Komatsu100
11 May 2015
Prelims announced Monday 18th May Expecting a good surge in share price next week. Should show sell off was overdone after Avincis purchase.
sage in the hills
08 May 2015
Re: Positive government Restoration of government contracts to Babcock ? .... if they are sensibleSAGE
Razor Blade
08 May 2015
Positive government Wow! Tories, here we come!
Rhigos
19 Mar 2015
Outsourcing Increase Budget: VAT on bids. The removal of the charge creates a level playing field. The changes come into force on 1 April and should increase outsourcing , thereby benefiting the likes of Babcock, Serco, Capita, MITIE, Mears, Carillion, Interserve et al. See article posted by Dief on Carillion board for full story.
gamesinvestor
13 Mar 2015
Directors It's quite interesting that over the last 12 or so months the majority of Director activity has been on the sell side.Largest deals (365 days)Traded Action Notifier Price Amount Value25-Jun-14  Sell Peter L Rogers 1,151.25p 250,000 £2,878,124.95 25-Jun-14  Sell Peter L Rogers 1,148.70p 76,620 £880,133.98 24-Jun-14  Sell John Davies 1,148.70p 54,638 £627,626.73 25-Jun-14  Sell Kevin Thomas 1,148.70p 32,445 £372,695.73 all of these large sales where made around the 1150 range and yet the directors looking in on a price today of 932 don't seem to be that interested in snapping up a "bargain" --- or perhaps they don't yet believe it to be.In fact the only purchases by directors over the last 6 months have amounted to about £1200 worth of automated dividend reinvestments.15-Jan-15  Buy Dividends Jeff Randall 994.84p 16 £159.17 13-Aug-14  Buy Dividends Jeff Randall 1,072.00p 45 £482.40 13-Aug-14  Buy Dividends Franco Martinelli 1,074.00p 43 £461.82 11-Aug-14  Buy Franco Martinelli 1,080.25p 11 £118.83 I could be wildly wrong, but the time to buy this stock might be when you get a green light and one or two of the directors open their wallets.Games -- Wallet firmly shut at the moment.
gamesinvestor
13 Mar 2015
An article on spending cuts Worth a read :-""""UK Services Sector Not Yet Clear Of Spending CutsAnita Likus Of DOW JONES NEWSWIRES LONDON -(Dow Jones)- While outsourcing companies look like they have escaped any impact from the U.K. government's plan to cut public spending by GBP6.2 billion, their relief may be short-lived. Experts say that more hefty cuts will follow and hurt smaller players as contracts are delayed or discretionary spending is cut. The U.K. government announced Monday that it will cut spending in areas such as education, transport and local government, among others, and said it would renegotiate some 70 contracts with suppliers of public services. It has protected the Ministry of Defence, or MoD, shielding a major player in the industry, Babcock International PLC (BAB.LN), and said it would maintain front-line services, too. Although listed support services providers haven't been approached to renegotiate contracts, they will not be protected when spending cuts extend to other areas, contract awards are delayed or discretionary spend reduces. The chancellor's "strategy seems to be one of carefully cutting away the waste rather than bluntly attacking front-line services," said Alan Downey, KPMG's U.K. head of public sector. "This will only be the start. There are much larger cuts to come." Capital Economics analysts agreed that "much bigger cuts, alongside hefty tax increases, will be needed to bring the budget deficit down." The government cannot cut existing contracts, but it can renegotiate future deals or delay awards, which could have an impact on the biggest companies. Babcock, whose customer base largely is composed of government departments and the regulated sectors, including the MoD, Network Rail and U.K. airports operator BAA Ltd., already has endured this in its rail division, where management had to reduce exposure due to unprofitable contracts. The company could suffer if defense contracts are cut or delayed in the MoD in future. Support services and construction group Carillion PLC (CLLN.LN), which generates about 75% of its profit in public and regulated industries, also remained upbeat. "We have very little exposure to government capital investment," a spokesman said. "The vast majority of what we do is service related." But while services such as road maintenance cannot be stopped, they can be squeezed. Serco PLC (SRP.LN), which provides services to the public sectors such as education, IT, security and business process outsourcing as well as running prisons and detention centers, should be shielded, despite generating some 50% of its business from central government. Capita Group PLC (CPI.LN), the U.K.'s largest outsourcing company, which generates only 10% of its business from Westminster, expects more business from central government, and particularly the MoD, as it improves efficiencies in back-office services and cuts costs. In fact, most of the big players in support services expect benefits from spending cuts, as the government outsources services to conserve cash while maintaining efficiencies. But they don't expect any impact before next year. Cuts could also trigger consolidation in the industry as smaller, private players go bust or are taken over. Panmure Gordon analyst Andy Brown said the U.K. government will have to use the private sector to cut spending, which will be beneficial for larger construction and support services players but at the expense of smaller companies. -Anita Likus, Dow Jones Newswires; +44 20 7842 9407; [email protected]""""Games
wangbaudan
11 Mar 2015
Re: Neil Woodford Well, I am a Woodie fan and sure he isn't saying that we should only invest in companies that don't win contracts!"He isn't obviously overly concerned about defence spending cuts post the may election. Could be a mistake." Tend to agree with you Games, and wouldn't be surprised to see the sp continue its downward trek up to the election, even wihout an overall market setback. PE also high.I have made a resolute decision though to stay with this fine company and to add just before the election - always a surge thereafter when uncertainty is removed. On the other hand, there will prob be quite a bit of further dithering while they decide who will join up with whom. Anyway, that is my firm and absolute decision...I think.
gamesinvestor
11 Mar 2015
Neil Woodford Extract from his February fund roundup :-"""We continued to add to the holding in Babcock International, which was weak after it failed to secure the Ministry of Defence’s Logistics Commodities and Services Transformation contract. We believe it is wrong to place too much emphasis on this particular contract disappointment. Outsourcing businesses typically win fewer than half the bids they participate in (Babcock’s win rate is c. 40%). Indeed, losing contracts in this industry can be indicative of pricing discipline, which we welcome.""He isn't obviously overly concerned about defence spending cuts post the may election. Could be a mistake.Games
wangbaudan
09 Mar 2015
Election fears I think that, apart from general fears of what might happen, defence-wise, after the May election no matter who forms the government, the fear of what might happen to Trident/Faslane is quite a serious one, no matter who tries to play it down. It is likely to become even more of a concern as May approaches. Red Ed says that Trident is safe and politicians are very honourable people who never break their word!!.If, horror of horrors, there is a prospect of a Lab/snp coalition and Salmand/Sturgean demand the termination of Trident, perhaps Ed might say "No way, that would be dishonourable. It would be better for the Dave to stay in No 10". Yes?? No??Avincis/oil price concerns too.Lost quite a bit so far this visit, though have done well in the past. Shall I go because of the above, or stay because it is a damn fine company with lots of contracts?
Komatsu100
09 Mar 2015
Mark Barnett: Why I'm buying into support services Mark Barnett: Why I'm buying into support services"A forthcoming investor day in March should help re-focus attention on the vast majority of Babcock’s business that is performing well."[link] Babcock International is an engineering support services company, providing a range of services to the UK Ministry of Defence, which contributes around 45 per cent of group revenue. Much of this is provided under a 15-year terms of business agreement, which was signed in March 2010, and provides visibility over forward work. Organic growth has been regularly augmented with acquisitions over the past five years, including most recently the purchase in March of Avincis, a large helicopter services business. It is true business is exposed to the oil and gas industry’s fortunes as it provides transport duties to offshore installations and stock market attention has focused on this rather than the longer-term growth opportunities of integrating Avincis within the group. Meanwhile, Babcock’s order book has expanded to a record £20bn following a contract signed just before Christmas. A forthcoming investor day in March should help re-focus attention on the vast majority of Babcock’s business that is performing well.
Rhigos
25 Feb 2015
Re: After the election gamesinvestor,Thank you for your detailed and insightful posts. I agree BAB heavily reliant on government contracts and I agree their customers are trying to cut back. Some contracts look like good steady long term income streams to me like nuclear de-commissioning. The relatively high gearing is a problem. If a company growing well high gearing of course amplifies growth but I'm not sure BAB fits into that category.Looking at a 5 year SP chart, with log price scale, it was a lovely almost straight upward trend until a year ago when it changed to a similar gradient downward trend. In Oct last year sector (support services) started to trend up but BAB did not follow suite. Their yield of 2.5% makes me wonder why I should hold them. I suppose I am expecting SP to recover. I will give them another few months in the hope that they announce they have won some good contracts.Of 3 broker recommendations this month 2 were buy and one outperform which is another reason to at least hold.
gamesinvestor
25 Feb 2015
After the election Osborne on record this morning openly admitting that an axe will have to be taken to non NHS government spending and there is concern about the UK's dwindling military budget that is likely to breach below 2% of GDP.This corresponds with the significant risk outlined in Babcock's small print.Games
gamesinvestor
24 Feb 2015
Re: Will BAB SP recover? something else in the last section of the risk section worth emphasising :-"""""""The UK government is due to undertake a Strategic Defence and Security Review in 2015 after the general election due in 2015 and such a review may have material short or longer-term consequences for the Babcock Group’s business with the Ministry of Defence."""""Whoever wins the election, and despite all the hoo har and promises from our fearless political gentlefolk, they will have absolutely no option but to take an axe to government spending.Games -- The argument that "well the that's where outsourcing comes into play because it cuts costs" -- that may be true to an extent but it still has to be paid for.
gamesinvestor
24 Feb 2015
Re: Will BAB SP recover? Rhigos, It's painful staring in the face of profits that could have been had. I've a few of these myself.Babcock looking forward seems on the surface a fine company. I'm no expert but the gearing on this thing is over 200% (according to digitallook but net gearing at 57% on London Stock Exchange March 2014) and it's very heavily dependent on military government spending. 3/4's of Babcock's business is military marine or defence and security.Where is all the government money coming from, given that the NHS is ring fenced and the welfare state has to receive so much to avoid civil unrest. With a deficit in the UK being one of the biggest in the western world and years before we can even stop a deficit, let alone reduce the debt, is there any option but to savagely cut defence spending? Also that debt could look expensive if the Fed starts to raise rates.This lot in the financial report risk section sums it up :-"""""Babcock’s customers are mainly large, complex organisations, typically central or local government departments (notably the UK Ministry of Defence), other public sector bodies or commercially owned entities in sectors subject to specific regulation. Many of them rely, to a greater or lesser extent, on public funding. These customers may be affected by financial, budgetary, regulatory or political constraints which could have a significant impact on the size, scope, timing and duration of contracts and orders with/placed by them and therefore on the level of business which the Group will derive from such customers. In addition, because of their size, these customers have considerable bargaining power and have the ability to cancel contracts without, or on, short notice, often without cause or exert pressure to secure their renegotiation. Inevitably, reliance on a relatively limited number of customers and contracts carries risks. National and local government policy changes and public spending constraints are potentially material risks for the Company as they could result in delays in placing work, pressure on pricing or margins, withdrawal of projects, early termination of contracts, lower contract spend than anticipated or adoption of less favourable contracting models. These customers set demanding criteria for eligibility for contracting with them, the cost of compliance with which can be significant. Damage to Babcock’s reputation, whether justified or not, or to the reputation of outsourcing itself as a business model by reason of reputational or performance issues with other suppliers has the potential, given a relatively narrow customer base and the size of contracts at stake, to impact severely our ability to win or retain significant business streams. Given its particular importance as a customer of the Group, reductions in the Ministry of Defence’s budget or changes in its defence policy or spending priorities (such as changes to policy on continuous at sea deterrence or successors to existing nuclear deterrence capabilities or submarine or surface ship strength or capabilities) may adversely affect the Group’s business if those reductions or changes result in the delay, cancellation, abandonment or significant reduction in scope of activities that may otherwise have been available for the Group to participate in. The UK government is due to undertake a Strategic Defence and Security Review in 2015 after the general election due in 2015 and such a review may have material short or longer-term consequences for the Babcock Group’s business with the Ministry of Defence. Games - Again I might be missing a whole load here, but it's dependency on government worries me - look what's happened to the energy industry partly due to tinkering with carbon levies, the Milliband effect and other blundering and blithering political mistakes.
Rhigos
21 Feb 2015
Will BAB SP recover? In April last year my BAB shares were 35% up including dividends after holding for 14 months and taking up rights. Now I am only 3.5% up. Should have followed my 15% moving stop loss and would have realised a 20% profit. It was a big mistake them buying Avincis and marked their SP decline. My feeling is SP will recover but taking longer than I expected. Perhaps they should sell off something to reduce debt.
