Signature of Terms of Business Agreement


 

TIDMBAB 
 
RNS Number : 1808J 
Babcock International Group PLC 
25 March 2010 
 

 
 
 
25 March 2010 
 
 
Babcock International Group PLC 
Signature of Terms of Business Agreement 
 
 
Babcock International Group PLC (Babcock) confirms that it has signed a long 
term strategic Terms of Business Agreement (ToBA) with the Ministry of Defence 
(MoD).  The agreement confirms Babcock as the MoD's key support partner in the 
maritime sector and underpins the delivery of key aspects of the MoD's Defence 
Industrial Strategy. 
 
The ToBA covers the fifteen year period between 2010 and 2025 during which 
Babcock commits to the progressive delivery of guaranteed cost savings to the 
MoD.  In return, Babcock is nominated to undertake specific roles and to perform 
particular types of engineering work in support of the Royal Navy's major 
warships and nuclear-powered submarines.  In addition, the ToBA also extends 
Babcock's management roles at the Clyde and Devonport Naval Bases from 2013 to 
2025 - a value of some GBP2.5 billion. 
 
In addition to the extension of the Clyde and Devonport Naval bases management 
roles, the agreement also provides visibility of a forward work programme of 
some GBP2.5 billion at 2010 prices.  These combined values are stated after 
benefits, which Babcock has agreed to deliver, of some 15% of the total value. 
Savings above the committed levels will be shared between Babcock and the MoD - 
providing the basis for additional financial benefits to both parties. 
 
Following signature of the ToBA, the Group's order book will be increased by c 
GBP2.5 billion to around GBP8.5 billion.  This does not include future refit 
work which is subject to individual valuation at the time of award. 
 
Peter Rogers, Babcock's Chief Executive said "The finalisation of this agreement 
is a fundamental cornerstone of Babcock's partnering relationship with the MoD 
in providing support to the Royal Navy.  It confirms Babcock's long term 
strategic role and it will deliver significant benefits to both parties over the 
fifteen year period." 
 
 
Enquiries 
Babcock International Group PLC 
                020 7355 5300 
Peter Rogers 
Terri Wright 
 
FD 
                                         020 7269 7291 
Andrew Lorenz 
Sophie Kernon 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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