Trading Statement

Babcock International Group PLC
28 September 2004

28 September 2004



                          Babcock International Group plc

                             Interim Trading Statement


Ahead of entering the closed period and following the significant changes
arising from the acquisition of Peterhouse Group plc ('Peterhouse') in June
2004, we are taking the opportunity to provide a more detailed update than would
normally be given on trading across the group for the first six months of the
financial year as well as progress on integration. We anticipate that trading
for the year will be in line with our expectations at the time of the AGM
trading update in July.

Babcock International Group plc ('Babcock') interim results for the six months
ended September 2004 will be announced on 25th November 2004.



Trading



Defence businesses


Activity levels in warship refit at Babcock Engineering Services ('BES') have
been underpinned by ongoing work on the carrier HMS Illustrious and on Type 23
frigate refits. Three further vessels have been secured in competition,
confirming BES Marine's reputation for quality, delivery and value for money.
Progress in the non-refit related businesses, Supply Chain Services, Engineered
Products and Design and Technology, has also been good.


In Babcock Defence Services ('BDS') the assimilation of the RAF Valley contract
has been excellent and all other contracts continue to perform well. Our
concerns that the Airfield Support Services Project (ASSP) PFI would be
cancelled were confirmed and this activity will be retained in the public
sector. Further progress is being made in bringing RSME closer to contract
award.

The £75 million per annum Regional Prime South West FM contract, now in its
fourth month under the management of Babcock Infrastructure Services ('BIS'), is
proceeding well. The BIS bid for the Regional Prime Central contract has been
submitted and the bid for the East Region is well under way. The outcome of the
Central bid is expected within the next three months.

Babcock Naval Services ('BNS') contract at HM Naval Base Clyde remains on track
to deliver the customer's cost and performance targets. BNS has also been
successful, together with the Design and Technology division of BES, in securing
a £7.5 million contract to operate, maintain and provide engineering support on,
the new NATO submarine rescue system.



Civil businesses

Babcock Africa has continued to deliver strong growth. It has secured a number
of orders in the power generation sector in Libya and the Equipment division is
performing strongly. As such, we expect a good out-turn from this business for
the full year.

Since the acquisition of Peterhouse, both the rail business, First Engineering,
and the power and telecommunications business, Eve, have performed in line with
our expectations.

Early successes in First Engineering, in partnership with Austrian construction
company, Swietelsky, saw the securing of the National High Output track renewal
contract from Network Rail, expected to be worth £30 million over two years,
with an option to extend for three further years.

Transfer of the rail maintenance contracts and associated plant to Network Rail
was completed satisfactorily on 27th June. Payments totalling approximately
£20.6 million have been received in respect of compensation for early
termination (£12.6 million) pre-handover performance incentives (£2.4 million)
and plant (£5.6 million).

In telecommunications the recent acquisition of Turner and Partners together
with the rollout of 3G networks has opened up significant opportunities in the
mobile telecommunications market. In power transmission, Eve, having secured
additional refurbishment contracts for the usually quiet winter period, look
forward to increased market activity in both transmission line refurbishment for
National Grid Transco as well as bidding for the first tranche of the Renewable
Energy Transmission System (RETS) contracts.

We are confident that, over the capital asset life cycles of the rail, power and
telecommunications infrastructure, First Engineering and Eve are well positioned
to deliver good growth.


Integration of Peterhouse



Peterhouse was acquired on 14th June 2004 and will be consolidated into Babcock
from that date. The integration is proceeding well and the Group's Executive
Committee has been expanded to include Alan Robertson and Janette Anderson.
Under the overall management of Alan Robertson, progress on synergy realisation
has been excellent and we remain confident of achieving the identified £4
million of annual synergy benefits, the bulk of which will be achieved in the
next twelve months.



•        The move of head office functions from Elland to Babcock's HQ in
         London will be complete by the end of October 2004.



•        Work on the rationalisation of the combined property portfolio is
         well underway with significant savings expected over the course of 
         2005/06.



•        IT and communications systems are in the process of being combined
         and we expect fully to realise our cost saving targets in this area by 
         mid 2005.



•        A review of the opportunities for the use of agency labour from our
         Acetech business to help reduce operational gearing in Eve and First 
         Engineering is underway. We anticipate commencing significant 
         utilisation of these resources during 2005.



In addition to the annual cost synergies of £4 million, financial synergies of
£0.9 million will be achieved in the current financial year, increasing to an
annualised total of £1.3 million thereafter.

Opportunities to benefit from the cross application of core skills within the
enlarged group have been identified and good progress has been made in bringing
them to fruition. These include utilisation of in-house design skills, the
delivery of comprehensive service offerings to existing customers and the
implantation of new additional services into Babcock's existing international
markets.



Investors and analysts site visit


On September 28th and 29th Babcock will host a visit by investors and analysts
to certain of its facilities in Scotland. During the course of this visit,
presentations will be made on Eve, Babcock Naval Services, First Engineering and
Babcock Engineering Services. The slides to be used in these presentations will
be posted on the Babcock website.




Babcock International Group PLC
Peter Rogers, Chief Executive                    020 7291 5000

Financial Dynamics
Rob Gurner                                       020 7269 7221








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 2004 sales from continuing business were £438
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.


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