Things are starting to look up for Westminster Group PLC (LON:WSG), the supplier of managed services and security solutions.
The company has suffered more than its fair share of bad luck that management must have been considering changing the company emblem to a black cat or an upside down horse shoe.
READ: Westminster Group making “significant progress” on Middle East airport project
Now, it has come through the Ebola crisis in Sierra Leone, which took a toll on its West Africa airport operations, and it has overcome teething problems with its ferry service, and is free to focus on “unprecedented” growth opportunities.
Back to profitability in 2016
Full-year results for 2016 were delayed until early June but were worth waiting for, with the company reporting the recovery in West Africa airport passenger numbers has continued as it confirmed a return to underlying profitability in 2016.
The managed services and security solutions provider clocked up revenues in 2016 of £4.4mln, up 3.1% from £3.4mln the year before.
READ: Westminster Group pursuing "unprecedented" growth opportunities
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.
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.
2017 interims weighed down by ferry service
In the first half of 2017, group turnover advanced £900,000 to £2.9mln, of which £1mln came from the technology division.
Unfortunately, the group posted an underlying half-year loss of £600,000, primarily as a result of the ferry contract it has in Sierra Leone, which failed to meet expectations.
It has now reached an agreement with Sea Coach Express that will be “commercially more beneficial to the group”.
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, so despite an indifferent start for Sovereign Ferries, it is worth persevering with.
At the period-end, Westminster was sitting on cash of around £800,000, which had fallen to £400,000 at the start of this month.
Focus is now on Managed Services
The Technology Division delivers 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.
"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 through 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.
Chasing big contracts but they take time to land
The end of June saw the shares lifted by news that the group had moved closer to finalising the long-term airport contract in the Middle East that Fowler alluded to.
In its interim results statement in September, it said it had made “significant progress” on a long-term project in the Middle East and promised a further update “shortly”.
At a reported £35mln a year, the airport deal would be transformational.
The firm said it expects to seek funding in the fourth quarter to support the anticipated Middle East contract.