27th Nov 2007 07:01
ArmorGroup International plc27 November 2007 27 November 2007 ArmorGroup International plc Trading update ArmorGroup International plc ("ArmorGroup"), the leading international providerof protective security services, today reports that operating profits for theyear to 31 December 2007 will be lower than the $10.6 million reported for thesame period last year. The Group also reports that David Seaton will bestanding down as Chief Executive Officer with immediate effect. As reported at the interim results in September the Group's full year outcomewas heavily weighted towards the second half of the year and was dependent on anumber of major contracts mobilising in the timeframe indicated by clients.However, the award and mobilisation of a number of major contracts in Iraq hasbeen severely affected by the Blackwater incident in Baghdad on 16 September.The Group has also been impacted in Iraq by a major commercial contract whichhas not built up as significantly or as quickly as recently projected by theclient. As a result the Group has already started to reorganise and reduce itscost base relating to Iraq. The Group expects these conditions to continue inIraq for the near future but strongly believes that its exemplary operationaland ethical reputation will prove to be a competitive advantage in the mediumterm. The Group has also faced continuing issues with the onerous administrative andhuman resource requirements for the US Embassy contract in Afghanistan, whichhave had a significant impact on the profitability of its operations in thecountry. The Group has recently restructured the management team involved inrunning the contract and believes this strategic project will become profitablein the early part of 2008. The Group has been seriously affected by the continuing weakness of the US$, theGroup's primary operating currency, which has had an impact of $0.5 million inthe second half alone and follows a $0.4 million impact in the first half. TheGroup continues to review how best to reduce this exposure going forward. As the first step in the reorganisation of the business, David Seaton, theGroup's Chief Executive Officer since June 2006, is stepping down with immediateaffect. The Board intends to appoint an interim Chief Executive Officer withina short time frame with the intention of securing a permanent replacement assoon as possible. In the meantime the Group's senior executive Director willbe Christopher Beese who joined the Group in 1988 and has been on the Group'sBoard as Chief Administrative Officer since 2003. The Group has been in extensive discussions for some months in relation to astrategic acquisition. Failing to complete this acquisition would result in theGroup having to write off approximately $2 million of professional fees incurredon due diligence and contract negotiations in the current financial year. Sir Malcolm Rifkind, ArmorGroup's Chairman, commented: "It has been a deeply disappointing and frustrating period for the Group with anumber of major projects being undermined by significant delays and unexpectedcontractual issues. The Group continues to be very strong operationally andreputationally and remains profitable and cash generative. "The Board believes the Group's competitive advantages will continue to supportits revenue growth and that the reorganisation and reduction of the cost basereported today will have a positive effect on its operating margins in the firsthalf of 2008." For further enquiries please contact: ArmorGroup International plc Christopher BeeseChief Administrative OfficerTel: +44 (0) 20 7808 5800 Patrick Toyne SewellDirector of CommunicationsTel: +44 (0) 20 7808 5848Mob: +44 (0) 7767 498 195 / 7920 530 521Email: [email protected] Notes to Editors ArmorGroup International plc For over 25 years ArmorGroup has been recognised as a leading provider ofdefensive, protective security services to national governments, multinationalcorporations and international peace and security agencies operating in hostileenvironments. ArmorGroup provides protective security services, risk managementconsultancy, security training and mine action services. It has 9,000 highlytrained and experienced employees and operations in 38 countries. ArmorGroupInternational plc is headquartered in London and listed on the London StockExchange. It complies with the US Foreign and Corrupt Practices Act, 1997 andthe UK's Anti-Terrorism, Crime and Security Act, 2001 and has also beencertified to ISO 9001:2000 and to ISO/IEC 27001:2005. For more informationplease visit www.armorgroup.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
ARG.L