21 yr Ferry Services deal - potential US$300m rev

RNS Number : 3874X

Westminster Group PLC

19 November 2014

 



19 November 2014

Westminster Group Plc:

Signs 21 Year Concession Agreement with US$300m Revenue Potential

Terminal Operations & Ferry Service - West Africa

Westminster Group Plc ('Westminster' or the 'Group'), the AIM listed supplier of managed services and technology based security solutions to governments and government agencies, non-governmental organisations (NGO's) and blue chip commercial organisations worldwide, is pleased to announce that, further to the announcement on 11 August 2014, its Managed Services division has secured a 21 year concession and lease agreement with a government in West Africa for the complete management and operation of a number of recently constructed ferry terminals together with the provision of a sea ferry transfer service, integrating with, and complementing, its current West African airport operations (the "Concession Agreement").

Concession Agreement highlights:

·    Long term contract with growth potential over and above current estimates

·    10 year exclusivity on WFM operating contract

·    Highly cash generative operating model with positive contribution expected in the initial 12 months

·    Westminster granted very favourable terms of trade including inward investment support and up to 12 months concession fee waiver

·    Concession fee based on per passenger levy - no fixed fee element

·    Sovereign Ferries (a wholly owned subsidiary who will operate the ferries) operating free of additional levies

·    Sources of passengers to include: Airport transfers to and from key local sites; daily use for non airport passengers e.g. airport workers, diplomats, healthcare officials; tourists

·    Critical to support humanitarian and NGO activities - whose activities are principally funded by overseas governments and charities

·    Private charter opportunities for secure transfers and tours

Under the Concession Agreement, Westminster Facilities Management ("WFM"), a wholly owned subsidiary of the Group, is leasing recently constructed terminal buildings and jetties and will take over the management and running of the operation, providing secure, safe and high quality terminal facilities for passengers and ferry craft alike. Under the Concession Agreement, from year 2, WFM will pay an annual concession fee of 5% of total passenger revenues to the Government in consideration for the lease and management of the buildings. The terminal services will be operated akin to an airport terminal with check-in counters, security screening, departure and arrival halls with shopping/refreshment facilities. WFM will promote, develop and expand the operations to cater for the expected growth in passenger numbers.

In addition, WFM has agreed to provide a high quality, professional and safe ferry service through its wholly owned subsidiary, Sovereign Ferries, using the terminals to transport passengers between the airport and the main conurbations for which there is an urgent need. In addition, in due course, the operation will be expanded to include a water taxi service around the coast and to neighbouring territories, assisting the country concerned to expand its tourist potential by providing safe transit to, and from, potential resort areas.

The ferry service is expected to serve around 3,500 passengers a month, as well as providing a vital link for health care workers and NGO's during the current public health situation created by Ebola in the region. As the situation normalises, passenger volumes are expected to rise significantly, with considerable potential growth thereafter from additional regional routes and services.

This ferry service is expected to share many of the attractive financial dynamics of the Managed Services business. It has the potential for a strong gross margin performance and has a rapid cash collection cycle. It is expected to generate a positive EBITDA contribution within 12 months of operation, even on the currently reduced passenger volumes, and its operational leverage should allow margins to improve as passenger volumes recover.

The Concession Agreement is initially for a period of 21 years with renewal rights thereafter. Based on current market conditions and forecasted economic growth, the potential revenues under the Concession Agreement are expected to be in the region of US$300m. Westminster is currently organising logistics, deploying resources and preparing the terminals with initial expenditure covered by existing working capital resources. Westminster is engaging with and recruiting experts in the field and, together with ferry operator CWind, is exploring various options for the procurement and provision of the initial vessels. Services are expected to commence in Q1 2015 once ferry craft arrive in country.

Commenting on the Concession Agreement Peter Fowler, Chief Executive of Westminster Group, said:

"I am delighted to announce this latest long term Managed Services contract award, which has been concluded just three months from the signing of the initial MoU, and which also includes favourable inward investment support for a number of years.

"This contract underpins the excellent reputation Westminster has established, not only from the provision of its services, but also in support of the Government and local community during difficult times. It represents an opportunity considerably larger than our existing airport Managed Services contract and reflects the confidence that the Government has in Westminster's ability to deliver quality services.

"We, together with our partners and agents, will be providing an essential and highly regarded service which will assist the country's economic growth and future development in tourism.  Westminster is rightly considered to be a committed partner in critical infrastructure development projects by governing authorities in Africa.  We have proven this through our resolute support for our clients during the last few months, which has been widely acknowledged, and stands us in very good stead with both existing and potential clients worldwide."

Updating on contract discussions within the Managed Services Division, Peter Fowler, added:

"I have previously reported that our Managed Services division has been in discussions with a number of long term, recurring revenue opportunities in airports around the world, all of which remain live opportunities. We are in continuing dialogue with the authorities regarding the East African project and expanding the scope of work. The major project opportunity in the Americas that we have previously referred to, as well as those in other parts of Africa, continue to progress through their respective procurement processes and I am encouraged by several new and important prospects in other parts of the World, including in Asia, where we have entered into new and exciting discussions on a number of potential projects. As ever with large scale governmental contracts there is no certainty as to timing or final outcome of such discussions but we remain excited about our future growth prospects.

"We will be providing further updates to the market as appropriate."

For further information please contact:

Westminster Group plc.	Tel: [phone]
Sir Malcolm Ross (Non Executive Chairman)
Matt Wood (Non Executive Director)
Peter Fowler (Chief Executive)
Ian Selby (Chief Financial Officer)
S. P. Angel Corporate Finance LLP (NOMAD and Broker)	Tel: [phone]
Stuart Gledhill/Katy Birkin
Winningtons Financial (Financial PR)	Tel: [phone]
Tom Cooper/Paul Vann	0797 122 1972

Notes:

Westminster Group plc is a leader in the supply of managed services and system solutions and products to the security, defence, fire protection and safety markets worldwide.

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 facilities management and running of complete security services and solutions in airports, ports and other such facilities together with the provision of manned services, 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.  For further information please visit www.wsg-corporate.com  

 

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