Westminster Group Plc (‘Westminster’, the Company’ or the ‘Group’), the AIM listed supplier of system solutions and products to the security, defence, fire protection and safety markets worldwide, is pleased to announce that it has restructured the Group’s businesses into two new divisions in order to focus on its growing international business and exploit increasing growth opportunities, particularly with high value, long term managed services contracts and major projects. As part of that restructuring the Group today announces the disposal of two UK focused subsidiaries to a management buy-out.
The Group has restructured its subsidiary operations to now operate in two key internationally focussed divisions as follows:
•Managed Services Division – focusing on long term managed services contracts such as the management and running of complete security services and solutions in airports, ports and other such facilities and the provision of manned services, consultancy and training etc.
•Technology Division – focusing on providing advanced technology led security solutions encompassing a wide range of surveillance, detection, tracking and interception technologies; principally to governments and governmental agencies, non-governmental organisations (NGO’s) and blue chip commercial organisations worldwide.
Over the past few years, the Group has been building and expanding its international presence, particularly in its target markets of Africa, the Middle East and Asia. Today the Group has a significant international footprint with offices and agents in 47 countries and a widespread reputation for successfully delivering advanced security solutions within its target markets.
Given the current challenging economic climate in the UK and Europe, and the growing prosperity and business opportunities in Africa, the Middle East and Asia, the Group’s strategy and vision of building an internationally focussed business in these target markets can be seen to have been a wise investment. The Group’s international presence and reputation is now able to be leveraged to exploit the many opportunities that exist in these markets, providing a distinct market advantage over many other competitor companies. The Group’s restructuring is therefore designed to better align the activities of Group companies to achieve greater integration in order to maximise such international opportunities.
Disposals
The Group’s two UK focussed subsidiaries (“The Targets”), RMS Integrated Systems Limited including CTAC (“RMS”) and International Monitoring Services Limited (“IMS”), are suppliers to UK domestic and commercial customers of alarm installation and alarm monitoring services respectively. These are clearly no longer synergistic with the increasing international focus of the Group as detailed above. Furthermore they operate in commoditised markets and are subject to pricing pressures. We are pleased to announce that a management buyout (“MBO”) led by Mr. Shires Crichton, Managing Director of both RMS and IMS, has been now been completed.
Details of the Transaction
The Targets are to be acquired by Amba Defence Limited (“Amba”), a company established by Mr. Crichton for the purpose of acquiring the Targets (the “Disposal”).
The Disposal will take place on a cash and debt free basis for an initial consideration of £200,000. The initial consideration is payable by Amba in instalments over the year following the Disposal. The proceeds of the disposal will be used for general working capital.
In addition, the Company will be entitled to further earn out payments based on the Targets achieving certain turnover milestones in each of the two years following the Disposal.
During the year to 31 December 2012, the Targets, in aggregate, contributed turnover of £1.62m and net losses of £0.37m to Group results as per unaudited management accounts. As at 30 June 2012 the Group’s unaudited consolidated balance sheet included trading assets of £88,000 (excluding cash) and an intangible asset of £195,000 in respect of the Targets. It is anticipated that the intangible asset will be adjusted to reflect this transaction in the Company’s audited balance sheet as at 31 December 2012.
Related party transaction
As Mr. Crichton is a current Director of the Targets he is classified as a related party under the AIM Rules for Companies (“AIM Rules”). The Disposal therefore constitutes a Related Party Transaction for the purposes of AIM Rule 13.
The Company’s Directors consider, having consulted with the Company’s Nominated Adviser, S. P. Angel Corporate Finance LLP, that the terms of the Disposal are fair and reasonable insofar as the Company’s shareholders are concerned.
Commenting on the Restructuring and Disposal Peter Fowler, Chief Executive of Westminster Group, said:
“I have previously made reference to the growing international opportunities that the Group is developing, particularly in long term managed services and the provision of high technology solutions for the protection of critical infrastructure, and that Westminster is now at a game changing point in its growth plans. Africa, the Middle East and Asia are now recognised as high growth markets for our services and the investment we have made in developing our international network in these regions is now paying off, with Westminster now well placed to exploit its market advantage accordingly.
“The restructuring to create two divisions, one focussed on managed services and one on the provision of technology led solutions, as outlined above, will create a more focussed and integrated business to better exploit these opportunities.
“The disposal of our two UK focussed subsidiaries as part of this restructuring is a logical step and I am delighted to be able to announce that both businesses have been the subject of an MBO led by a long standing employee of the Group, Shires Crichton. Mr Crichton has already been managing the two businesses and I am confident that he has the drive and vision take the businesses forward to new prosperity. Both businesses will continue to provide a range of services to Westminster on a contract basis and we look forward to working with them as close business partners.
“In summary, I believe these changes will not only assist the Group focus more effectively on its international business opportunities but will streamline our operations with cost savings of approximately £1.3m p.a.”
For further information – see the Company’s web site, www.wg-plc.com
