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Westminster Group lands 10-year franchise agreement in Mexico

Published: 09:30 30 Sep 2014 BST

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Westminster Group (LON:WSG) is making solid progress is building up its Managed Services arm to complement its Technology Division.

The security specialist is seeking to grow the Managed Services business, focusing on airports across the world, as a way of broadening its geographic base and providing a more regular revenue stream, to help smooth out the “lumpy” nature of revenues from the Technology division.

The company said the Managed Services division’s pipeline is growing and continues to show strong operational and financial dynamics. Unfortunately, the Ebola virus outbreak halted the division’s impressive momentum in West Africa, but even so, year-to-date passenger volumes at the airport where the company operates were still up 1.6% year-on-year, as at the end of August.

Passenger volumes are currently running at around 40% of those in the same period in 2013, and are affecting revenues in the short term, but the medium term prospects for the business remain good.

The company reported its overall Managed Services prospect pipeline has grown to circa 35mln pax, or embarking passengers at airports, from around 30mln pax at the end of May, of which 3.8mln pax relate to airports in East and Southern Africa and the Americas, where Westminster is in regular and advanced high level discussions.

Group revenues from ongoing operations in the first half of the year were £2.24mln, versus £4.68mln the year before.

Managed Services revenues declined slightly to £1.50mln, compared to £1.55mln in the same period the year before, with exchange rate movements proving unhelpful. Loss before tax was £939,000, compared to a loss of £725,000 the previous year.

“The pursuit of further large scale managed services contracts is our overriding priority and we have the international reach and reputation to exploit such project opportunities,” said Peter Fowler, chief executive officer of Westminster Group.

“Our pipeline is growing and opportunities continue to progress and, whilst dealing with governmental processes can be time consuming and frustrating at times, I am confident the opportunities these potential contacts offer, being long term with excellent financial dynamics, are more than worth the effort,” he added.

In a separate announcement, the company announced a new 10 year franchise agreement for Mexico worth £1.9mln in franchise fees, with a minimum requirement of £1.5mln of incremental revenue per annum from year two.

The company also announced it had received a letter of intent on two further projects: one to protect an iconic bridge in America and another for an advanced analytics solution for 352 sites in Saudi Arabia.

The company also gave an update of its recently announced 25 year potential joint venture ferry project, which the company claims could be worth in the region of $300m, stating it expects to commence operations in the first quarter of 2015.

Shares in Westminster Group were up 4.7% at 39.8p in early deals.

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