LONDON (dpa-AFX) - Babcock International Group PLC (BAB.L) reported that the contract profitability and balance sheet review (CPBS) has identified impairments and charges totalling approximately 1.7 billion pounds. The early estimate of this impact is approximately 30 million pounds per annum for future periods and approximately 20 million pounds for fiscal 2021.
David Lockwood, CEO said: 'The early results from our reviews show significant write offs and a smaller ongoing reduction in the profitability of the Group. Through self-help actions, we aim to return Babcock to strength without the need for an equity issue.'
Babcock stated that it will focus on being an international aerospace, defence and security company. The Group is changing its operating model to simplify the business and reduce layers. This will result in approximately 1,000 employees leaving the Group within the next twelve months. The restructuring will have a one off cash cost of approximately 40 million pounds and is expected to deliver realisable annualised savings of approximately 40 million pounds.
Also, the Group will rationalise portfolio by divesting certain businesses. The Group expects this will generate proceeds of at least 400 million pounds over the next twelve months.
For fiscal 2021, before adjustments from CPBS, underlying operating profit was 307 million pounds compared to 524 million pounds, prior year, down 36% excluding disposals and FX. Underlying revenue was 4.69 billion pounds compared to 4.87 billion pounds, down 2% on last year excluding disposals and FX. Net debt, excluding lease obligations, was 750 million pounds at 31 March 2021. The Group's cash balance was 533 million pounds at 31 March 2021.
The Group stated that it is cautious about progress in fiscal 2022 profitability as it will be a year of transition. The Board will not be recommending a dividend for fiscal 2021 or 2022.
Copyright RTT News/dpa-AFX
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