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ArmorGroup 87.25p +0.25p Questor says Buy Print
EDITED BY JAMES QUINN - March 22, 2007 - The Daily Telegraph

BUYING shares in firms that provide private security and ransom-negotiating services in the world's trouble spots is not your every day kind of investment.

Indeed, there are not that many such companies to choose from. And in the UK, only ArmorGroup offers investors exposure - if that is what they want - to some of the darker goings-on in places like Iraq or Nigeria.

The company's profit numbers published this week, which showed revenues up 17pc to $273.5m ( pounds 129.5m), underline that Armor is winning a larger slice of the protective security services market.
Research company AMR International estimates that the private security business grew 8pc last year to $2.6bn, with the majority of that growth coming from outside Iraq.

The Iraq conflict has been good business for security firms.

But although Armor's revenues from Iraq rose 10pc, this was far outstripped by growth of 107pc in Afghanistan, Africa and South America. As a consequence, last year 49pc of Armor's revenues came from Iraq, down from 59pc in 2005.

Group pre-tax profits fell from $12.1m to $9.6m largely because of the under-utilisation of Armor's Iraq training facility. The security business is changing in Iraq, partly because funding for reconstruction work is slowly being reduced and the expansion of what Armor calls Iraq's "move towards security autonomy''. The bulk of Armor's Iraq work is now the protection of convoys.

Armor thinks that the private security business is coming of age. The company wants to see strong regulatory standards and is targeting a blue-chip client base.

Investors like what they hear and have driven up the share price 76pc in the past six months. With the shares on a forward multiple of 10 times earnings, and yielding 3pc, they still look good value despite the recent rally.
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