www.wg-plc.com
The Westminster Group is a specialist security group operating worldwide via an extensive international network of agents and offices in over 45 countries. The Group's principal activity is the design, supply and ongoing support of advanced technology Fire, Safety, Security and Defence solutions to governments and government agencies, non governmental organisations and blue chip commercial organisations worldwide. The Group is listed on the AIM market of the London Stock Exchange and its Corporate Headquarters and Demonstration Grounds occupy a 4½ acre site, discreetly located in the heart of the English countryside.
Westminster Group says delayed orders could ultimately prove transformational
Westminster Group’s (LON:WSG) below-par second half was largely down to timing, according to finance director Nicholas Mearing Smith.
This morning the security specialist warned that it expects to make an operating loss of £2 million this year after being hit by contract delays. The company, whose interests span from fire alarms to flak jackets and site protection, said it has sufficient working capital for the next 12 months.
Westminster’s major customers are governments, who are re-assessing their spending priorities. This in turn has led to delays in winning new business.
The group did however say it was very close to signing major new contracts.
Speaking with Proactive Investors Westminster finance director Nicholas Mearing Smith emphasised that it was a timing problem and that, provided they are completed, the delayed contracts could ultimately prove to be business transforming.
Mearing Smith said that these were very significant deals and several orders have the potential to be larger than any contract Westminster has landed to date.
The deals are expected in the early part of 2011.
However Mearing Smith said he was unable to give any precise commercial details, or a firm completion date, for the contracts due to the advanced nature of the negotiations.
He also emphasised Westminster’s strong cash position.
Unlike many other AIM-listed firms, Westminster is fortunate as its balance sheet is strong enough to sustain the business for at least another 12 months – even if it does not land a single new contract.
In this morning’s statement Westminster cautioned that it will have to put in place a “number of cost reduction measures” if it does not win a significant new contract before March 31 next year.
On AIM, the news prompted something of a kneejerk reaction, with shares being marked down by as much as 35 percent in opening trades. Shares have bounced back since then, and in late morning deals they were changing hands at around 15.75 pence, down 17.1 percent on the day.
In this morning’s statement Westminster said: “The tenders submitted by Westminster remain the subject of ongoing discussion with the expectation that they become firm contracts.
“Consequently, (the company) has intensified its efforts with those governments that are more likely to be able to award significant contracts in the near future, particularly in the Middle East.
“The results of those efforts appear to be very close to fruition, with the expectation of several major contracts being signed in the first quarter of 2011, however we must again highlight the uncertainty of timing.”
Westminster gave some hint of the potential problems when it updated the market on September 23.
At that point it said it was concerned about the timing of final contracts, which would normally give a lift to sales in the final six months of the year.
“In prior years, the second half of the year has been stronger than the first half owing to the timing of major contracts,” Westminster told investors.
“In 2010 many governments, which are the major customers of the group, have delayed the award of major contracts due to the uncertainty surrounding public sector finances.”
