Results from AIM-listed Westminster Group caught our eye recently. Despite sitting on the outskirts of our software & IT services ‘world’, the similarity to Digital Barriers, the brainchild of ex-Detica management (see archive), was what piqued our interest. The company is focused on the global security market – “Westminster’s principal activity is the design, supply and ongoing support of advanced technology security solutions, risk assessments and close protection services”. In other words, like Digital Barriers it is focused on the physical security space.
Results for the year to 31st December 2011 show strong progress for the company. Annual revenues shot up from £3.8m to £10.1m, while the order intake (up from £3.2m to £14.7m) indicates more strong growth to come. As far as we can tell, most of the growth is organic; the last acquisition we can see was that of CTAC for £1.8m in April 2010. This would have had some impact on the year but much of the revenue would also have been recognised in 2010. Instead, growth appears to be coming from the addition of new ‘agents’ operating for the Group internationally. Westminster refers to its “super agent model”. “Underlying” operating profits in H2 also moved from loss (-£1.8m) to profit (+£0.65m), though losses were still recorded for the full year.
As Digital Barriers is also finding, much of the growth opportunity is coming out of the Middle East & Africa region. Westminster Group, for example, recently won a multimillion pound contract award for advanced security systems for the palaces of a Middle Eastern Royal Family. We’re sure Digital Barriers is watching Westminster Group with interest. We doubt, though, that the ‘buy and build’ firm would be looking to Westminster as a suitable acquisition opportunity; with revenues of c£15m (see Digital Barriers has ‘defining’ year), adding Westminster Group would lead to the potential for severe acquisition indigestion. For now, it seems the pair is operating quite comfortably side by side with plenty of opportunities for both organisations to thrive.