Babcock International Group PLC
24 July 2001
Date: Tuesday 24th July 2001
Contact: Gordon Campbell
Chairman
Babcock International Group PLC
Telephone: 01494 727 296
Ginny Pulbrook
Citigate Dewe Rogerson
Telephone: 020 7282 2945
Babcock International Group PLC
Annual General Meeting
Chairman's Statement
'A year ago my predecessor announced a radical strategy for the Babcock Group.
It entailed three elements: firstly, the return of cash to shareholders of
some £30m; secondly, the concentration and focus on our support services
businesses; and finally, the sale of our materials handling business and the
Railcare business. We have made a very positive start in delivering this
strategy, but there is still a considerable way to go.'
'During the year the cash return to shareholders was effected and was
equivalent to 18p per old share. The focus on support services was
considerably enhanced by the acquisition, in March, of the business called
Hunting Defence Services. This business provides training, maintenance and
facilities management services to the Armed Forces. As such, it complements
perfectly our position in supplying services to the Ministry of Defence
through your Rosyth facility. It also took your company more firmly into the
support services and facilities management arena from which we hope to develop
into the commercial sector as well. In addition, we made substantial progress
in securing the contract to manage the Royal Naval Submarine Base on the
Clyde, known as Faslane and Coulport, and signed a Memorandum of Understanding
with the Ministry of Defence. We are currently the sole bidder for this
contract, which we hope to finalise later in the year. At that point we will
be one of the largest suppliers of support services to the MoD.'
'In terms of exiting the materials handling and engineering businesses, we
succeeded in selling the loss-making Railcare operation shortly after the
year-end. The sale of BMH as a single entity was always going to be difficult
and, as trading conditions deteriorated, became impossible. We are, however,
still determined to sell the BMH businesses but this will have to be in a
series of separate sales. We are currently in negotiation for the sale of two
of the BMH businesses. In terms of current trading, demand remains poor for
the materials handling businesses. This deterioration started at the end of
2000 and there are no signs of recovery.'
'In BES the order book has increased substantially, with the allocation of
five type 23 frigate refits and the third aircraft carrier refit. This will
provide a secure workload at Rosyth for the next 3-4 years. There will,
however, be some drop in activity as a consequence of the completion of the
submarine contracts. The business acquired from Hunting is meeting, or
slightly exceeding, our expectations and the order book has increased since
the time of acquisition. We have recently submitted two major tenders for
further MoD contracts.'
'My colleagues and I are determined to carry through the re-positioning of
Babcock as a dedicated support services business. We hope to make considerable
further progress in the next twelve months, and I trust that your investment
in Babcock will be materially enhanced by a re-rating of the shares as we move
into the higher growth sectors of the economy.'
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