16th April 2010
Westminster Group Plc:
Acquisition of CTAC Ltd For up to £1.8 million
and Subscription of 1,250,000 shares at 41p to raise £512,500 before expenses
Westminster Group Plc ('Westminster' or 'the Group'), the AIM listed supplier of system solutions and products to the security, defence, fire protection and safety markets worldwide, announces that it has acquired the entire issued share capital of CTAC Ltd ('CTAC' or the 'Company'), for a maximum consideration of up to £1.8 million ('Acquisition').
CTAC is a specialist integrated provider of 'high end' security solutions to a blue chip client base including Brinks, DeBeers LV and Seven Trent Water who operate in operationally critical, high value and high profile fields such as cash handling, bullion storage, jewellery and diamond merchants, chemical storage and utilities.
A key strength of the business is its 24hour Alarm Receiving Centre (ARC) which is built, operated and certificated to the National Security Inspectorate (NSI) Gold standard, the highest level of such certification in the UK. The ARC operates as a 24/7 control & command centre and monitors alarm and video signals from over 1,000 systems across the UK, producing a strong recurring revenue stream.
Founded in 2004, the Company operates from a 3,000sq ft premises in Kidderminster, UK, supporting clients primarily within the UK but with a growing interest and significant market potential internationally.
Westminster has built a considerable global presence operating through established agents in 45 countries, offering a niche portfolio of security, defence, fire and safety products and services. The addition of CTAC to the Group continues Westminster's expansion through the integration of complementary services. Synergistic benefits of the Acquisition include:
- Niche business in sector and good fit with Westminster's core business;
- 24 hour Control & Command facility and Alarm Receiving Centre is a major enhancement to the Group's service operations presenting cross selling opportunities to other Group companies and international clients operating across international time zones;
- Opportunity to add new services such as 24 hour travel advice, emergency medical & hostile extraction services to overseas travellers and third party remote monitoring & call centre services; and
- Ready built nationwide service team and infrastructure to serve Westminster's increasing UK customer base, including Westminster's recently announced contract with the Ministry of Justice covering 139 Prisons in England and Wales.
The net assets of CTAC at 31 December 2009 were £279,928. The pre tax loss for the year to 31st December 2009 (unaudited), after exceptional costs of £274,453, was £69,770 compared with a pre tax profit for the year to 31st December 2008 of £200,098. The exceptional costs of £274,453 in 2009 relate to contract over-runs, now rectified, and one-off consultancy fees relating to preparation for sale and the NSI certification costs. Excluding exceptional costs the operating profit for 2009 was £204,683. The first three trading months of 2010 indicate an underlying trading profit of £89,000 and a strong recurring revenue base.
The initial consideration of £825,000 will be satisfied by £500,000 in cash payable out of the Group's own cash resources and the balance of £325,000 by the issue of 792,683 new ordinary shares of 10p each in Westminster ('Ordinary Shares') at 41p on the date of completion ("Consideration Shares").
Two further performance based payments will be made, calculated on 40% of net profit in each of the two years following completion, up to a maximum aggregate additional payment of £1 million.
Following acquisition, the vendor and Managing Director of CTAC, Adrian Johnson, will remain with the Company as a consultant for a period of 24 months. All other staff, with the exception of Cathy Johnson, will remain with the Company.
The Group is today pleased to announce that it has raised further working capital through a subscription of 1,250,000 new Ordinary Shares at 41p, raising £512,500 before expenses from new investors ('Subscription Shares'). Application has today been made for the Subscription Shares and the Consideration Shares ("New Shares") to be admitted to trading on AIM and admission of the New Shares is expected to take place on 22nd April 2010. Following the Issue of the New Shares, Westminster's enlarged issued share capital will comprise 17,730,754 Ordinary Shares.
The above figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, Westminster Group plc, under the Disclosure and Transparency Rules.
Commenting on the Acquisition Peter Fowler, Chief Executive of Westminster Group, said:
"I am delighted to welcome CTAC into the Westminster Group. I believe the Company is at an exciting stage with tremendous growth prospects and by joining our Group we can now provide the investment and marketing infrastructure to help achieve that growth.
"The Company is an excellent fit for our business, broadening our scope of services and offering additional synergistic opportunities to our other Group companies. CTAC is an excellent fit with our RMS business and a clear benefit is for the two businesses to share resources and technologies as well as cross selling services.
"The 24 hour ARC and control centre is an excellent addition to our Group enabling us to offer a wide range of new services. It will be of particular benefit to our Close Protection business, Longmoor, who will use the centre for monitoring and management of operations and for intelligence gathering for client travel advice and emergency extraction services.
"The acquisition of CTAC, with its large UK customer base and sizeable recurring revenue stream, is also in line with our current strategy of enhancing our operations in the UK and Europe and in significantly growing high margin recurring revenue.
"I have been impressed by what Adrian and his team have achieved in the last few years and with the quality of CTAC's operations and client base. I am sure that the business will continue to flourish as part of our Group and I would like to welcome Adrian and all of his team to Westminster and look forward to growing the business with them all."
Adrian Johnson, Founder and Managing Director of CTAC added:
"This deal gives CTAC an excellent opportunity for accelerated growth through Westminster's existing client base, infrastructure and international reputation.
"I am proud of what we have achieved with CTAC over the past five years and our success is due, in no small part, to the hard work and effort of all our employees. I have enjoyed working with Peter and his management team throughout this process and been impressed by Westminster's friendly but businesslike atmosphere. This was one of the major factors in choosing to join Westminster together with the belief that our staff and business would benefit and thrive within the Group.
"We look forward to working with Peter and his team."
Enquiries:
Peter Fowler 01295 756 300
Chief Executive - Westminster Group Plc
Nicholas Mearing-Smith 01295 756 300
Finance Director - Westminster Group Plc
Nandita Sahgal 020 7107 8000
Catherine Leftley
Seymour Pierce
Tom Cooper/Paul Vann 0117 985 8989
Winningtons Financial 0797 122 1972
Notes:
Westminster Group plc is a leader in the supply of system solutions and products to the security, defence, fire protection and safety markets worldwide.
Westminster's principal activity is the design, supply and ongoing support of advanced technology security solutions, risk assessments and close protection services. These can range from product only assignments, such as the supply of specialised scanners, to the design and implementation of an integrated system solution such as a border detection and surveillance system. The majority of its customer base, by value, comprises governments and government agencies, non governmental organisations and blue chip commercial organisations.