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You mean the Ferry that never carried one fee paying customer,.... in theory great idea,.. in practice a disaster.
Please don't remind us of that... I was having a happy Thursday,.. sun shining,.... work sorted,... and heading out for a beer with my brother,.... now I'm thinking Sierra Queen!
Likewise, the domestic passenger traffic, which is circa 2, 3 x the international travel. The domestic airport that WSG will operate, is the domestic airport that the DRC president uses.
The tax that WSG will collect will be circa $25/pax and will be made up of a part share of an existing tax, and a new tax of circa $12/pax.
The $10M revenue quoted is not reliant upon the passenger figures and the speed of the roll-out.
Air Quarter have just announced an increase in their provision from 1 to 4 flights a week.
PF believes that Air France are looking to increase the frequency of their flights to the DRC.
The British Government are also looking for a British Carrier to commence direct flights to DRC. However, for this to happen the security structures in place need to be improved. The Statutory body responsible for assessing airports make annual inspections. The next inspect in the DRC is November of this year. It is possible that the initial enabling works that WSG will have carried out by then would allow progress to be made on this.
MH confirmed that the operational set-up costs are inclined to be fixed costs and an y increase in pax traffic goes to the bottom line in terms of profit. It was clear from the discussions that the management believe there is the scope to considerably increase the contract value over the next few years.
This is MY take on that discussion, but I would suggest that a natural growth in international traffic, the add-on of freight traffic scanning and picking up a proportion of the domestic traffic, then $20M could be on the cards in 4 or 5 years.
Given enough time, PF may look to do several interviews over the coming weeks.
WSG have a conservative 10p/share value against the DRC contract based upon the existing contract structure.
Hope this helps.
DRC Contract
Previously announced in 2021 as being 20yrs. However, in-country PPP laws allow for an initial contract of 10yrs. We have 10yrs with a potential 5 years extension. Note, WSG will own all kit installed. If the contract is terminated after 10yrs with no extension the DRC must pay for or return all kit. This disruption and cost would suggest that the 5yr extension is most likely to be extended.
Should the contract be terminated early, WSG will receive 5 x annual contract value, so circa $50M min.
Should there be a dispute in the T&C’s, the arbitration body that will oversee any negotiations will be an International third party, outside of any in-house political influence.
The revenue due to WSG will be paid by the individual airline carriers in US$ to WSG. The monies do not come from a DRC source of African banks etc.,
The initial funding will come from cash at hand. The remainder of the funding will come from revenue generated by the security fees, as income starts in July 2024, and most likely debt funding.
PF clearly, would not take a ‘Placing’ off the table but it was made clear that is not his preferred route. PF confirmed that the company already had several debt-based funding offers on the table. Some with attractive T&C’s and others with less attractive.
The company has time in which to engage with the various lenders with a view to getting the best deal for the company. Given they have cash at hand, I got the impression that this process will stretch in to the ‘weeks’ rather than ‘days’ timescale. When decided, it will be announced to the market.
The roll out of the works/training for the 5 airports will be an 18-24month process, but the implementation has already started with staff in country. PF will be back in the DRC within the next few weeks and MH will most likely be in country towards the of May.
The current contract is for embarking international passengers only. The company are using historic date which suggests 400k pax/annum. WSG believe this may be lower than the current pax, however, want to commence operations on the ground before they comment further. For this reason, it will most likely be 3 or 4 months before any Brokers issue any new notes on the company as there forward-looking analysis will be based upon these numbers. They will also have the debt funding structure to hand by then.
The in-country company employing local labour will be 100% owned by WSG. They will be paid by WSG, and when all airports are operational, they estimate 400 employees.
The contract does not include freight scanning and monitoring. The DRC are desperate for this become in-country as this is, at present, sent outside of country for scanning, processing, and monitoring. It is likely that existing contract will be developed to include freight handling, however, PF stated that WSG must, in the short term, concentrate on deliver the international passenger contract.
.... very interesting the Port expansion works....
https://splash247.com/ad-ports-moves-to-develop-congolese-port/
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and more on the airport...
https://constructionreviewonline.com/construction-news/expansion-of-kinshasa-ndjili-airport-in-drc-to-resume-after-3-years-stoppage/
Almost certainly one of the 5.. it's the Kinshasa International Airport.
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Dr Mac...FYI. ..the departure tax is $55/pax.. not $60.
Departure tax
Departure tax
You need to pay a departure tax of 55 US dollars on international flights and 10 US dollars on domestic flights. You pay these fees when you check in for your departure. Get an official receipt and a copy for each fee. Hand the originals on request to immigration and at boarding and keep the copies.
Hi Dr M...
the DRC airport departure tax used to be structured in a different way,... two taxes,... one for the airline and security/processing tc., and one which went to the DRC government....---- it was later combined in to one tax.
I suspect that the tax gets shared three ways,.... little to the DRFD government,.. a little to the WSG company 'in country'.. supplying the labour etc.,... and the balance to WSG.
I doubt that PF will share the b/down,.. ( commercially very sensitive)... but from my research I recall the Government tax wa about $6-8's.
Anyway,.. just putting that out there-- clearly,... there is huge scope for the $10M.... to increase dramatically over the next 10yrs... especially if you add in freight scanning and some domestic routes,.. which attract airport departure tax of $10's/passenger.
NIce2 CU---- as you say read the RNS.
It's NOT £10---it is $10M..... which equates to circa £8.2M/annum.
It's not 15yrs.... it is 10years,... with a possible extension.
So that is £82m over 10yrs at present international passenger numbers. It doesn't include internal domestic travel,... nor freight.
Nevertheless, £8.2M,... at an operating margin of 50% ( recent years 50-60%)= is still circa £4.1M EBITDA--- or EPS of £0.013p with circa 330M shares in issue. Put that on a modest p/e 10years.... and you have circa 13p/share.... just for this contract.
As I said before, the current unknowns are the finance required and means of funding, and the discount that the market will apply for operating in that region.--- PF fas indicate that short term funding will come from cash to hand-- ( it's only a 3-month in lead up to revenue being generated)... and then. we'll see what else is required. Perhaps some further detail on this from the Broker presentations on Wednesday.- the nice thing about the structure of teh deal is that we are paid by the International Air Carriers and we aren't reliant upon the DRC authorities etc for payment.
It may takes just a few days,... or it might take a few months for the sp to start to reflect the value of the contract. That is outside of our control. The very good news for the LTH's here, is that this contract, together with SL ( which has record pax and growing).... are the foundation stones to getting us in to profit year on year.
If, as we are led to believe, good progress has been made on a number of the other long term service contracts, and one or two more of these land,.... then as it says in the RNS,... we really could be looking at a transformation rise in the share prise.
As it is, I suspect there will be a large amount of 'churn' and volatility in the sp as traders come and go; when this happens,... we hope that the sp forms a new base at a higher level,... and steadies itself for the next kick on--- much as we are seeing now.
Anyway, fingers crossed.
.... and several other MSC's, having made steps forward.....--- there are several on the books in terms of RNS's,... perhaps not as lucrative as the DRC, .... but important to us in terms of creating a solid base to cash flow going forward.
Liberia, was a port project that we port screening project that we announce in June 2021, during the covid crisis, and w have precious little from it since- albeit the port operator APM terminals ( who also operate Team) have recently been spending money dredging the port, Freeport of Monrovia, to allow larger container vessels with deeper draft,... and installed some new cranes?
https://www.lse.co.uk/rns/WSG/10-year-managed-services-contract-liberia-62q66g13t0ubpmt.html
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Then there is Central African Republic... CAR-- which, incidentally, shares a border with the DRC. However, they only have one international airport and it is tiny,... and I mean tiny!
https://www.lse.co.uk/rns/WSG/central-african-republic-and-trading-statement-gh7khp9j8seux7u.html
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Plenty more going on behind the scenes I am sure. Will be interesting to see what comes out of the Broker presentation on. Wednesday. Hopefully news will filter out to us,...
Best
....interesting those comments by PF,..... he mentions 'Ports' also...----- WSG had announced potential MSC's, via RNS's... back in 2021,.. so similar time line with DRC...... which includes a 10yr Port contract,.... Liberia.--- I believe this was delayed/deferred due to a land acquisition/dispute issue....
... maybe this has been resolved..
https://www.lse.co.uk/rns/WSG/10-year-managed-services-contract-liberia-62q66g13t0ubpmt.html
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and...
"Central African Republic
and
Trading Statement
Westminster, the specialist security and services group, notes recent press speculation with regards to a potential airport contract in the Central African Republic, and also provides the following trading statement.
Central African Republic (CAR)
In the normal course of business, we do not comment on contracts until they have been signed. However, the Company confirms that it is in discussions relating to a managed services contract, although there is no certainty as to whether these will result in a contract or to the timing thereof.
Further announcements will be made in due course, as required."
https://www.lse.co.uk/rns/WSG/central-african-republic-and-trading-statement-gh7khp9j8seux7u.html
"I am pleased to report we have made significant strides forward with several of the large-scale, long-term managed services airports and ports opportunities, each of which would, when secured, provide multi-million-pound step changes in annual revenues.
In our 2022 Annual Report published in June 2023 we stated we could potentially secure one or maybe two new large-scale manage services contracts in 2023. The outcome and timing of these complex projects are never certain, particularly in a challenging world environment, however, whilst we did not manage to finalise contracts in 2023, we have made important progress and from current activity and discussions underway we do expect secure these and potentially other such contracts in 2024."
https://www.lse.co.uk/rns/WSG/interim-results-xlz7z1q0rg4v4au.html
DRC contract is worth ZERO, will cost the company just over 1 million in loss.
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Interesting.... care to back that up with a calculation?
https://www.wob.com/en-gb/books/tony-levene/investing-for-dummies/9780764570230?cq_src=google_ads&cq_cmp=18059580451&cq_con=&cq_med=pla&cq_plac=&cq_net=x&gad_source=1&gclid=EAIaIQobChMIzcDsgqu6hQMVhJJQBh0ZtQIREAYYASABEgI-pPD_BwE#GOR001269128
This might help.
$10M= £8M
£8M at 50% operating margin = £4M EBITDA
330m shares= circa 0.013p/share
10 p/e= circa 12-13p share
UNKOWN... cash/debt to service contract...UNKOWN,... discount market will apply until first revenues start to be banked and risk attached to region..?
GLR....... historically the operating margin on the MSC's has been circa 50%..... , we have a training lemon t here too,.. so we are really holding their hand to get the security up to. top notch standard to attract more international carriers. I doubt the margins will be less than 50%, given the above.