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Westminster Group PLC: THE INVESTMENT CASE
INVESTMENT OVERVIEW

Westminster close to clinching major deal in Middle East after bumper 2017

Westminster's pipeline of opportunities is strong in the Middle East
Westminster Group
INVESTMENT OVERVIEW: WSG The Big Picture
Completion of the Middle East contract is expected anytime soon

Westminster Group PLC (LON:WSG) is close to signing off a major security project in the Middle East, which it said will represent a “major step” towards achieving its strategic objectives.

The remaining contractual and commercial issues for the project have been agreed with completion of the deal expected anytime soon.  

The potentially transformational Middle East managed services contract first announced last September is expected to be worth about €24m per year in the initial phase of the project.

“The project remains a high priority for the client and we still believe this final approval process is imminent, but with any project of this size and complexity there can never be certainty of timing or outcome as we are dependent on the client's timescales,” Westminster said in an update in late March.

The AIM-listed security group raised £750,000 to support the contract through a share placing in January and plans to raise further funds once the deal is signed.

Details of the deal are likely to be announced in the second quarter.  

New $4.5mln contract award

Separately, Westminster announced in March that its technology division picked up a US$4.5mln order in the Middle East with an existing client to screen vehicles as they enter a high-security facility. 

The company said in a statement in April that it has started work on the project after receiving the advanced payment on the contract. Most of the contract to be delivered during the current financial year.

Chief executive Peter Fowler said the contract was secured after a "prolonged period" of negotiations"

"This contract is one of several large-scale projects we are negotiating in the region," he said. 

Revenues jump in 2017

In a trading update in January, the company said it expects revenues to increase 23% to £5.3mln in 2017, driven by 28% growth in the managed services division.

Westminster saw an improvement in its aviation security business in West Africa as the nation recovered from the Ebola outbreak.

The number of embarking passengers rose by 14% to 111,000, with a record month in December. Turkish Airlines started a new route into Istanbul in the first quarter.

Technology revenue rose 10% to £1.8mln, though the sales were lower margin than previously and this division will break even compared to an underlying profit [EBITDA] of £273,000.

Westminster also took a £700,000 charge for the discontinued Sierra Leone ferry service, which it has also decided to write-off completely.

However, the EBITDA loss will be in line with the board's expectations at around £1.2mln, of which £0.7mln arose from the discontinued ferry operations in Sierra Leone.

Meanwhile, Sir Tony Baldry moved from non-executive to executive chairman in January to help the company deliver on its strategic goals. 

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