29th Mar 2007 07:00
Babcock International Group PLC29 March 2007 29 March 2007 Babcock International Group PLC Pre-Close Trading Statement In line with its usual practice, Babcock International Group PLC ("Babcock" or "the Group") the support services company, makes the following trading statementprior to the close of its financial year on 31 March 2007. Babcock is pleased to confirm that it expects the full year results to 31 March2007 to be in line with its previous expectations expressed at the time of theinterim announcement in November 2006. Our order book remains in excess of £2 billion and cash flow has been strongthroughout the second half of the year. Our target markets have remainedbuoyant and a number of important developments, which are outlined in thisstatement, have occurred during the period, providing the Group with access tosignificant potential growth opportunities. Operations Key developments for Defence Services in 2006 and 2007 include the award of anextension to the Single Living Accommodation Modernisation or "SLAM" contract(known as SLAM II) and the securing of its position supporting the UK Hawk jettrainer fleet by participation in the HAWK Integrated Operational Support or IOScontract with BAE Systems PLC. Contract award for the management of training and facilities at the Royal Schoolof Military Engineering, where the Babcock-led consortium is the preferredbidder, is progressing toward financial close, which is expected towards the endof the new financial year. Babcock has previously confirmed that it is fully supportive of the MOD'sDefence Industrial Strategy ("DIS"). Babcock has been discussing variouspossibilities with other industry participants and with the MOD in order toprogress the twin objectives of achieving industry restructuring consistent withthe DIS and delivering shareholder value. Against this background Babcock hasmade an indicative offer to acquire the entire share capital of DevonportManagement Limited ("DML"). In the past year Technical Services has been operating at a high level ofactivity. Babcock design teams have been engaged with both commercial contractsand engagement in the design phase for the Future Aircraft Carrier (or "CVF").The recognition of Rosyth as the only facility in the United Kingdom appropriatefor final integration, test and commissioning of the aircraft carriers has had abeneficial impact on the Group's warship support activities. The need tomaintain a core capability for the programme, plus the performance of Babcockthrough time, is being recognised in the allocation of warships for refit by thesurface support Alliance. The Alstec nuclear support business has outperformed our planning assumptionsand is well placed to benefit from the accelerating pace of decommissioning andreactor life extensions. The Nuclear Decommissioning Authority forecast in 2005/06 that total decommissioning activities in the United Kingdom would have avalue of some £62.7 billion over the coming years. In January 2007, Babcockacquired 24.5% of the issued share capital of International Nuclear SolutionsPLC ("INS"), a specialist operator in the nuclear engineering services sector at63 pence per share. Discussions are continuing with the Board of INS about thepossibility of making a cash offer for the remainder of INS's issued sharecapital. A combination of Alstec and INS together with our nuclear experienceat Rosyth and Faslane would create a comprehensive Tier 2 service offering fornuclear site licencees and operators. Engineering and Plant Services has achieved a record year of growth. The SouthAfrican Government's commitment to infrastructure spending and further growth inthe resources sector continues to underpin confidence in the further growth ofthis business. In March, the South African Government launched a R97 billion(£6.8 billion), five year investment programme to boost power generation. Theacquisition of the South African power lines division of ABB in the summer of2006 is performing well, with a four-fold increase in order book alreadyachieved. We believe that the momentum being seen in the development ofinfrastructure in South Africa will begin to be replicated in other SouthernAfrican states and Babcock Africa is well placed to benefit from thisopportunity. Earlier this month, Networks closed a contract as part of a joint venture withinthe Energy Alliance (the Alliance) with National Grid PLC to maintain itselectricity transmission infrastructure across Western England & Wales. Thecontract is for an initial five year period and valued at some £100 million perannum to the Alliance. In addition, Babcock announced yesterday that itstransmission business has successfully pursued a contract to support EDF EnergyNetworks in the South East of England over a five year period, valued at some£10 million per annum. As anticipated at the half year, mobile telecoms mast work has been slow andtherefore in the communications business within Networks, the emphasis has beento focus on meeting the requirements of the digital switch-over, upgradingtechnology for handling broadcast of the digital television signal. During the year, the Rail business commenced a restructuring programme to alignit more closely with the new structure of its principal customer, Network Rail.During the period, the business continued to win contracts, notably the twosignalling framework contracts which will secure work for the next five years,and the £25 million Trent Valley capacity enhancement project also on behalf ofNetwork Rail. We have also been short-listed as one of the final two biddersfor the Greater Manchester Passenger Transport Executive tramways infrastructurebid. Summary The overall trading environment for the Babcock businesses remains excellent.The order book is strong and markets in which Babcock is active continue tooffer significant growth opportunities. For further information please contact: Babcock International Group PLCBill Tame, Finance Director 020 7291 5000Jeffrey Bradford, Head of Investor Relations Financial DynamicsAndrew Lorenz / Susanne Walker 020 7269 7121 About Babcock International Group PLC Babcock International Group PLC is an asset management business. Babcockmanages fixed infrastructure and mobile assets. Babcock meets our customersneeds by leveraging its engineering skills base and project managementexpertise. The Group focuses on adding value at the operational level workingalongside customers to manage their mission-critical infrastructure and assets. In the year to 31 March 2006 sales from continuing business were £837 million.In May 2005 Babcock acquired ALSTEC which applies engineering based services andproject management expertise to the civil nuclear support and decommissioningmarket, airport baggage handling systems and niche defence activities. The Group operates across five core business segments: Defence Services, providing facilities management, equipment support andtraining expertise to the British Armed Forces. Technical Services, supports the activities of customers in the oil and gas,defence, marine, nuclear and supply chain service markets. Engineering and Plant Services provides design, installation, equipment andmaintenance support to the resource extraction and power generation andtransmission sectors. It also holds the Volvo franchise for constructionequipment in Southern Africa. Rail provides a wide range of capabilities including track renewals, signalling,control technology and rail power systems for the UK rail infrastructure. Networks, operating under the EVE brand name, is a significant player in thehigh voltage electricity transmission, mobile telecommunications and digitaltelevision infrastructure in the United Kingdom. The Babcock head office is in London, the United Kingdom and the Company'sshares are quoted on the London Stock Exchange in the support services sector(EPIC:BAB). For further information, please visit the Babcock website atwww.babcock.co.uk. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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