ArmorGroup wins £96m deal to guard US embassy in Kabul

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ArmorGroup has become the largest British company in Afghanistan after signing a five-year $189m (£96m) contract to guard the US embassy in Kabul.

The deal is Armor's biggest contract to date and is in line with the company's strategy to diversify away from Iraq, which currently accounts for around half of its revenues.

Towards the end of last year, Armor lost a contract to provide training for 1,000 bodyguards for the judiciary in Iraq which led to full-year profits falling 21 per cent, despite the underlying business growing strongly as tensions in the Middle East continue.

The new contract, which was previously operated by private rival Global Risk Management, will roll out over the next three months and will see the number of Armor personnel working in Afghanistan increase from 600 to around 1,000.

Armor has recruited former Gurkha soldiers and local Afghan guards to protect staff and facilities within the Embassy compound. It will also supply dogs, trained to detect explosives, to patrol the perimeters of the compound. It has also taken on catering and laundry contracts for the Embassy and other facilities in Kabul. Dave Seaton, the chief executive, said he expects to extend the company's leading position in Afghanistan as the market grows.

Richard Rae, an analyst at ABN Amro, said the contract win "clearly demonstrates Armor's credentials in the high-profile embassy market, and it places them in a near-dominant position in Afghanistan".

"Armor now has committed revenues for 2007 of around $210m, which is an encouraging position at this early stage, but ... further new contract wins are still required," he added.

Shares in the company gained 2 per cent yesterday, up 2p to 97p, giving the company a market value of £52m.

Armor has been operating in Afghanistan since 2002, supporting commercial, governmental and NGO clients. It also operates a $30m-a-year contract to provide security services to UK government personnel and assets in the country.