(Alliance News) - Babcock International Group PLC on Thursday said its annual profit dropped following a dispute over its frigates contract with the UK Ministry of Defence.
Meanwhile, shares in Babcock International were up 7.9% at 340.60 pence in London on Thursday morning.
In the financial year that ended March 31, the London-based aerospace, defence and nuclear engineering services company said its pretax profit fell 97% to GBP6.2 million from GBP182.3 million.
This was caused by a GBP100.1 million in costs for the year incurred from the Type 31 frigates dispute, representing a GBP42.6 million revenue reversal and a GBP1.6 million impairment and the recognition of a GBP55.9 million contract loss caused by the commencement of a dispute resolution process with the Ministry of Defence over the contract costs of Type 31 frigates.
Revenue grew 8.3% to GBP4.44 billion from GBP4.10 billion, and was up 10% organically with growth across all sectors.
"We've made excellent progress this year, with better-than-expected cash generation, margin expansion and double-digit revenue growth. When we started our transformation, my first goal was to stabilise and strengthen the balance sheet and I'm delighted to say that work is complete," said Chief Executive Officer David Lockwood.
Net debt fell 42% to GBP564.4 million from GBP968.7 million the prior year.
Babcock declared no dividend for the financial year, unchanged from the prior year, but said it plans to reintroduce a dividend in 2024.
The company said it expects financial 2024 to be a year of organic revenue growth and that its expectations for profitability and cash flow were unchanged.
"In a world of significant instability, national security has never been more important. With defence making up two-thirds of the group, the combination of capability, availability and affordability we offer is increasingly relevant," said CEO Lockwood.
"I'm excited by the momentum building across the business, and that confidence is reflected in our expectation of continuing cash-backed profitable growth, and reintroducing a dividend in [financial 2024]."
By Will Neill, Alliance News reporter
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