Westminster Group Plc

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

Interim Results for the six months to 30 June 2023

Westminster Group Plc (AIM: WSG), a leading supplier of managed services and technology-based security solutions, announces its unaudited interim results for the six months ended 30 June 2023 (the 'Period').

Highlights: 

·    Delivered products and services to 35 countries around the world.

·    West African airport operations operating at record levels.

·    Training business operating at record levels.

·    Guarding business expanded, including providing new services for the Historic Royal Palaces.

·    Progress continues to be made with DRC and other Managed Services opportunities.

·    Group revenues £3.5 million (H1 2022: £3.9 million).

·    Gross profit increased to £2.24m (margin: 64%) (H1 2022: £1.98m (margin: 51%)). 

·    Administrative expenses are down to £2.52 million (H1 2022: £2.76 million).

·    EBITDA improves to loss of £98k (H1 2022: Loss £648k).

·    Operating Loss reduced to £274k (H1 2022: Loss £782k).

·    Loss per share of 0.09p (H1 2022: Loss 0.24p).

Commenting on the results and current trading, Peter Fowler, Chief Executive of Westminster Group, said:

"I am pleased to report that, despite the global uncertainty and economic challenges, our underlying business continues to perform well.

"In H1 our West African airport operations and our training business were both operating at record levels. Our guarding business has exceeded internal expectations in the Period, and we saw a number of contracts extended and expanded, including providing services for the Historic Royal Palaces. We have delivered products and services to 35 countries around the world, including some important new contract wins plus we have continued to progress our DRC project and other large-scale opportunities.

"We look forward to delivering further growth and improvements over the remainder of 2023, building on our 2022 results. 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. We remain positive about our future growth prospects."

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 (NGOs) 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.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014 ("MAR") WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN

Chief Executive Officer's Review

Overview

In our 2022 Annual Report, I stated we were looking to build on the progress we had made in that year and that Q1 traded ahead of budget. I am pleased to report that, despite the global uncertainty and economic challenges, our underlying business continues to meet internal expectations.

H1 2023 we achieved revenues of £3.5m (H1 2022: £3.9m). The reduction in revenues is partly as a result of terminating the Ghana port operation in February 2023. as previously advised, however this has largely been offset by other parts of the business performing well, in some cases at record levels, and partly as a result of delayed Technology sales due to the economic uncertainties impacting purchasing decisions. However, an improvement in margins meant we achieved an improved gross profit of £2.2m 13% up on H1 2022 (£2.0m) and this together with a reduction in overhead costs as a result of our ongoing cost restructuring strategy, enabled us to deliver a significant improvement in EBITDA loss to £98k (H1 2022: loss £648k), well ahead of budget for the half year. This is also despite an exceptional £234k impact from exchange rate losses.

Our West African airport operations have continued the growth we saw in 2022 and are currently running at record levels. The new terminal operation and our collaboration with Summa are working well and have been a positive development.

Our guarding business has performed well in the Period, and we have seen a number of contracts extended and expanded, including providing services for the Historic Royal Palaces.

Our training businesses have also performed well, trading at record levels, securing various new contracts and continuing to provide services at one of the UK's largest airports.

In H1 2023, we delivered products and services to 35 countries around the world, including some important new contract wins such as explosive detection systems to Saudi Arabia, and security equipment to a leading French airport, which we believe will lead to further business in the sector. We are pleased to have been selected to provide security for the Echo of Superbloom display at the Tower of London and we continue to receive a healthy level of enquiries for our products and services from around the world. That said, Technology sales in the Period are behind budget as the global economic situation continues to have an impact on sentiment and customer's ability to fund new capital-intensive contracts. However, we do have several potential projects in the pipeline, including the previously delayed projects which we are negotiating alternative payments schemes and which we still expect to materialise in H2 2023.

The Martyn's Law (Protect Duty) legislation, which will set out standards to protect patrons and the general public from terrorist attacks when in crowded spaces, was expected to come into force within the UK during 2023, but due to parliamentary procedures, is now expected to be in the King's Speech to parliament on 7 November 2023, for implementation in 2024. The Home Office estimates that 650,000 UK businesses could be affected. This could include settings such as pubs, shopping centres, music venues, parks, places of worship and any other place where large gatherings of people occur. With Westminster's expertise and portfolio of products and services we are well placed to assist businesses and organisations improve their security. In this respect, we have already secured a number of important contracts ahead of the legislation coming into force and are in contract discussions with a number of other potential customers. We believe this could be a sizeable business opportunity for the Group. For more information on Protect Duty, see here: https://www.wg-plc.com/protect-duty#

A key part of our growth strategy is of course delivering on new large-scale, long-term Managed Services projects and in this respect, we are working hard to deliver on the numerous project opportunities we have developed. Our long-standing DRC project continues to move forward albeit at a frustratingly slow pace, but we have every reason to believe this will be finalised this year. In addition, we are close to finalising one or two other such sizeable Managed Services prospects and whilst timing is notoriously difficult to call when dealing with government organisations, we could deliver on one of these near-term opportunities at any time.

Our settlement negotiations with Scanport regarding early termination of the Ghana Port operation appears to be nearing a conclusion and we are hopeful of receiving a cash payment before the end of the year.

Financial

Revenues were at £3.5 million (H1 2022: £3.9 million) for the first half year.  This decrease is represented primarily by the end of the Ghana port operation and lower Technology sales due to economic uncertainty in the world, offset by strong performances in other areas of the business.

The Group generated a gross profit of £2.2 million (H1 2022: £2.0 million) which equates to a gross margin of 64% (H1 2022: 51%).  The percentage increase is due to cost control and an increase in high margin services sales in H1 2023 changing the margin mix.

The operating loss was £0.274 million (H1 2022: loss of £0.782 million). This improvement is due to improved margins and lower overheads as a result of the cost restructuring strategy we have been implementing.

Cash balance as at 30 June 2023 was: £0.1 million (30 June 2022: £0.4 million, 31 December 2022: £0.3 million).  The Group also has overdraft facilities of c. £0.4 million which were unutilised at 30 June 2023.  Working capital has improved from 2022 with debtor balances at £4.8m (2022: £3.7m) vs creditors of £1.9m (£2.1m)

Earnings per share improved to a loss of 0.09 pence (H1 2022: 0.24 pence loss).

Outlook

Our business is traditionally H2 weighted, and we believe that will continue to be the case this year, accordingly we look forward to delivering continued growth and improvements over the remainder of 2023 building on our 2022 results. 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. We remain positive about our future growth prospects.

Peter Fowler, 

Group Chief Executive  

28 September 2023