Saturday 21 September 2019

Babcock assures over health after ‘false and malicious’ claims

The engineering group insists it ‘continues to enjoy a healthy financial position’.

Defence supplier Babcock International has hit out at ‘false and malicious’ claims made in a highly-critical report by a mystery analyst as it moved to assure over its financial health (POA(PHOT) N HARPER)
Defence supplier Babcock International has hit out at ‘false and malicious’ claims made in a highly-critical report by a mystery analyst as it moved to assure over its financial health (POA(PHOT) N HARPER)

By Holly Williams, Press Association Deputy City Editor

Defence supplier Babcock International has hit out at “false and malicious” claims made in a highly-critical report by a mystery analyst as it moved to assure over its financial health.

The engineering group – the Ministry of Defence’s second largest contractor – insisted it “continues to enjoy a healthy financial position” following steep falls in its share price after a research paper posted last month by a firm called Boatman Capital.

Babcock said it “strongly refutes” claims made in the report by the “anonymous and so far untraceable” Boatman.

“The group continues to seek to discover who is behind Boatman Capital,” it added.

Shares lifted 3% after Babcock’s assurances.

The Boatman report alleged Babcock has a “terrible” relationship with the Ministry of Defence (MoD), while it also claimed Babcock has “systematically misled investors by burying bad news about its performance”.

Babcock plays a key part in equipping our world-leading armed forces Government spokesman

It also launched a scathing and personal attack on Babcock’s bosses – chairman and defence industry veteran Mike Turner, and chief executive Archie Bethel – claiming they are “not up to the job”.

Shares were sent tumbling after the Boatman report, with the stock remaining under pressure.

In a vote of confidence in Babcock, a government spokesman said: “We monitor the health of all of our strategic suppliers, including Babcock, and remain committed to working with them on a wide range of programmes.

“Babcock plays a key part in equipping our world-leading armed forces and the MoD spent more than £1.7 billion with the company last year, supporting thousands of jobs across the nation.”

Babcock said it was delivering 128 contracts for the Government, with “future opportunities continuing to form a key part of our bidding pipeline”.

But Babcock said earlier this month it would close Appledore shipyard in Devon and offer relocation to 199 employees.

The Boatman research report had cited threats to the future of Appledore.

Babcock will publish half year results on November 21.

While investors cheered Babcock’s response to the Boatman report, AJ Bell investment director Russ Mould questioned why it took so long.

He said: “While these comments partially address some of the criticism from Boatman, one has to question why it has taken Babcock nearly a month to go public on responding to the bear raid.

“Boatman’s research note was issued in October when Babcock traded at 672p; its shares have since fallen by 10% in value.”

He added: “Babcock may have pacified its shareholders temporarily with today’s update, yet it has merely given itself a couple of weeks’ breathing space before the big showdown on November 21 when half-year results are reported.”

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