LONDON (dpa-AFX) - Babcock International Group PLC (BAB.L), an engineering services company, Monday confirmed that the Cavendish Fluor Partnership or CFP, in which the company has a 65% stake, has come to a mutual agreement with the UK's Nuclear Decommissioning Authority or NDA. The deal is to bring to an end the Magnox decommissioning contract at the end of August 2019, having operated the contract for a full five years.
Following the detailed contract Consolidation phase, it has become apparent that the work that needs to be done at the 12 Magnox sites is now materially different in volume from that specified in the NDA's tender, and this puts the contract at risk of a legal challenge. The company noted that a High Court judge ruled against the NDA last year in respect of its award of the Magnox contract.
The change to the contract will result in the removal of around 800 million pounds from the company's 20 billion pounds order book, creating an annual step down in revenue of around 100 million pounds from financial year 2020/21 which the company would expect to replace in the normal course of business over that timeframe.
NDA CEO David Peattie said, 'Terminating is no reflection on CFP as performance on the sites under its ownership has been strong. Making progress on the ground and keeping our sites safe and secure remain our collective priorities.'
The company further said that around 1 billion pounds will be removed from the 11 billion pounds bidding pipeline.
This contract change is not expected to have any negative financial impacts over the next three years and the company does not expect this to change the financial guidance it expects to give at the firm's full year results in May.
The ongoing decommissioning of Dounreay by the Cavendish Dounreay Partnership, with Babcock share 50%, is not affected by the latest statement, the company said.
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