Babcock BAB interims

[Davidsb]

These were released yesterday:-

https://www.investegate.co.uk/babcock-i ... 00049674H/

<snip>
Financial highlights
· Underlying operating profit up 1.4%, up 2.4% at constant exchange rates
· Group margin improving to 10.9%, partly as low margin businesses exited
· Underlying basic EPS up 3.1% to 39.9p
· Underlying revenue down 2.3%, impacted by exits and disposals
o Organic revenue growth at constant exchange rates -1.1%
o Excluding exits, organic revenue growth at constant exchange rates +0.5%
· Underlying operating cash flow of £264 million (120% cash conversion pre capex, 82% post) and free cash flow of £140 million
· £32 billion combined order book and bid pipeline, 92% of underlying revenue already secured for 2018/19
· Net debt £1,132 million, down £159 million year on year; represents 1.6x EBITDA and on track to reach 1.4x by March 2019
· Interim dividend up 3.6% to 7.1p, reflecting our confidence in the prospects for the Group and sustained cash generation

Exceptional charges
· Exceptional charges of £120 million (£101 million net of tax), related to reshaping our Oil and Gas business, our exits and disposals programme and rightsizing capacity across sectors, including exit of Appledore shipyard
· Total related net cash costs expected to be around £10 million after disposals and asset sales
</snip>

And the dividend:-

An interim dividend of 7.10p per 60p ordinary share (2017: 6.85p per 60p ordinary share) was declared after the balance sheet date and will be paid on 16 January 2019 to shareholders registered on 7 December 2018.

[Bouleversee]

A puzzling situation, this. The share price has plummeted since the damning report from Boatman and it seems rather strange to be increasing the dividend by so much in the circumstances. I have holdings inside and outside ISAs and am losing quite a lot of my investment. Difficult to know what to do now. The directors seem to have rather more confidence in their future than the market. Shades of Carillion and Interserve?

[Davidsb]

There seems to be some mystery as to who is behind Boatman - it makes you wonder if there is some kind of hidden agenda?

My investment in BAB is modestly down in capital terms, but in a 46-share portfolio, some shares are virtually guaranteed to be down on purchase price. As a relatively recent buy (and less than 1% of my total invested) I am happy to sit back and ignore the noise - and I may even add to my holding if no surprises emerge over the next couple of months.

Best wishes anyway - whatever you choose to do.

(As an off-topic aside, my WPP (Wild Punt Portfolio) is looking at Interserve at the moment, along with Keller and a couple of other bombed-out choices......have they hit the bottom yet?)