AGM Statement
Babcock International Group PLC
26 July 2002
Date: 26 July 2002
Contact: Gordon Campbell, Chairman
Babcock International Group PLC
Telephone: 020 7291 5001
Rupert Steveney
Citigate Dewe Rogerson
Telephone: 020 7282 2843
Babcock International Group PLC
Chairman's Statement to Annual General Meeting
26 July 2002
'Twelve months ago I announced that my colleagues and I were determined to carry
through the re-positioning of Babcock as a dedicated support services business
and that we hoped to make considerable progress in the coming twelve months. I
am pleased to report that we have, indeed, made considerable progress. Over the
last twelve months we have integrated the acquisition of Hunting Defence
Services, and its performance has been ahead of our expectations, both
strategically and financially. We also secured further orders for the warship
re-fit programme where, after the completion of HMS Ark Royal, we are now
undertaking the re-fit of HMS Invincible. When HMS Invincible is completed, she
will be replaced by HMS Illustrious, which is expected to be a larger contract
and one which will run through until 2004. This, along with other warship
re-fits, gives Rosyth a confirmed programme for the next two years'.
'In addition, we secured, as expected, but slightly delayed, the contract to
manage the naval bases of Faslane and Coulport. This is a £350m contract
covering a five year period, and we would expect both the scope and the length
of this contract to be extended. Indeed recently, the Ministry of Defence
confirmed that the Astute class submarine will be base-ported at Faslane, and we
would anticipate this to lead to additional business'.
'We also committed ourselves to selling the loss-making engineering and
materials handling businesses. This proved difficult in the economic
circumstances, but we have now sold over 70% of these businesses (by turnover)
and, going forward, they will comprise less than 15% of the Group's sales. We
still intend to sell these businesses and would hope to do so within the next
twelve months'.
'Finally, shortly after the year-end, we concluded the acquisition of Service
Group International, a business which supplies facilities management to the
Ministry of Defence and to the civil market. This will provide Babcock's entry
to the civil market and completes the first stage of the refocusing of Babcock
as a supplier of support services'.
'Operating in such a changing set of circumstances is extremely demanding for
employees, and I would like to acknowledge their help and forbearance over the
past twelve months. Equally, there have been some significant management
changes at a senior level in the company, but I now believe that we have the
right executive team to take the company forward'.
'When I addressed you last year, I also added that I hoped your
investment in Babcock would be materially enhanced by a re-rating of the shares
as we move into higher growth sectors of the economy. Compared to the FTSE
All-Share Index, your investment in Babcock has outperformed by 38%, although
the index itself has fallen significantly. This is a consequence of investors
recognising that Babcock has substantially transformed itself into a business
with secure long-term order books, a good visibility of earnings, and
substantial growth prospects. It is your Board's intention to continue to seize
these growing and profitable opportunities and, by so doing, to continue the
improvement in shareholder value.'
- ENDS -
Notes to editors:
About Babcock International Group PLC
Babcock International Group PLC is a support services business providing
technical services, training and facilities management to the defence and civil
sectors. In the year to 31 March 2002 sales from continuing business were
£358.9 million.
The Group operates in three principal sectors: Technical Services
(engineering and support services in defence, rail, marine and secure facilities
sectors), Training & Support (support services, training and facilities
management for the defence and civil sectors) and Materials Handling (material
processing technologies and engineered systems). The Group is currently in the
process of disposing of the Material Handling division as part of Babcock's
strategy to focus on the support services market and, in the process, enhance
shareholder value.
Babcock's head office is in London and the Company's shares are
quoted on the London Stock Exchange. For further information, please visit
Babcock's website at www.babcock.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange