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Westminster Group

  • BY: Andrew Hore |
  • POSTED: 23/05/2010 |

Westminster Group is looking to build up a recurring revenue base so it is not as dependent on large one-off security contracts.

The purchase of security and fire systems supplier CTAC in April was the first step. The central monitoring control room has been split off as a separate business.

All this was too late to contribute to the 2009 figures. Revenues rose from £5.48m to £7.95m, while the profit fell from £201,000 to £140,000. The underlying performance when exchange gains and losses are stripped out shows a swing from a loss of £47,000 to a profit of £217,000. The Longmoor Security training and protection services business made a loss in the months it was part of Westminster but it should be profitable this year.

House broker Seymour Pierce forecasts a jump in underlying profit to £900,000 in 2010. The acquisitions since flotation will make a strong contribution to this figure. The training business has won contracts that will improve its contribution and CTAC and the monitoring business will provide steady revenues.

There was net debt of £825,000 at the end of 2009. Since then money has been raised but most of that was used on the CTAC acquisition. Debtors are relatively high at the balance sheet date because $3.4m was owed by Juba International Airport in Sudan. Since then, $2.7m has been paid and another contract has been awarded.

Westminster paid an initial £825,000 in cash and shares for CTAC and there is deferred consideration of 40% of net profit over the next two years. Management is looking to acquire similar security businesses around the country to give it a regional presence. Any acquisitions could transfer their monitoring business to the company’s own monitoring subsidiary and keep more of the contract value within the group. Add-on acquisitions are likely to be smaller than CTAC.

The regional presence will help Westminster to provide the services for its framework contract with the UK Ministry of Justice. The four year contract is to supply and maintain access and security equipment to 139 prisons in England and Wales.

At 31.5p a share, Westminster is valued at £5.59m. The shares are trading on 10 times prospective 2010 earnings.

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