Westminster Group Plc (AIM: WSG), a leading supplier of managed services and technology-based security solutions worldwide is pleased to announce the acquisition of security and risk management company Keyguard UK Ltd.
Highlights of the acquisition include:
- Acquisition gives Westminster greater strength in offering combined technology and guarding solutions to its target markets of critical infrastructure security
- Immediate cost savings identified post integration
- Acquisition expected to be earnings enhancing in first year of ownership
- Additional recurring revenue stream to the Group
- Cross-selling opportunities into both Westminster and Keyguard’s client bases
- Retention of key staff
- Expected maximum cost of £200k, subject to working capital requirements of the business
Introduction to Keyguard
Keyguard is a UK based security and risk management company providing security services to organisations and critical national infrastructure across the country. It is focused on infrastructure growth – Construction, Renewable Energy and Transport sectors. Services include manned guarding, mobile patrols, risk management and K9 services.
The business was established in 2006 based in Corby, Northamptonshire by founder, Rob Lawrence, who built a successful and well-respected business. Keyguard holds the required industry accreditations and is an ISO quality assured business.
In the year ending 31 December 2016 the business had a turnover of £1,477,495 generating profit before tax of £199,868. In June 2017 Rob Lawrence sold 60% of the shareholding to Armatus Risk Holdings Limited (“Armatus”). In September 2018 Keyguard’s parent company Armatus was placed into administration.
Due to Keyguard’s parent company, Armatus, being in Administration the 2017 accounts have not yet been finalised and when completed are not expected to provide a true reflection of Keyguard’s operations as they will be distorted by Armatus costs and activities. However, we understand that turnover in 2017 was in the region of £1.4m, similar to 2016.
More information on Keyguard may be found on their website www.keyguarduklimited.co.uk
On 7 November 2018 Westminster completed the purchase of the 60% shareholding in Keyguard from the administrators of Armatus and the remaining 40% from Rob Lawrence. The business will be relocated to the Westminster offices in Banbury and consequently Keyguard overhead cost savings will be achieved. Rob Lawrence will remain as a director in the business and has agreed to a standard Westminster Group employment contract.
The total consideration payable is expected to be a maximum of £200,000. Expected net asset value of £18,224 was paid in cash on completion and the balance estimated to be a maximum of £181,776 will be payable in cash as an earn out based on certain debt collection over the next 24 months. Westminster will also provide working capital for expansion and to fund new contracts.
The assets acquired include stock, debtors and bank balances offset by creditors. There are also several vehicles used in guarding and office equipment.
The completion and transaction costs have been funded from the Company’s existing resources.
Rationale for Acquisition
Keyguard operates in a strong and growing market and is completely allied to and enhances Westminster’s existing market, opening new opportunities and broadening the scope of the Group’s business portfolio. The acquisition is expected to be immediately earnings enhancing and is synergistic in that not only will this transaction allow the Group and Keyguard to be able to sell into each other’s customer base but will enable a broader range of joint offerings where technology and manned guarding are both required, particularly within the aviation and critical infrastructure market.
As part of the Group, Keyguard’s existing operations can be enhanced and new opportunities pursued, and the Board believes a performance in line with 2016 can be achieved or exceeded delivering a new recurring revenue stream to the Group.
Commenting on the acquisition of Keyguard Peter Fowler, Chief Executive of Westminster Group, said: “I am delighted to be able to announce the acquisition of Keyguard, it is a good business and brings added capabilities to our Group. Indeed, we are already exploring new and interesting joint opportunities. I am equally delighted that Rob Lawrence will remain with the business. Rob has been known to us for some years and he is a hardworking, knowledgeable and dedicated individual with an ex UK Forces background. Rob will be a valued part of our management team and will help drive the business forward.”
Commenting on joining Westminster, Rob Lawrence, founder of Keyguard said: “I am very happy and extremely pleased to now be part of the Westminster Group. I am proud of what we have achieved to date with Keyguard and I am excited about what we can now achieve in the future given the reputation, experience and professional support of Westminster.”