Babcock International Group PLC
18 July 2003
Date: 18 July 2003
Contact: Albert Dungate, General Counsel
& Company Secretary
Babcock International Group PLC
Telephone: 020 7291 5000
Andrew Lorenz, Rob Gurner
Financial Dynamics
Telephone: 020 7269 7291
BABCOCK INTERNATIONAL GROUP PLC
ANNUAL GENERAL MEETING
CHAIRMAN'S STATEMENT
'I am pleased to confirm that the transformation of Babcock into a support
services business is essentially complete. Two-and-a-half years ago we
committed to converting Babcock from an engineering conglomerate to a support
services provider because of the more favourable characteristics of this type of
business. I think last year's results fully justify this decision, with sales
on continuing businesses 25% higher; operating profit before goodwill and
exceptionals on continuing businesses 44% higher, and earnings per share before
goodwill and exceptionals 95% higher.
'In addition, we have an order book of over £600m and are currently bidding for
contracts with a capital value of some £5bn.
'Notable successes in the year included the commencement of the contract to
manage HM Naval Base Clyde at Faslane and Coulport, the specification of Rosyth
as a key site in the construction of the new aircraft carriers, the sole bidder
status for the RSME contract, and the acquisition and successful integration of
SGI.
'We have continued to sell the materials handling businesses and now have only
one business (BMH Marine) remaining. We are in the process of disposing of this
business but, even if it were not sold, it would comprise less than 5% of the
current year's turnover.
'With regards to Pensions, I am pleased to say that, despite a significant
reduction in the pension surpluses, the combined pension scheme has maintained a
modest surplus under FRS17. Such is the volatility of this standard that, had
we revalued it at 30 April, the surplus would have increased to £20m, and at 30
May, this would have been some £40m.
'A year ago we recruited Peter Rogers as Chief Operating Officer as a step
towards splitting the roles of Chairman and Chief Executive. The time has now
come to implement this change and, with effect from next month, Peter will
assume the position of Chief Executive. Except for the largest of companies, I
cannot see the case for having a full-time Chairman and Chief Executive. It is
my intention, therefore, to reduce my involvement in Babcock to two days per
week.
'Your Board's main objective has been, and remains, to deliver a superior return
to its shareholders. You can see from the Report and Accounts that £100
invested in Babcock in April 1998 would be worth £140 five years later. This
compares with £100 invested at the same time in the Engineering and Machinery
index (which is where Babcock was quoted at the time) which would only have been
worth £52, an outperformance by Babcock of 88%. In order to help sustain this
performance, we are asking shareholders to approve a proposal to implement an
incentive scheme (LTIP) for senior executives which will align their
remuneration with the relative total shareholder return.
'Additionally, operating in a continually changing environment is very
challenging for our employees, and I am sure you will join me in thanking them
for their dedication and hard work.
'In terms of current trading, the first quarter's results are in line with our
internal expectations.
Babcock is now positioned as a support services business in a market which has
significant growth potential, and we are looking forward to the future with
confidence.'
G A Campbell.
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 2003 sales from continuing business were £409
million.
The Group operates in two principal sectors: Technical Services (engineering and
support services in defence, rail, marine and secure facilities sectors) and
Training & Support (support services, training and facilities management for the
defence and civil sectors).
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
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