Babcock plays down write-downs
Babcock International played down a weekend report about a large write-down that the defence contractor will have to take to its accounts this week.
Sky News reported that a near-£100m hit will be taken on the value of the Avincis helicopter business, four years after Babcock completed the £1.6bn acquisition.
On Monday the FTSE 250 group emphasised that it does "not expect the net cash costs to be material" when it announces its half-year results announcement this Wednesday.
Babcock said in a trading update in September that it had exited its North American mining and construction support business, agreed the sale of its media services business for around £30m, and was poised to exit its powerlines business in South Africa and would "reshape" its oil and gas crew change business to improve performance.
In November the company said it would close down its 163-year old shipyard in Appledore, Devon as government battleship orders have run out.
The board reiterated on Monday that it is currently undertaking a programme to "strengthen the group by exiting a number of small, low-margin businesses" and that an update would be provided on these activities at our half year results.
"Whilst the exact impact of these actions has yet to be determined by the board, we do not expect the net cash costs to be material."
Babcock's latest response comes a week after it lashed out at shadowy research firm calling itself Boatman Capital.
A note from Boatman emerged last month, saying the FTSE 250 company had “systematically misled investors by burying bad news about its performance” and citing problems with work for the Ministry of Defence, Babcock's main customer, where relations were said to be “terrible”.
The company insisted its relationship with the MoD was "as strong as ever" and said the Boatman report "included many false and malicious statements which the group strongly refutes", with a MoD spokesman saying the government remained "committed to working with them on a wide range of programmes".