Information  X 
Enter a valid email address

Babcock Intnl Group (BAB)

  Print      Mail a friend       Annual reports

Monday 28 June, 2004

Babcock Intnl Group

Re Agreement

Babcock International Group PLC
28 June 2004


                                                                    28 June 2004



                        BABCOCK INTERNATIONAL GROUP PLC

                      ANNOUNCEMENT BY PETERHOUSE GROUP PLC

                             REGARDING NETWORK RAIL


Peterhouse Group Plc ('Peterhouse') is pleased to announce that it has reached
agreement with Network Rail regarding the compensation for the transfer of rail
maintenance contracts with the Peterhouse subsidiary First Engineering in
Scotland and Manchester.


This follows the announcement made by Network Rail in October 2003 stating its
intention to bring all rail maintenance contracts in-house, and an announcement
by Peterhouse on 9 March 2004 that it was at an advanced stage of negotiations
with Network Rail to reach a compensation settlement arising from its decision
to take maintenance activities in-house.  In the year ended 31 December 2003
these contracts generated, in aggregate, £140 million of turnover and
approximately £5.3 million of operating profit.


Network Rail has agreed to pay First Engineering approximately £12.6 million in
cash.  This amount will cover the costs of transfer and loss of profits suffered
by First Engineering.


A further  £2.4 million in incentive payments are payable contingent on the
timing of the transfer and on contractual performance in the period prior to
transfer.  The compensation payment is expected to be subject to taxation.


In addition to this amount an estimated £5.6 million will be paid by Network
Rail to First Engineering for certain assets that are used in the rail
maintenance operations.


First Engineering will continue to provide to Network Rail for a transitional
period support services, including plant, materials management, payroll services
and training.


The other contracts First Engineering has with Network Rail in track renewals,
signalling, power supply, consultancy and facilities management are unaffected
by Network Rail's decision in October 2003 to bring rail maintenance services
in-house.


ENQUIRIES


Peterhouse Group Plc
Peter Rogers, Executive Chairman                             +44 (0)20 7291 5000
Janette Anderson, Chief Executive of First Engineering


Financial Dynamics (Public Relations Adviser to Babcock)     +44 (0)20 7831 3113
Andrew Lorenz
Richard Mountain
Rob Gurner



                      This information is provided by RNS
            The company news service from the London Stock Exchange                                   

a d v e r t i s e m e n t