margin Technology Solutions sales; typically, at about 15%. Because of this mix effect the headline Gross Margin decreased to 42% (2018: 55%).

Operating Cost Base

Demonstrating how operationally geared the Group is, despite a 63% increase in sales, Group administrative costs only rose by 12% to £5.3m (2018: £4.7m) in total. However, excluding share-based payments (increasing due to accounting for warrants issued) and discontinued items, the costs only rose by 3%. This is was primarily due to inflation.

Exceptional Items

The exceptional item of £0.1m (2018: £0.4) is the pre contract costs on a Middle East airport project. This project was fully shelved in the first half of 2019. The costs relate to the period up to 30 June 2019.

Operational EBITDA^ from underlying continuing and discontinued operations

The Group loss from operations was £0.8m (2018 Restated: £1.0m). When adjusted for the exceptional and non-cash items set out below and depreciation and amortisation, the Group recorded an EBITDA^ profit from underlying  continuing and discontinued operations of £0.1m (2018: £0.4m loss restated).

This is a significant improvement on 2018 and prior years.

Finance Costs

Total finance costs of £0.6m (2018: £0.3m) increased from the prior year as the coupon on the Secured Convertible Loan Note (SCLN) rose from 12% to 15%.  Plus, a calculated interest adjustment following the extension of the SCLN. There was an underlying cash charge of £0.5m (2018: £0.4m).

Restatement of 2018 Accounts

The 2018 comparative figures have been restated to take into account the application of the new accounting standard on Leases - IFRS 16.  There are further details in Note 2 and the financial effect of introducing this standard is demonstrated in Note 12.

Result for the Year

The Group loss before taxation was £1.4m (2018 Restated: £1.4m) and the loss per share was 1.02p (2018 Restated: 0.39p).  The main reason for the difference in earnings per share was that in 2018 a deferred tax credit of £0.9m was recognised, but in 2019 this was only £0.02m.

Statement of Financial Position

Total Group assets amounted to £7.0m at 31 December 2019 compared with £8.8m (restated) at 31 December 2018.  The main movement was a reduction in debtors at the year end. 

Net Group current assets amounted to £0.7m at 31 December 2019 compared to Net Group current liabilities of £0.2m (restated) at 31 December 2018.

The Group trade and other receivables balance as at 31 December 2019 was £2.6m (2018: £4.6m). Average days sales outstanding at the year-end were 38 (2018: 41).  The 2018 figure had a significant amount for the Middle East contract in progress at that time. This also explains a drop in contract liabilities.

Cash and cash equivalents of £0.6m at 31 December 2019 compared with £0.3m at 31 December 2018.

Assets of disposal groups classified as held for sale were £0.17m (2018: £0.17m) this is the Sierra Queen, see Note 29 and Note 32

Trade and other payables were £2.5m (2018 Restated: £2.6m) and average creditor days were 66 (2018: 27).  The year-end increase in creditor days was influenced by the Asia Port contract.

A deferred tax asset of £0.91m (2018: £0.89m) was held at the year end.

Total equity at 31 December 2018 stood at a surplus of £1.9m (2018 restated: £1.1m).

Key Performance Indicators

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

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

At 31 December 2019, the secured CLN carried a coupon of 15% payable quarterly in arrears, had a conversion price of 12.5p (10p from 1 January 2020) and, following an extension after the year end, matures on 1 May 2021

At 31 December 2019, the unsecured CLN carried a coupon of 5% payable quarterly in arrears, had a conversion price of 10p and matures on 31 July 2021.

Equity Issues

Summary of Warrants

The S P Angel Warrants were inadvertently omitted from the 2018 accounts but have been accounted for in 2019. The omission of a charge of £27,000 from the 2018 accounts was not material.

In July 2019 10,000,000 warrants were issued to various holders alongside the equity issue. On 19 December 2019 375,000 of these warrants were converted to ordinary shares.

Cash Flow Statement

During the year, the Group had an operating cash outflow of £0.4m (2018: outflow £1.2m) which arose primarily from an unfavourable working capital movement of £0.6m (2018: £0.2m) offset by the £0.1m EBITDA^ from underlying  continuing and discontinued operations result.

During the year, the Group raised £1.55m gross from the issue of new equity.  In 2018, £1.34m was raised from new equity, with a further £0.2m of proceeds from the issue of convertible loan notes.

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

Westminster Group PLC

The accompanying notes form part of these financial statements.

The accompanying notes form part of these financial statements. The Group and Company financial statements were approved by the Board and authorised for issue on 13 May 2020 and signed on its behalf by:

Peter Fowler                                                                                        Mark L W Hughes

Director                                                                                                  Director