Trading Update

RNS Number : 3971D

Westminster Group PLC

31 January 2018

 

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

Westminster Group Plc (AIM: WSG), a leading supplier of managed services and technology based security solutions, is pleased to provide a trading update on its business activities based on unaudited management accounts for the 12 months ending 31 December 2017.

The Group expects to report a 23% increase in revenues to £5.4m in 2017, an increase of £1.0m on the £4.4m reported for 2016. The EBITDA loss for the year is expected to be in line with the Board's expectations at around £1.2m, of which £0.7m arose from the discontinued ferry operations in Sierra Leone.

Managed Services Division

In December we announced that legal and commercial negotiations regarding the major long-term project opportunity within the Middle East had been completed apart from a few minor commercial and contractual issues yet to be agreed. We are awaiting notification from the client on the completion of its final internal approval process, which could happen at any time. We believe this final approval process is imminent, but with any potential project of this size and complexity there can never be certainty of timing or outcome.

Our Managed Services Division is the key focus of the Group and we have signed a number of Memorandums of Understanding (MoU) with governments and airport authorities in our target markets, several of which were added in 2017. In addition to the Middle East potential contract discussed above, we expect to see at least one of these MoU's converted into a signed contract in 2018. As previously announced, due to the confidential nature of such projects and commercial sensitivity, we are no longer announcing any individual MoU when signed and we will update the market on material developments as appropriate.

Our aviation security business in West Africa has performed well as the post Ebola recovery continues. There has been passenger growth across all airlines apart from Air France, with some of these passengers being picked up by their code-share airline, KLM. Our embarking passenger numbers in December at c.11,000 represent a record December since the commencement of our contract. For the full year we had c.111,000 embarking passengers, an increase of 14% on the c.97,000 embarking in 2016. Several new airlines have started services towards the end of 2017, and we are expecting Turkish Airlines to commence a new route to Istanbul in Q1 2018.

Unaudited revenues in 2017 for the Managed Services Division amounted to £3.6m, an increase of 28% on the £2.8m achieved in 2016.

We continue to secure contracts to assist airport authorities around the world with their equipment and training needs, and we plan to expand our training team in 2018 to meet the demand for their services.

Technology Division

The Group's Technology Division is expected to report increased revenues in 2017 to £1.8m, an increase of c10% on the £1.6m achieved in 2016. There have been fewer large, higher margin sales in 2017 and as a result the gross profit margin for the Technology Division was down to 19% in 2017, compared with 40% in 2016. As a result of the lower margins, the Division is expected to report a broadly break-even EBITDA result for 2017 compared to an EBITDA profit of £273,000 in 2016.

The Technology Division continues to receive a high level of interest and enquiries from around the world for its technology products and solution offerings and the Board believes a planned expansion of the sales team will produce a marked improvement in this Division's performance going forward.

Ferry Operations

Our Interim Results Announcement in September 2017 noted that the Board had taken the decision to exit the ferry service in Sierra Leone. An agreement was reached with Sea Coach Express at the end of September to operate the Sovereign Ferries service between the airport and Freetown and this service is now fully operational. Sea Coach Express has taken over the Sierra Princess and has added other vessels to expand the Sovereign fleet, offering travellers a greatly enhanced service. We continue to operate the ferry terminals in Sierra Leone in accordance with our 21-year agreement and we are jointly promoting the Sovereign Ferries service with Sea Coach Express. We will continue to receive revenues from passengers travelling to and from our terminals.

We are exploring options for disposal of the Sierra Queen. Sovereign Ferries had assets of £2.6m on its balance sheet at the end of September 2017, including £1.5m for the Sierra Queen, and the Board has taken the decision to write these down to nil at 31 December 2017. The costs associated with the exit from the ferry operations are expected to be treated as exceptional exit costs in the Company's full year results.

Cash and Funding

At 31 December 2017, the Group had a cash balance of £0.4m, with a further £87,500 received earlier this month from the exercise of 875,000 warrants.

At 30 January 2018, the cash balance was still approximately £0.4m however the Company expects to announce further details in respect of a small fundraising later this morning in order to provide additional working capital and to support new contract opportunities.

As mentioned in our December Project Opportunity Update, plans are in place to raise the required funds to support investment in the new Middle East project and other potential new Managed Services contracts, details of which will be announced later in Q1 2018.

Chairman and Board

With an increasing volume of high level and governmental meetings around the world being undertaken in progressing our many Managed Services opportunities, and to help deliver on our strategic goals, Sir Tony Baldry is moving from Non-Executive to Executive Chairman with immediate effect. The Board will be further strengthened in due course with new Non-Executive Directors who will broaden and strengthen the Board's knowledge and expertise. 

Outlook

The anticipated new Managed Services contract award in the Middle East will represent a major step forward towards achieving the Group's strategic objectives, and as mentioned with our Interim Results in September 2017, we expect to be investing in the business in 2018 and beyond to deliver future growth.

For further information, please contact:

Westminster Group Plc	Media enquiries via Walbrook PR
Rt. Hon. Sir Tony Baldry - Chairman
Peter Fowler - Chief Executive Officer
Martin Boden - Chief Financial Officer
S. P. Angel Corporate Finance LLP (NOMAD & Joint Broker)
Stuart Gledhill	020 3470 0470
Lindsay Mair
Caroline Rowe
Beaufort Securities Limited (Joint Broker)
Elliot Hance	020 7382 8300
Walbrook (Investor Relations)
Tom Cooper	020 7933 8780
Paul Vann	0797 122 1972
	[e-mail]

Notes:

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

Westminster's principal activity is the design, supply and on-going 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.

 

END

 

 

TSTURVBRWOAAOAR