Babcock International Group PLC
24 May 2001
24th May 2001
Contact:
Gordon Campbell, Executive Chairman
Nigel Young, Group Finance Director
Babcock International Group PLC
Telephone: 01494 727296
Ginny Pulbrook
Citigate Dewe Rogerson
Telephone: 020 7282 2945
BABCOCK INTERNATIONAL GROUP PLC
Disposal of Babcock's rail maintenance interest to Alstom
Babcock International Group PLC ('Babcock') continues its focus on support
services with the disposal of its majority held rail maintenance business,
Railcare Limited ('Railcare') (a UK 60:40 jointly owned venture with Siemens
plc) to Alstom UK Limited ('Alstom'). Babcock has received cash proceeds of
some £4.6m and Alstom will assume the borrowings of Railcare amounting to £
2.0m.
In the unaudited accounts for the year to 31 March 2001, Railcare incurred
losses before taxation and goodwill amortisation of some £11.3m, of which £
5.7m were exceptional costs associated with a major redundancy programme. The
net assets of Railcare included in the accounts of Babcock at completion are
expected to be £16.5m of which Siemens minority interest is expected to be £
7.7m. The exceptional loss for Babcock arising from the disposal is some £
6.2m. In the audited accounts for the year ended 31 March 2000, Railcare
incurred losses before taxation and goodwill amortisation of £3.4m and
contributed net assets of £17.2m of which Siemens minority interest was £7.8m.
Babcock's strategy remains to dispose of its materials handling division and
to focus its resources on support services and facilities management. The sale
of Railcare is the first stage in exiting the engineering and materials
handling businesses and Babcock continues to pursue further disposal
opportunities. The circular to shareholders dated 16 February 2001 stated that
trading in the materials handling business has been disappointing. Performance
in this division has continued to deteriorate and with the exception of the
pipeline services business in the United States the order book has declined
further.
Trading in Babcock's other businesses continues in line with expectations and
initial indications from the recently acquired Hunting Defence Services are
promising with over £20m of orders confirmed since completion on 9 March 2001.
- End -
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