LON:WSG | Westminster - Worth Watching!

3rd Mar '09 by inthemoney55

9 comments 5148 reads

I have been looking at defence and Security stocks as I feel they may fair better than most in this market, particularly those with overseas earnings in USD or Euro.

I have noticed this company (WSG) seems to have a good news flow, a tight spread for an AIM stock with growth prospects and I quite liked the recent pre close statement ...

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, will announce preliminary results for the year ended 31st December 2008 on Friday 24th April 2009.

Historically, the business has shown a seasonal revenue pattern, with a bias towards the second half of the year, which was repeated in 2008. The order book at the year end stood at £4.2million, compared with £1.5m at 31st December 2007.

Taking the year as a whole, the Board is satisfied with the Group's trading performance in 2008 which is in line with market expectations. Westminster has no borrowings and at 31st December 2008 had net cash of £570,000.

I like the no debt and cash in bank position and an increasing order book sounds interesting.

I also see they have announced an acquisition in the sector - a paper transaction so again preserving cash.

Small but the management look right and they seem to have plenty of potential to grow!

See the web site at www.wg-plc.com

I feel this could well be one to watch .... any one have thoughts on this?

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promethean

3rd Mar '09

A good piece by Edison on Westminster.

http://www.wg-plc.com/investors/publications/Westminster_Outlook_260109.pdf

Yes they have quoted for £300m of work, but how much will be converted to sales? Edison say 5%, which could lead to £15m revenues... but it's still speculative.

Westminster still need to show that they can run a tight ship and turn profitable... all our eyes should be on the H2 figures and how the trends are developing... the board is relatively experienced with ex FTSE 100 directors etc... can they execute?

I don't like stocks that aren't already profitable - the markets are completely unforgiving, and earnings is one of the only crutches available in a credit downturn.... My hunch is that if they do turn profitable, there will be plenty opportunity to buy with less risk at a later date. Other defence plays may prove more defensive in this environment...

Betasurfer

18th Mar '09

The most recent thing I saw on this was the £2.3m acquisition of LongMoor - anyone heard anything since then?

http://www.stockopedia.com/news/announcement/WSG/090226wsg8943n.htm

When are the results out?

inthemoney55

21st Mar '09

According to the company's pre close statement the preliminary results will be announced on 24th April - it will be interesting to see how they are doing as they certainly have had a reasonable news flow over the past year and the board look very competent! I like the no debt and cash in the bank comments mentioned in the pre close.

The recent acquisition is a maximum payout of £2.3m but initially only £389k and that was in shares, the remainder is performance based on net profit so looks like a clever deal - no cash outlay, new division with interesting client base and further payments only if they make a profit. The size of the deferred payout would suggest they are optimistic of high growth from Longmoor

26th Mar '09

I see a nice £1million order announced this week adding to a healthy order book - this company certainly seems to be able to secure some interesting business!

StrollingMolby

29th Mar '09

I read a good book a few months back called War Plc, which detailed how private military companies ("PMC") were being hired both by oil companies in dangerous parts of the globe, as well as by govts to provide security to army bases, in Iraq, Afghanistan, etc, and also to provide security to convoys in war zones, take soldiers to and from airports etc... The numbers quoted (I don't have this to hand) show how this has grown exponentially in recent years (certainly since the first Iraq war). For example the US Dept of Defence is rumoured to have over 100,000 contractors in Iraq undertaking PMC duties - helped in no small part by the immunity from prosecution offered to all Americans involved with the coalition.

My first thought reading the book was to see if there was an investment angle on it, but of course a lot of these PMCs are private companies, which provides them with the lack of transparency they need for contracts and how they are performed. Another reason companies are private is to remain as far out of the spotlight as possible following various incidents of unprovoked attacks on civilians. One of the most well-known names in the PMS arena is Blackwater. In terms of UK companies, you may have heard of Executive Outcomes (& Tony Buckingham, director of HOIL), Sandline Intl (& Tim Spicer, Simon Mann).

Anyway, getting back to the point of the post, the author of the book commented that the industry was looking for ways to diversify away from protecting mines and oil rigs in far-flung places, or providing security to armies in the Middle East. The next large area of growth will come from providing security at large-scale events in the UK, in place of the Met Police - such as sporting events, Olympics 2012, Trafalgar Square on NYE, etc... It is not thought that PMCs will replace the police altogether, but will provide the main numbers for standing by barricades in fluorescent jackets, directing crowds etc... allowing police to better manage their manpower & budgets.

To this end, it is worth watching companies in the security sphere that have some exposure to events-type protection. WSG are one such firm, and Group 4 (GFS) probably the largest. A small firm I found within theBusiness Services sector is Sectorguard (SGD) but they really are few and far between. Does anyone know of other such listed firms, or a way to play this opportunity? G4S seems the leader in the market but I cannot think of other large-cap companies in this area.

MrT

20th Apr '09

Good news today that it has secured a prestigious €2m contract to protect the new Nagaa Hammadi Dam complex on the river Nile in Egypt. The contract is to supply and install an advanced security net across the river Nile; to prevent access to the dam from either vessels or divers and to protect the hydraulic control structurefrom any floating or submerged objects.

http://www.stockopedia.com/news/announcement/WSG/090420wsg000327.htm

Commenting on the contract awards, Peter Fowler, Chief Executive of Westminster
Group, said: "The Nile Dam project presented us with a unique set of challenges. The client
had not been able to find a solution using existing security products or other
specialist security firms. Our project managers used innovative technologies to
tackle each of the individual demands of the brief to provide a bespoke and
complete solution. This tailored approach is critical in differentiating
Westminster from alternative solution providers.

"I am delighted to be able to announce this latest contract award so soon after
our previous major project win in Iraq. Both contracts are a testament to the
investment we have made in building up our Middle East operations and illustrate
how Westminster can design innovative solutions for wide ranging security
challenges throughout the world.

"This latest award means that we have started 2009 very positively, with a surge
of new orders worth, in aggregate, in excess of GBP3.3million, to add to our
already record order book of GBP4.2m at the beginning of the year (GBP1.4m
2008). Enquiry activity remains healthy and despite the current economic
difficulties we remain optimistic for 2009".

Good quality contract win which follows the previous £1million contract award recently announced for Iraq both of which clearly suggests they have the ability to secure interesting and sizeable business with national governments etc.

Results out later this week - will be interesting reading!

25th Apr '09

Impressive results announced yesterday with doubling of revenues and delivering profits.

http://www.stockopedia.com/news/announcement/WSG/090424wsg000741.htm

Highlights:

Revenues up 100% on year end 2007 to £5.5m
Gross profit margin maintained at 35%
Contracted order book up 180% on year end 2007 to £4.2m
Maiden profit after tax £204k
Strong Cash position with net cash circa £600k
Group is debt free

These are impressive results on the back of recent quality contract announcements.

This reinforces my view that this company is worth watching - I like the look of the management and they appear to have a good business model in a sector I believe will weather the economic climate better than many.

9th Nov '09

Just bringing the thread up to date with the Interims that were released in September:

Highlights

First half revenues up 69% to £2.4m (2008 - £1.4m)
Order book up 23% to £5.3 million at 30 June 2009, compared with £4.3 million at 30 June 2008
Strong Balance sheet with £1.1 million net cash
Enquiries running at double last year's rate since new website launched in April
Close Protection and Risk Assessment specialist Longmoor Services Limited acquired in February
Convertible Loan Notes of £1.2m issued in June 2009
New contracts won in period for dam protection, airport security, ThruPORT rapid deployment security portals; and post period for close protection services and mobile surveillance systems.

Since the half year-end date, WSG have issued no less than nine RNS' concerning contract wins or distributorships. Whilst it's good to have good news flow, I'm not a fan of companies that RNS everything down to the date of the Christmas party! Saying that, for a company of this size (£5m market cap) these deals may be considered material.

One contract of note, announced last Friday, is a $2.7m extension to the 2008 contract worth $4.7m that WSG was awarded to secure Juba International Airport (in Sudan). The RNS also states the winning of more than $1m more in contracts in October.

SM

Westminster - worth watching!

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Inthemoney55

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