Babcock under siege as shadowy analysts strike
ENGINEERING group Babcock, which works on UK military aeroplanes and naval bases, has come under fire from a secretive research firm.
Boatman Capital research, which has a Panama-registered website and whose directors are unknown, said in a report that Babcock ‘has systematically misled investors by burying bad news about its performance’. it called on the senior leadership team, ‘specifically the chairman and chief executive’, to step down. Babcock sank 4.1pc, or 27p, to 627p.
Boatman alleged that Babcock’s relations with the Ministry of Defence are ‘terrible’, despite the government department being its largest customer and accounting for 38pc of revenue last year.
it added that the MoD was particularly annoyed with Babcock’s delay in completing certain projects. Boatman calculated that costs on many of these projects were over-running by millions of pounds – a risk which investors had not been made fully aware of. Chairman Mike Turner, who has been at the company for ten years, must step down, Boatman insisted. Meanwhile, Boatman claimed it had been told by ‘defence sources’ that boss Archie Bethel ‘is simply not up to the job’.
The research firm accused Babcock of masking poor growth in its business by buying new companies. The Appledore shipyard in Devon, it said, was only just hanging on as it had minimal work to keep it in business. Babcock conceded it was ‘reviewing the options for our business at Appledore’ but declined to comment on the rest of the report.
Analysts at Stifel said they were ‘not familiar’ with Boatman Capital research, and remained comfortable with their ‘buy’ recommendation for Babcock.
As retailers have continued to take a battering, value footwear company Shoe Zone appeared to be a surprising bright spot.
in an end-of-year trading update, the company said revenue had risen by 1.8pc to £161m – and profits should be ‘in excess of £11m’.
Part of this was down to better revenues from its spring and summer ranges, but also the company generated higher margins after axing loss-making stores and implemented policies to better protect itself from currency swings.
After closing 20 stores and opening 16 over the year, Shoe Zone had 492 shops around the UK. Of those, 19 were in the new ‘big box’ format located in out-of-town retail parks. investors were also pleased that Shoe Zone’s third special dividend would go ahead. The firm said it would distribute £4m of excess cash to shareholders – around 8p per share. Shares shot up by 11.6pc, or 19p, to 183.5p.
The FTSE 100 tentatively continued Friday’s rebound after its torrid ride last week, ending the day up 0.5pc, or 33.3 points, at 7029.2 points. investors were still clearly nervous, as defensive stocks such as gold miners propped the index up while engineers and grocers pared the gains.
On London’s AIM, Chelsea Football Club’s owner roman Abramovich had some welcome news, as his 21.1pc stake in biomass company Velocys increased in value by £1.3m. Shares climbed by 39.8pc, or 1.5p, to 5.31p as it said it was making ‘strong progress’ in finding investors for its Mississippi biorefinery development.
But russian oil exploration company Urals Energy slid by 10pc, or 5.5p, to 49.5p as it revealed it was running out of cash after Sergey Kononov, the president of its subsidiary, made an ‘unauthorised’ £1.1m loan of company funds to another employee.
Urals ordered Kononov to repay the misappropriated or outstanding cash, but bizarrely said it would not be firing him due to the confidence that the board had in him ‘over the last few years’.