1 July 2008

Babcock International Group PLC

Award of Canadian Submarine Support Contract

Babcock International Group PLC (Babcock), the leading submarine support provider to the Royal Navy, announces that the Canadian Government has awarded Babcock Marine the In-Service Support contract for its four Victoria class submarines (VISSC).  This contract marks Babcock's entry into the international submarine support market utilising the significant technical expertise and depth of knowledge built up over many years within its UK Marine division.

The initial contract is for five years and is expected to be worth around C$250 million (£125 million) to Babcock. The Canadian Government has options to extend the contract up to a total of 15 years, with the total contract value to Babcock expected to be in the order of C$1.5 billion (£750 million).  

The VISSC contract will be managed by a joint venture company, the Canadian Submarine Management Group (CSMG), formed by Babcock Marine and Weir Canada Inc. CSMG will operate from a head office in Ottawa with a number of seconded staff from Babcock Marine in the UK providing submarine support expertise. Victoria Shipyards will be sub-contracted to undertake the refits in their shipyard near Vancouver and BMT Fleet Technology will provide some specialist technical support.  

Peter Rogers, Chief Executive of Babcock commented

"We are delighted to have won this contract, which recognises the strength that we derive from our leading position in the UK submarine support market. This contract represents our first move into the international submarine support market, where we hope to build further on our existing expertise.  We look forward to working with the Canadian Government to develop the long-term relationships and deliver the high standards of customer service for which we are recognised."

 Ends

Notes to Editors

Victoria In-Service Support Contract (VISSC)

1.    The scope of the contract includes 
        - conducting maintenance on submarines during fleet time and deep maintenance during

           refits
       - engineering services: working up design change solutions to upgrade capability 
       - supply chain management 
       - equipment repair and overhaul.

2.    There will be a phased build up to full operational support during the first six months of the

       contract.  

3.    The CSMG management team will be based in Ottawa, with satellite offices supporting the

       operational submarines in Victoria and Halifax, close to their base ports on the east and

       west coast. 

Babcock International Group PLC

1.    Babcock is an engineering support services company with a market capitalisation of

       around £1.4 billion 

2.    In the financial year ended 31 March 2008 Babcock reported revenues of £1.56 billion and

       underlying profit before tax of £95.5 million

3.    Babcock's key strengths are 

a.    a highly technical engineering skill base

b.    a complex project management capability

c.    an ability to work in partnership with its customers to deliver the highest standards

       of customer satisfaction

d.    a thorough understanding of and ability to manage customers' operationally critical

       assets

4.    Babcock operates through six divisions based extensively in the UK with operations in

       southern Africa and North America.  

5.    Through its Marine division Babcock is the UK's leading naval support business and is the

        largest support provider to the Royal Navy. Babcock is the sole provider of through-life

        support to the Royal Navy's submarine fleet and owns the only facilities in the UK where

        nuclear submarines can undergo refuelling and deep refit work. Babcock also manages,

        on behalf of the Royal Navy, the Clyde naval base at which the majority of submarines are

        based and where in-service maintenance is carried out.  

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