REG - Westminster Group - Trading Update

WestminsterAnnouncement

01/11/2022 07:00

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RNS Number : 8116E  Westminster Group PLC  01 November 2022

 

 

01 November 2022

 

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 worldwide, provides a trading update for
the year ending 31 December 2022 and an update on business prospects.

 

2022 Trading Update

 

In our interim results announcement in August 2022, we stated we expected the
current year to be H2 weighted, which remains the case, and that we remained
optimistic we could meet 2022 market expectations, whilst being mindful that
the global situation and growing economic crisis around the world may yet
impact forecasts.

 

The Board's current expectation is that 2022 revenue outturn will be
approximately a third below market expectations, which is expected to deliver
a loss before tax equivalent to approximately half of that reported in 2021.
This is predominantly because of the slippage of the multimillion pound
Technology project mentioned below.

 

We have made important progress this year.  Highlights in the period include:

 

·    Our West African Airport operations have not only recovered to
pre-pandemic levels, but 2022 looks set to be the highest revenue levels ever
achieved since we started operation in 2012. This is most encouraging and
bodes well for the future, particularly with a new terminal due to open in the
next 12 months.

 

·    Active preparation for the opportunities we believe will arise in UK
from the forthcoming Protect Duty legislation, as we outlined in our Interim
Report in August. This has already led to two important new contract wins, one
for an iconic UK building and another for a theatre and exhibition complex in
Northern England. We are already in discussions with and developing similar
opportunities around the country.

 

·    Delivered outstanding security services at Her Majesty the Queen's
funeral having been contracted to be on standby and having rehearsed to
provide specific equipment and services during recent years.

 

We have previously advised that we anticipated the ratification process for
the contract covering 5 airports in the DRC, originally announced in June
2021, would be concluded in Q4 2022 allowing for the project to commence at
last. Whilst this has been a slow process, the Board believes this timing
remains the case and recent events and activity add to our confidence that
progress is being made. Should ratification occur pre the 2022 year end, we
expect revenue will start to be recognised in early 2023.

 

In our interim results announcement, we also stated we expected to secure at
least one more long-term, large-scale managed services contract this year and
we continue to believe that to be the case. Whilst there is never certainty of
timing or outcome of negotiations for such projects, which are complex and can
involve various bodies, we have reached an advanced stage of negotiation with
at least one such project. However, if signed, there would be little, if any,
revenue recognised in the current year.

 

Further, a key part of achieving 2022 market expectations was the timely award
of a multi-million-pound Technology project for the MENA region, which, whilst
we still expect to be awarded the contract this year, we are now running short
on time to deliver and recognise revenues in 2022, and accordingly, depending
on when the order arrives, some of this revenue is now likely to slip into
2023.

 

Future Prospects and Financial Position

 

Despite global economic and political pressures, we continue to have healthy
levels of enquiries, a large bank of opportunities and over the course of the
year have provided goods and services to numerous countries around the world.

 

Westminster Arabia has recently been certified by the Saudi Arabian High
Commission for Industrial Security (HCIS) - this is something we have been
pursuing for some time and an important achievement being a requirement for
government regulated and/or funded projects (such as Giga Projects, critical
infrastructure, transport etc.) and to supply products & services to
government affiliated companies.

 

There has been no change with our other West Africa port project. We continue
to wait for our client to finalise the land allocation issues with the
government but remain ready to start once access is granted.

 

Our guarding business continues to perform to expectations and has been
winning new business whilst our training business is performing ahead of
expectations. However, given the global situation, whilst we expect to
maintain current activity levels in these areas, but we are not expecting
significant growth in 2023.

 

It is likely that the economic crisis in the UK and around the world will
impact business sentiment and spending. We are mindful that this may affect
decisions on some of the larger Technology project opportunities which
underpins the importance of building our recurring revenue streams, in
particular our pursuit of long-term, large-scale managed services projects.

 

Regarding our Ghana port operations, whilst we remain on site and continue to
operate as normal, the relationship with our local partners, Scanport, has
become increasingly strained in recent months. We are looking at potential
mediation to resolve matters, but we may look to terminate the arrangement
early, in 2023, rather than 2024 and receive accelerated receipt in recompense
accordingly. This would allow us to free up resources for the new and larger
managed services projects we expect to have in place by 2023 which will
mitigate any impact on our 2023 expectations.

 

In response to cost inflation, we are taking measures to reduce our energy
consumption and have also commenced a cost cutting programme across the
business. Currency volatility is also something we are monitoring carefully
and where possible provide natural hedging by selling goods in the same
currency we are purchasing them, but this is not always possible and so we are
looking at hedging where appropriate. One positive for our business at present
is that the majority of our international revenues, such as our West African
airport, are in USD and so showing healthy gains.

 

The Company's executive continues to carefully monitor the cash needs of the
business on a regular basis and are of the opinion that, with the
abovementioned cost saving measures and prudent cash management in the near
term, and assuming no further new large-scale projects are signed, there are
sufficient cash resources available to the group to undertake current
operations at least the end of 2023. In anticipation of new large-scale
projects that would require financing, we have held discussions with a number
of funding sources and have various non-dilutive options we can pursue
including potential support from UK Export Finance.

 

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

 Strand Hanson Limited (Financial & Nominated Adviser)
 James Harris                                               020 7409 3494
 Ritchie Balmer

 Richard Johnson

 Arden Partners plc (Broker)                                020 7614 5900

 Ruari McGirr (Corporate)

 Tim Dainton/Simon Johnson (Broking)

 Walbrook (Investor Relations)
 Tom Cooper                                                 020 7933 8780
 Paul Vann
 Nick Rome                                                  Westminster@walbrookpr.com (mailto: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.

 

The Westminster Group Foundation is part of the Group's Corporate Social
Responsibility activities. www.wg-foundation.org
(http://www.wg-foundation.org)

 

The Foundation's goal is to support the communities in which the Group
operates by working with local partners and other established charities to
provide goods or services for the relief of poverty and the advancement of
education and healthcare particularly in the developing world.

 

The Westminster Group Foundation is a Charitable Incorporated Organisation,
CIO, registered with the Charities Commission number 1158653.

 

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