TIDMWSG
RNS Number : 5060S
Westminster Group PLC
26 June 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')
AGM Statement
Westminster Group Plc (AIM: WSG), a leading supplier of managed
services and technology-based security solutions worldwide, will
hold its Annual General Meeting today at 11am at the offices of
Moore Stephens LLP, 150 Aldersgate Street, London, EC1A 4AB. At the
meeting, Westminster's Chief Executive Peter Fowler will provide
shareholders with the following update:
"In our 2017 Annual Report I was pleased to report that the
Group is now in a better position than it has been for some time in
terms of management, structure, revenues and prospects. Both our
Managed Services and Technology divisions are performing well.
Trading for the first five months of this financial year has been
broadly in line with the Board's expectations and excluding the
impact of any new major contracts, we expect to be EBITDA positive
this year.
Technology Division
"Our Technology Division has had a strong start to the year
securing a number of contracts for products and services around the
world including the $4.5m USD contract announced in March 2018.
That project is underway, and we expect it to be largely delivered
this financial year.
Managed Services Division
"Our Managed Services Division experienced a strong start to the
year with January passenger numbers being the second highest on
record and despite a minor downturn in passenger numbers during
March and April, due to prolonged elections in Sierra Leone, we
expect to see continued growth over the full year with new
carriers, such as Turkish Airlines, having now commenced services.
Cargo screening services revenues are ahead of budget but remain
minor as we await the airport authority's development of an
effective cargo hub. This, together with the country's export
potential, should generate additional cargo traffic. New airlines
are also likely to create additional demand.
"So far in 2018 we have secured important new contracts to
assist airport authorities with their equipment and training needs
at a number of international airports in our target markets and we
are expanding our training team to meet the demand for our services
in this area.
"We continue to process our large scale managed services
prospects around the world although, due in part to the
confidential nature of such projects and commercial sensitivity, we
are no longer announcing or commenting on any individual
Memorandums of Understanding or Letters of Intent as this can lead
to speculation particularly as negotiations can ebb and flow over
prolonged periods and take some time to reach a final outcome. We
will of course update the market on material developments as
appropriate and in accordance with our regulatory responsibilities.
We are however, as previously announced, working towards signing at
least one other long term Managed Services contract during 2018,
although with projects of this scale and complexity there can never
be certainty as to outcome or timing.
Iran Projects
"A defining achievement for the Company so far in 2018 was the
formal signing on 7 May of a long term (15 year) contract for
equipment and services at one of the 60+ airports in Iran. The
contract, with initial annual revenues in excess of EUR24 million
Euros, was the culmination of over two years complex and intensive
negotiations and planning.
"During the latter part of 2015, with the Joint Comprehensive
Plan of Action (JCPOA) implementation date of 16 January 2016
approaching, we identified Iran as potentially one of the world's
most exciting emerging markets, a view shared by leading
analysists. Iran's economy is the second-largest in the Middle East
and North Africa region after Saudi Arabia. It is larger than
Australia's and approaching those of Turkey and Spain. It has a
population of close to 80 million people, with a median age of 28,
with strong aspirations to travel and engage with the rest of the
world. Iran has a strong economy, an educated populace and a
diaspora of over 4 million.
"The country is recognised as a significant potential global
aviation market after almost four decades of isolation and with
over 60 airports in need of expansion and upgrading is potentially
one of the world's fastest growing aviation opportunities. It is
also strategically and geographically positioned to potentially be
a major cargo and passenger transport hub between East and
West.
"We signed a Memorandum of Understanding with the airport
authorities in March 2016 and received a formal Letter of Intent in
May 2016. Over the past two years we have been involved in wide
ranging and complex negotiations with commercial and political
bodies with meetings in various jurisdictions. To be in a position
to undertake this transformational project we have had to put in
place a complex supply chain and invest in our corporate
infrastructure, including the establishment of operations in
Germany. We also dealt with a constantly changing scope of works as
the client prioritised its requirements. In addition, given the
sensitivities around operating in Iran, we had to overcome numerous
challenges including banking, financing and strict compliance with
international sanctions involving detailed due diligence and
considerable professional advice from across Europe and the United
States (US). Throughout the process we have received and continue
to receive, valuable support from the UK government at the highest
levels.
"On 22 December 2017 we announced we had finalised legal and
commercial negotiations apart from a few minor commercial and
contractual issues. On 28 March 2018 we announced that the
outstanding commercial and contractual issues has been agreed and
that we were awaiting the client's internal approval process to
complete. On 7 May 2018 the client finalised its approval process
and the contract was signed. The contract is structured so that the
effective date commences on the exchange of formal board letters
between us and the client, which was expected to take place within
8 weeks of contract signing. The purpose of the exchange of letters
is to allow both parties time to ensure everything is in place
before commencing operations whilst giving both parties comfort
that the contract was finalised, and terms could not be
changed.
"Unfortunately, on 8 May 2018 President Trump made an
announcement that the US was unilaterally withdrawing from the
JCPOA agreement and re-imposing sanctions. Whilst none of
Westminster's proposed equipment or services is subject to any
existing or proposed sanctions, the US action has implications for
finance and banking and has created uncertainty in the
international business community.
"The other signatories to the JCPOA agreement, being China,
Russia, Germany, France and the UK, have all stated their continued
support for the agreement, as have the European Union (EU), the
United Nations, the International Atomic Energy Agency and most
other leading countries around the world. Germany, France and the
United Kingdom have jointly vowed to uphold the JCPOA agreement and
on 4 June 2018 wrote to the US Treasury Secretary Steven Mnuchin
and Secretary of State Mike Pompeo, regarding exemptions for EU
businesses and certain banking issues. Also, as widely reported,
the EU is considering putting measures in place to protect and
support European companies against US extraterritorial actions,
which is expected to be in place before 6 August 2018.
"Given the initial uncertainty, and following discussions with
our customer and commercial partners, the Board made the decision
to place the project on hold whilst it seeks clarification on the
impact of the US withdrawal from the JCPOA and the implications for
the Company's banking, finance, insurance, its supply chain and the
possible impact on the Company's other business and therefore to
date there has been no formal exchange of board letters to make the
contract effective. We have also placed on hold a second smaller
contract in Iran for EUR2.65 million Euros signed at the same time
for the same reasons. This decision, which we hope will be
temporary, was prudent and sensible as it would have been
irresponsible for the Company to commence these projects until such
time as we are certain that issues emanating from the US withdrawal
would not prevent a successful implementation.
"Whilst some multi-national corporations with large exposure to
and trade links with the US have announced a withdrawal from
Iranian activities we are encouraged that others such as Renault
have publicly stated they are committed to continuing business with
Iran. Whilst our client is keen to commence the project as soon as
practically possible they are cognisant of and understand our
position and are actively working with us to explore various
solutions to the challenges posed by the US action. We have engaged
with our US lawyers based in Washington who have confirmed that our
activities are not covered by direct or indirect sanctions provided
that our equipment and services have less than 10% US content. For
additional comfort we are exploring the possibility of getting a
letter of assurance from the US Treasury which would be helpful. We
are in discussions with all relevant parties including our bankers,
financial bodies, advisors and supply chain to find a way forward.
Our German subsidiary has been critical in this respect and we are
making progress, although not all issues have yet been resolved and
we believe it is likely we will have to make changes to our banking
and some equipment suppliers. Securing this major contract was a
momentous achievement and we remain hopeful that the solutions we
are seeking, together with the measures being put in place by the
EU, will enable this and other potential projects in Iran to
proceed in due course.
Ferry Operations
"As previously announced we exited the ferry operations in
September 2017 in a manner that would not adversely affect airport
passenger transfer to and from the mainland, which is important for
our airport operations - this was one of the initial drivers for
our involvement in the ferry service. We consequently entered into
a formal agreement to transfer the operation to Sea Coach Express,
the largest ferry operator in Sierra Leone, which has now been
completed. We will continue to operate and manage the ferry
terminals in accordance with our 21-year agreement and will receive
a share of revenues on ticket sales made through our own
operations, together with a payment for all passengers travelling
to and from our terminals although we do not expect these revenues
to be material in the near term.
"We currently still own the Sierra Queen, which was written down
to nil value at December 2017 and is subject to only minor ongoing
security and maintenance costs. We are exploring options for
disposal including a sale at the earliest opportunity.
Board and Senior Management
"Our business is set to benefit from unprecedented growth
opportunities, particularly with our airport security operations,
and it is essential we have the right strategies, people, processes
and systems in place to successfully deliver such growth. In recent
months we have made some important new appointments to the Board
and senior management and additional appointments to further
broaden our range of experience and expertise are planned in the
coming months.
Outlook
"Our vision is to build a global business with strong brand
recognition delivering niche security solutions and long term
managed services to high growth and emerging markets around the
world.
"Whilst operating in emerging markets does carry a higher risk
of delays and disruption, is time consuming and involves a greater
degree of frustration and bureaucracy, with perseverance and
diligence the potential rewards are substantial.
"Over the next few months and years we have an opportunity to
achieve unprecedented growth from the prospects we are pursuing
around the world, and I believe we are closer now than we have ever
been in delivering on our vision. The Board and I remain committed
to delivering on this potential and we thank our shareholders and
other stakeholders for their continued support."
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 & Broker)
Stuart Gledhill 020 3470 0470
Lindsay Mair
Caroline Rowe
Walbrook (Investor Relations)
Tom Cooper 020 7933 8780
Paul Vann 0797 122 1972
tom.cooper@walbrookpr.com
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.
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END
AGMFAMITMBJTBAP
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