Westminster Group PLC Trading Update (8116E)

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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) 
 Ruari McGirr (Corporate) 
 Tim Dainton/Simon Johnson (Broking)             020 7614 5900 
 
Walbrook (Investor Relations) 
Tom Cooper                                     020 7933 8780 
Paul Vann 
Nick Rome                                      [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 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

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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November 01, 2022 03:00 ET (07:00 GMT)