Westminster Group PLC (LON:WSG) said the recovery in West Africa airport passenger numbers is continuing as it confirmed a return to underlying profitability in 2016.
Full-year results from the managed services and security solutions provider showed revenues in 2017 rose 31% to £4.4mln from £3.4mln the year before.
Adjusted underlying earnings (EBITDA) were positive at £25,000 versus a loss of £360,000 the previous year, albeit after £1.08mln (2015: £1.04mln) of exceptional non-cash credits, including £585,000 of pre-launch costs for the group’s ferry service.
Gross margin much improved thanks to increased higher margin revenue contribution
For the group as a whole, gross margin surged to 71% from 58%, due to both the increased revenue contribution from the higher margin Managed Services division and also from improving performance in the Technology Division.
Substantial progress has been achieved towards finalising contract negotiations on the long term Middle East airport project opportunity with potential annual initial revenues of circa £35mln.
The group’s airport security operations in West Africa are experiencing a strong recovery from the Ebola crisis that devastated the region and which finally came to an end in March 2016.
Airline traffic has still not fully recovered to pre-Ebola levels, but there has been steady growth with flight schedules increasing and new airlines such as KLM commencing services.
Sovereign Ferries up and running and gaining market share
Sovereign Ferries commenced its initial operations in December 2016 and major capital expenditure on the service is now largely over, Westminster said.
The current addressable ferry market has been estimated at around £4mln a year and Westminster has already secured a 3% market share. At 14%, the operations should start making a positive contribution to the bottom line and Westminster is confident it can grow its market share well beyond this.
The Technology Division delivered a wide range of sales and solutions around the world. It provides the technological resources and platform to expand the group’s operations around the world but it is the Managed Services Division that is increasingly Westminster’s core focus, particularly within the aviation security sector.
In 2016 Westminster’s embarking passenger numbers grew by 52% to 97k (2015: 64k) while in the first quarter there was a further year-on-year increase of 27% in embarking passengers.
The Technology Division continues to build its recurring revenue base of maintenance and service contracts both in the UK and overseas and now has recurring revenue maintenance contracts with governmental and corporate clients valued at over £180,000 per annum.
Chasing big contracts, but they will take time to land
"Our business is now in a better position than it has been for some time as the challenges and trials of the last few years are now largely behind us. Our market proposition, particularly our managed services business, has never been more relevant against a backdrop of increasing threats to air travel and a more unstable world and we are well positioned though our extensive network and governmental relationships to transform our business,” said chief executive, Peter Fowler.
“Over the next few months and years we have an opportunity to achieve unprecedented growth from the prospects we are pursuing, such as the Middle East airport opportunity, any one of which could be transformational for the group,” he added.
Meanwhile, chief financial officer (CFO) Ian Selby will be stepping down from the board at the annual general meeting (AGM) to concentrate on his other business ventures. He will be replaced at the AGM by Martin Boden, the former CFO of Genus PLC, who has experience with high growth businesses and international markets both with AIM and FTSE 250 listed companies.