BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - Babcock International Group PLC (BAB.L) said its underlying profitability for fiscal 2023 is in line with expectations, excluding the potential one-off impact of the Type 31 contract. Babcock International Group stated that cash flow for fiscal 2023 was significantly ahead of expectations. Net debt as at 31 March 2023 was approximately 350 million pounds before operating leases. The Board expects to reinstate a dividend in fiscal 2024.
The Group also issued an update on the Type 31 contract which was awarded by the UK Ministry of Defence to deliver five Inspiration Class frigates for the Royal Navy. To date, the Group has recognised over 600 million pounds of revenue but no profit on the programme. Expected to conclude in 2028, the programme remains on schedule, the Group said.
The Group noted that, throughout fiscal 2023, it has been in dialogue with the customer about the contractual position regarding additional forecast costs resulting from certain material macroeconomic changes that were not foreseen at contract inception. A dispute resolution process under the contract has commenced, which may lead to an arbitration. The Group's preliminary assessment is that a one-off provision of between 50 million and 100 million pounds would be required to cover the duration of the contract. The related cash impact would be of a similar amount, realised over the remainder of the programme.
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