TIDMWSG

RNS Number : 4980B

Westminster Group PLC

31 January 2020

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014

Westminster Group Plc

('Westminster', the 'Group' or the 'Company')

Trading Update, Notice of Results and Total Voting Rights

Westminster Group Plc (AIM: WSG), a leading supplier of managed services and technology-based security solutions worldwide, is pleased to provide a trading and business update, and notice of its results for the 12 months to 31 December 2019.

Overview

We are pleased to announce that 2019 was a record year and the Group expects to report, subject to audit, around a 63% year on year increase in revenues to circa GBP10.9m, an increase of GBP4.2m on the GBP6.7m reported in 2018. This is the 5th year of double-digit percentage revenue growth and shows the momentum we are building.

We continue to invest in our worldwide business development programmes in order to deliver on our growth potential, particularly in our long-term major managed services projects. Operating in frontier markets is time consuming, complex and costly but the potential rewards are substantial. Despite the cost of business development, the set up costs for our Ghana project and the costs associated with setting up our various strategic alliances and joint ventures in Saudi Arabia, Bahrain and Tunisia etc., we expect to report a greatly improved EBITDA performance for the full year as compared with 2018 which was a GBP0.38m EBITDA loss. As a business we are operationally geared in that we have relatively fixed operating costs and as our revenues continue to grow our profitability will grow proportionally faster. In this respect we believe we are now approaching an inflection point.

Annual Review

Both the Managed Services and Technology divisions performed well during the year.

Our passenger numbers for our West Africa airport operations for the year are at record levels and the last few months of 2019 were consistently some of the highest monthly traffic numbers experienced since we commenced operations there.

In February we delivered the remainder of the $4.5m US Dollar vehicle screening contract in the Middle East, which the Company secured in 2018.

In March 2019 we had entered into a Technical Partnership Agreement with a Ghanaian company, Scanport Ltd. In June 2019, we announced a letter of intent had been received acknowledging Westminster as the Technical Partner and setting out the preliminary terms regarding the appointment and scope of work relating to a container screening project at the new container port, Terminal 3 at Tema, Ghana.

Terminal 3 is a new $1.5 billion investment project by Meridian Port Services ('MPS') which is creating one of the most advanced port operations in Africa, if not the world. The first two berths opened on 28 June 2019 and the first commercial vessel successfully docked on 3 July 2019. The third berth is expected to be operational in Q1 2020 and the fourth berth is due for completion at the end of 2020. When complete it will expand the port's capacity from around 1 million Twenty-foot Equivalent Units ('TEU') pa to over 3.5 million p.a.

Scanport-Westminster have been successfully running the container screening and secondary search operations since the port opened on 28 June 2019, with Westminster providing the technical management and operations and Scanport responsible for local costs, management and employment. Revenues are shared between Scanport and Westminster and are driven by container traffic volumes passing through the Port. Westminster's share of revenues during the soft opening and start-up phase of operations in 2019 amounted to several hundred thousand USD and we look forward to the operation producing a meaningful contribution to our revenues in 2020 as the port continues to expand, the new berths come on stream, capacity and throughput increases, and new tariffs come into operation.

Recent developments would indicate that the formal exchange of contracts, which the Board consider a formality given we are already appointed and operational, are likely to be signed in February 2020. We are excited by the prospects of this long-term managed services project and we expect our subsidiary Westminster International (Ghana) Ltd. to be an important and growing part of our business.

In April 2019, our Technology division announced the award of a USD $3.4million contract for the provision of advanced container screening solutions to two separate ports in an Asian country. Following manufacture and site preparation works the first of these was delivered in November 2019 and the second unit was dispatched in January 2020.

In May 2019, we announced we had acquired Euro Ops, a French based aviation security and support services company which, through its sister company, Euro Ops International (also trading as ICare), provides aviation support services such as Airport Security, Aircrew Management, Humanitarian Logistics, Operations & Dispatch, Ground Handling etc. Euro Ops has been fully integrated into the Group and is developing meaningful business and opportunities within Francophone territories. Our new French operation joins our existing German subsidiary, which is also developing a number of sizeable business opportunities, in providing us with a European footprint. Whilst Westminster is not likely to be materially affected by Brexit, having European operating companies will be beneficial.

In June 2019, we announced we were forming a 50.1% Group owned joint venture subsidiary, registered in Saudi Arabia, under the name Westminster Arabia. Our JV partners are Hazar International who, under their impressive Chairman, Sheikh Salman Bin Mohammed Bin Khalid Bin Hethlain, are strong and influential partners. An experienced business development team is now in place within the country and is already involved in several large-scale project opportunities in the Kingdom. One of several projects already being pursued in the Kingdom is Saudi ports and in 2019 at the request of the authorities we conducted detailed operational and vulnerability assessments at certain ports following which, the Westminster team are booked to meet with the port authorities in February 2020 for more detailed discussions regarding port security solutions. The business opportunities for Westminster's products and services within Saudi Arabia are substantial and the formation of Westminster Arabia represents an important strategic development for the Group.

Our training business continues to grow and, in addition to our direct contracts with airports and governmental bodies around the world, and the opening of the training centre in the UK in 2019, we have entered into two important Strategic Alliances. In July 2019, we announced we had signed a strategic alliance agreement with the Gulf Aviation Academy ('GAA'), a leading provider of professional aviation training in Bahrain and the wider Middle East and North Africa ('MENA') region. This alliance has already produced tens of thousands USD in new business and recently GAA secured an important new contract with the Bahrain Airport Company ('BAC'), the operator and managing body of Bahrain International Airport ('BIA') to provide civil aviation security training to hundreds of airport-stationed Ministry of Interior ('MOI') personnel each year and which will involve Westminster in the delivery of this service.

In November 2019, Euro Ops entered into a strategic alliance with the Tunisian Academy for Civil Aviation Safety and Security Training ('AFSAC'). From its impressive training centre in Tunisia, AFSAC provides certified aviation security training workshops on behalf of the International Civil Aviation Organization ('ICAO') and is an AACO approved training centre.

In December 2019, we finalised the sale of the Sierra Queen which has a book value of GBP170,000. The vessel has been sold for a total consideration of $643,000 US Dollars, payable by $40,000 deposit and the balance by 36 equal monthly payments. Under the sale agreement the Company will, at its own cost, ship the vessel to the purchaser in Greece in Q1 2020 and it will be secured by a mortgage charge over the vessel until final payment has been received.

On a wider front we continue to progress various existing and new large-scale managed services project opportunities around the world. As we have previously advised, project opportunities of this size and nature, particularly in emerging markets, are not only time-consuming and involve complex negotiations with numerous commercial and political bodies but discussions can ebb and flow over many months, with periods of intense activity which can be followed by long periods of inactivity. An example of this is the African airport project we referred to in our trading update in January 2019 that we were waiting on counter signature from the government. This project opportunity remains alive a year later but was delayed due to an unrelated issue leading to reorganisation within the government which has largely now taken place and we expect to recommence discussions in the coming months.

We operate in a market that requires strict confidentiality and we are not able to provide detailed updates or explanations for delays which, if made public, may cause issues with our clients and be prejudicial to discussions. However, whilst there is never certainty as to timing or outcome of the many project opportunities we are pursuing, we are making progress on a number of fronts and we will provide market updates on material developments when appropriate and in line with our regulatory responsibilities.

In summary, 2019 was a busy year and a year of growth during which we have made significant strides forward.

Cash

At 31 December 2019, the Group had free cash available of circa GBP557k. Since the year end the Company has entered into a GBP3million financing facility as reported on 23 January 2020, of which it has drawn down GBP1.5m and has commenced a staged redemption programme of the Company's existing GBP2.245m Convertible Secured Loan Notes ('CSLNs') which is planned to be completed well before the CSLNs maturity date of 30 June 2020, saving on both interest and management fees.

Outlook

Trading for 2020 has started on a positive note, building on the success of 2019.

Our Technology division has experienced a higher than normal order intake in both December and January for a wide range of security equipment, which together with shipment of the second container screening system for a port in Asia, as part of the $3.48m USD contract announced in April 2019, bodes well for Q1 revenues.

Our Managed Services division not only has more large-scale project opportunities under discussions than ever before, but we commence the year with our expected annual recurring revenues from our managed services projects, our Ghana project and our existing guarding and maintenance contracts, already at a level greater than our entire 2018 revenues.

Both our Managed Services and Technology divisions continue to have a healthy and active enquiry bank and we anticipate 2020 will be another year of significant growth. We look forward to making progress on our more significant managed services contract opportunities during the year.

Notice of Results

Westminster will announce its Final Results for the 12 months to 31 December 2019 on Thursday 30 April 2020.

Total Voting Rights

In accordance with the Financial Conduct Authority's Disclosure Guidance and Transparency Rules ('DTRs'), the Company hereby announces that it has 159,402,511 ordinary shares of 10p each in issue, none of which are held in treasury. Therefore, the total number of voting rights in the Company is 159,402,511.

The above figure of 159,402,511 may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the DTRs.

For further information please contact:

 
Westminster Group Plc                      Media enquiries via Walbrook 
                                            PR 
Rt. Hon. Sir Tony Baldry - Chairman 
Peter Fowler - Chief Executive Officer 
Mark Hughes - Chief Financial Officer 
 
S. P. Angel Corporate Finance LLP (NOMAD 
 & Broker) 
Stuart Gledhill                            020 3470 0470 
Caroline Rowe 
 
Walbrook (Investor Relations) 
Tom Cooper                                 020 7933 8780 
Paul Vann 
Nick Rome                                  Westminster@walbrookpr.com 
 

Notes:

Westminster Group plc is a specialist security and services group operating worldwide via an extensive international network of agents and offices in over 50 countries.

Westminster's principal activity is the design, supply and ongoing support of advanced technology security solutions, encompassing a wide range of surveillance, detection, tracking and interception technologies and the provision of long-term managed services contracts such as the management and running of complete security services and solutions in airports, ports and other such facilities together with the provision of manpower, consultancy and training services. The majority of its customer base, by value, comprises governments and government agencies, non-governmental organisations (NGO's) and blue-chip commercial organisations.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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January 31, 2020 02:00 ET (07:00 GMT)

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