AGM Trading Update

RNS Number : 7119C

Westminster Group PLC

30 June 2016

 

30 June 2016

Westminster Group Plc:

AGM Trading Update

Westminster Group Plc ('Westminster', the 'Group' or the 'Company'), 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, today updates on its activities and trading to date for the current financial year ahead of its Annual General Meeting to be held at 11am today.

Trading

As previously reported in the Company's Annual Report, the Group has experienced an encouraging start to 2016 with the end of the Ebola Crisis in West Africa, an ongoing recovery in revenues and increasing interest in Westminster's long term airport security operations.

Trading in the first six months of 2016 shows a continuing improvement in performance in both divisions. The Managed Services Division has also recorded a record financial performance in the first half of the year with further improvement expected in H2 as passenger numbers continue to recover to pre Ebola levels (currently c85%).

This improving performance in both divisions, combined with the lower cost base of the Group, has allowed the Group to reach close to EBITDA break even for the first half of 2016.  This compares to a loss on a similar basis of approximately £0.9m for the first half of 2015, although this clearly reflected the worst effects of the Ebola crisis.

The Group's cash position has been strengthened by the fundraising announced on 3 June 2016 and cash collection levels remain healthy.

Managed Services Division

The Managed Services Division has continued to build its presence and considerable potential around the world and several new airport opportunities have been identified and are being pursued, in addition to the numerous opportunities already in progress.

In progressing these various opportunities, the Division currently has seven Memorandum of Understanding (MoU) signed with various governments and airport authorities in different regions of the world, all still active, three of which have been signed in 2016. Whilst the signing of an MoU is no guarantee of a final contract it is a significant step in the process.

In May 2016, the Division received a formal Letter of Intent relating to one of the signed MoU's for a long term (up to 25 years) airport security contract at a significant international airport in the Middle East. Under the draft terms of the contract, now under negotiation, the project would generate revenues in excess of £30m per annum based on the current PAX throughput and the currently anticipated fee per passenger. The Company is working closely in conjunction with the UK Government on this and other incremental opportunities identified in the country concerned and expects to make a further announcement regarding progress of this opportunity before the end of July 2016.

Technology Division

The Technology Division has made a positive contribution during the first half of 2016 with higher margins and a lower cost base. The Division continues to secure and deliver a wide range of technologies and solutions to clients all over the world. An extensive new website was launched in June which is expected to further improve enquiry rates.  In support of this belief, order intake in June was the highest monthly level since July 2013.   

In February 2016, the Division announced the signing of an MoU relating to a proposed border security project which involves the provision of equipment, training and ongoing maintenance of security screening checkpoints for the duration of the contract, initially 20 years, at an import border crossing within the Middle East. The Company has successfully carried out trials and demonstrations in relation to this project in May and is now discussing funding and deployment options with the authorities.

Ferry Update

Following prolonged delays, the Sierra Queen is now on the slip in the local shipyard and repairs are underway. The Company will update further once repairs are completed.  We have continued to invest in set up of the appropriate infrastructure in the first six months of the year.

The 2^nd vessel, the Sierra Princess, a 70 seater fast ferry, has now arrived in country and is going through formal registration and should be undergoing sea trials in July. Once sea trials are completed the Sierra Princess will be put into service alongside the Sierra Queen.

The Company has engaged an experienced marine and risk management specialist to undertake a commercial and operational review of the project. In view of the Company's growing long term aviation prospect opportunities, and the momentum with various negotiations underway, part of their remit will include the management of the ferry service on a long term basis.

Joint Ventures

As part of its strategy for dealing with the growing prospect list of major long term airport security projects in various parts of the world, the Company is looking to enter into strategic joint venture (J/V) arrangements in certain countries and for certain projects whereby the J/V partner will bring added value through financing support for the project, providing a regional presence, language and cultural enhancements. One such J/V arrangement is already at an advanced stage of discussion and further announcements in this respect will be made in due course. 

Board changes

The Company has previously announced that it is undertaking a wide ranging strategic review of its business to ensure it is well positioned to maximise opportunities going forward and to take the business to the next level. As part of that review, the Company is making a number of changes to its management and board structure including a streamlined Plc Board responsible for the strategic direction of the business, the creation of an Operational Board with responsibility for the running of the business and the creation of an International Advisory Board to advise on various international issues including governmental and client liaison, cultural, ethnic and religious sensitivities.

To those ends a number of changes are taking place:

1.   The Company has previously announced the retirement of Sir Michael Pakenham from the Plc Board who will remain as an advisor to the Company.

2.   The Company is today pleased to announce that, immediately following the AGM, Sir Tony Baldry will join the Plc Board as Deputy Chairman. Sir Tony was a Member of Parliament for 32 years stepping down in 2015. He held various ministerial posts during that time including Minister of State in the Ministry of Agriculture, Fisheries and Food. Sir Tony also served as Parliamentary Under Secretary of State for the Department of the Environment, Department of Energy and the Foreign and Commonwealth Office with various responsibilities including South Asia, Africa, North America and the West Indies. Sir Tony is a practising barrister.  Sir Tony has been working with the Company for several months based on a modest retainer and has been instrumental in assisting the Company progress several of the airport MoU opportunities.

3.   Roger Worrall who is retiring by rotation at the AGM will no longer be seeking re-election to the Plc Board in order to concentrate on his role as a Director of the Operations Board. Roger is a founder member of the Company pre-flotation and his dedication, experience and hard work is invaluable to the Company's operations.

4.   The Company is currently in discussions with other experienced and qualified individuals and will be reporting on further appointments and changes to its board structures and composition in the near future.

Outlook

With the end of the Ebola crisis in West Africa, a recovery of revenues and the improved performance of both Divisions we have delivered a significantly improved financial performance for the first six months of 2016. This, together with the long awaited commencement of the ferry services now in sight, the business changes and enhancements we are undertaking to strengthen the business, and the progress we are making in our core long term managed services business, not least the recently signed Letter of Intent for a long term major airport contract, means we are both positive and excited by our growth prospects in the months and years ahead. 

Whilst there is never any certainty as to timing or final outcome of the various opportunities we are pursuing we believe the size, number and geographical spread of the various opportunities we are developing provide significant potential for growth.

For further information please contact:

Westminster Group plc.	Tel: [phone]
Peter Fowler (Chief Executive)
Ian Selby (Chief Financial Officer)
S. P. Angel Corporate Finance LLP (NOMAD & Broker)	Tel: [phone]
Stuart Gledhill
Walbrook PR (Financial PR)	Tel: [phone]
Tom Cooper/Paul Vann	0797 122 1972
	[e-mail]

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 ferry services, 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.  For further information please visit www.wsg-corporate.com

 

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