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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