21st Jul 2016 11:09
LONDON (Alliance News) - Defence support services company Babcock International Group PLC on Thursday said it has continued to pick up contracts in the first quarter of its new financial year and retains a confidence its business will be resilient to any Brexit-related challenges.
The FTSE 100-listed group said its current financial year to the end of March 2017 has been in line with its expectations so far, with good demand for its critical services operations in the UK and overseas, and with progress made on business development activity in key markets.
Babcock said its order book and bid pipeline have remained stable since it published annual results in May. It said around 85% of its projected revenue for the current financial year is now in place, along with 56% for the following financial year.
Though too early to forecast the impact Brexit will have on the wider UK economy, Babcock said the long-term fundamentals of its business are unchanged, and it remains confident on the outlook for the current financial year and the next.
Babcock shares were up 0.5% to 960.50 pence.
The group said its Marine & Technology arm has continued to make good progress. Babcock's naval marine business performed well thanks to more surface ship and submarine support work derived from the ramp-up in the Royal Navy's Type 23 frigate life extension programme and the start of work on the latest Vanguard class submarine, the nuclear-powered ballistic missiles submarines which provide the UK's nuclear deterrent under the Trident programme.
Since the start of its financial year on April 1, Babcock has secured multi-year equipment management deals with the UK's Ministry of Defence worth around GBP130.0 million total. It also secured a EUR50 million deal to build an offshore patrol vessel for the Irish Naval Service.
Elsewhere, Babcock said it won a contract from Danish energy company DONG Energy to work on the Hornsea offshore wind farm in the North Sea and then followed this with a contract from German engineer Siemens to build two offshore transformer modules for the Beatrice wind farm in the Outer Moray Firth, also in the North Sea.
Babcock said its Defence & Security's Defence Support Group subsidiary is progressing a range of contract opportunities currently out to tender and has been confirmed as the support services provider to the UK's Challenger tank fleet and its Air unit has started work on the UK Military Flying Training System Fixed Wing and Rotary Wing contracts.
Within Babcock's Support Services arm, the decommissioning contracts for the Magnox and Dounreay nuclear plants remain on plan. Consolidation talks regarding a significant upsizing of the Magnox contract with the UK's Nuclear Decommissioning Authority are expected to conclude later in 2016.
In April, the group said it started the roll-out of new vehicles for the London Fire Brigade and its Network Engineering unit won two overhead line refurbishment deals worth GBP30 million. Babcock added the schools it runs in Surrey, Devon and Worcestershire have continued to receive good ratings from schools inspector Ofsted.
Babcock's International division's MCS Emergency Services unit has renewed air ambulance contracts in Sweden and Italy. In Spain, mild weather conditions have delayed the start of the "firefighting season" in the country.
The MCS oil and gas business continues to suffer against weak end markets, but Babcock said it is working on a number of potential contracts which are expected to start delivering revenue in the second half of its current financial year.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
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