BABCOCK INTERNATIONAL GROUP PLC
30 July 1999
Contact: Dr T John Parker
Executive Chairman
Nigel Young
Finance Director
Telephone: 01494 727296
Ginny Pulbrook
Citigate Dewe Rogerson
Telephone: 0171 282 2945
Babcock International Group PLC
Annual General Meeting
Chairman's Statement
'Before proceeding with the main business of the meeting,
I would like to make a few introductory remarks in order
to update shareholders on progress since my statement in
the Annual Report'.
'In the Annual Report I explained that Babcock
International Group now possesses a strong financial
platform from which to grow both organically and by
acquisition and that the year had begun well. An
increase of £54 m to the Group's overall order book since
March giving £407 m at June underpins our confidence
going forward'.
'BES Division, that represents some 60% of Group sales,
was awarded a contract in May to a value of approximately
£100m to refit the aircraft carrier HMS Ark Royal and
work has now begun at the Rosyth dockyard. In the
Division's rail activities there is a solid order book
for train refurbishment and it is expected that
significant additional work will be won in the coming
months. However the weakness experienced by Railcare in
wheel set and bogey schedule call-off orders last year is
again repeating itself and as a result we expect the
trading performance to follow last years pattern of a
weaker first half. We are also pursuing ongoing
performance improvement measures in Railcare to protect
future margins and this has involved a recent reduction
in employee numbers'.
'BMH Division is now seeing the first encouraging signs
of recovery in certain Asian markets although South
Africa and certain South American economies continue to
be rather sluggish. The success of the Division in
securing high profile grain terminal orders in Europe and
the Middle East since the year end demonstrates the
importance of our commitment to continuing product
development. Whilst we expect a number of BMH's markets
to remain challenging this year, we believe that the
Division is well positioned with an order book of £133m
at June 1999 (compared to £91m in June 1998) to make good
progress'.
'In both Divisions we are continuing to investigate a
number of acquisition opportunities where there is a good
fit with our strategic and financial criteria. In
addition, we are pursuing organic growth opportunities
that leverage off the skills of our people and
technology. These exciting opportunities which in
certain cases demand a strong commitment of internal
resources include our bids in joint venture to manage the
Atomic Weapons Establishment (AWE) at Aldermaston and the
development of the new Sonar system (2087) for the Royal
Navy's Type 23 frigate fleet. Success in these major
project opportunities will further underline the Group's
strategic shift towards Engineering and Technology
Services'.
'Against this background we continue to view positively
the Group's future prospects'.
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