Defence and engineering giant Babcock International Group Plc has completed the £293m sale of a marine division consultancy with offices in Plymouth as it announced a £115m profit for the past six months.
The company - which operates the dockyards at Devonport, in Plymouth, and Rosyth, in Scotland - sold the Frazer-Nash Consultancy to KBR, an American engineering giant as part of a “turnaround plan” to tackle financial losses.
It marks the end of a 14-year partnership between Babcock and the Surrey-based engineering and technology consultancy which sprung out of classic carmaker Frazer-Nash.
Babcock in the news
The consultancy, which works on submarine design and naval weaponry among other roles, was part of Babcock's Marine sector, which is centred around its operation in Devonport, and has nine 海角视频 sites, including at the Millfields in Plymouth.
The sale is part of a plan to deal with Covid-related losses and debts and which also includes Babcock offloading its stake in aviation services company AirTanker Holdings Ltd for £126m.
Meanwhile, in an update for investors, Babcock revealed its finances are looking healthier and that in the six months to September 30, 2021, it had made an underlying operating profit of £115m, and the draft management accounts show a revenue of £2.228bn.
A Babcock statement to investors, ahead of full half-year results being revealed on December 7, said: “Trading for the group in the first half of the year was in line with our expectations and our full year outlook remains unchanged.”
The draft accounts also show net debt of £1.347bn, which was down from the £1.354bn reported at the end of March 2021, and £938m excluding operating leases, although this was up from £772m. The group's net debt to EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) ratio is now 2.8 times, up from a multiplier of 2.5 on March 31.
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And it is this debt pile that the company is now looking to reduce with its sell-offs. Confirming the Frazer-Nash sale, for £293m before adjustments and transaction costs, the company said: “This sale forms part of our portfolio realignment, which aims to generate at least £400m of proceeds, the majority of which will be used to reduce the group's net debt. The consultancy was part of Babcock's Marine sector and had revenue of £101m in FY21 (FY20: £102m), with profit before interest and tax of £14m (FY20: £17m).”
The 海角视频’s competition watchdog is currently probing another Babcock sale, the £10m disposal of its oil and gas aviation business to helicopter services specialist CHC Group LLC. The Competition and Markets Authority (CMA) said it will assess whether the deal might cause a substantial lessening of competition in the 海角视频 and whether it may have broken the law on mergers.