(2006) Babcock Partnering Enables Government To Deliver

The Big Picture

Another strong six months

September-October 2006 contents 2

Chief Executive’s introduction Partnering enables Government to deliver

With your help and support, Babcock businesses remain in an excellent state of health. Our order book continues to be strong and is currently in excess of £2.3 billion.

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BABCOCK NETWORKS Eve Group branding switch Converging on fixed-line networks The challenges of Killin to Stoy

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ALSTEC Luton Airport check-in and baggage handling

With the Regional Prime East contract for Defence Estates successfully mobilised and operating well and the Prime South West contract in its third year, growth in Defence Services has been good. Our South African operations continue to enjoy strong demand in all their markets, particularly the equipment market. Activity levels in Rail have continued to improve and the business was successful in September, securing preferred bidder status on two out of the six signalling strategic framework contracts recently tendered by Network Rail.

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BABCOCK INFRASTRUCTURE SERVICES RAF Yeovilton’s new ATC tower opens Sustainability Conference 2006 Replacing Poole’s 60-ton floating pontoon

While these successes obviously make headlines the work done by Babcock people in maximising benefits to both ourselves and our customers in ongoing contracts plays a vital part in the success of the company. On behalf of the Board I would like to thank all of you for making these achievements possible.

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Eve Group switches to Babcock Networks

BABCOCK NAVAL SERVICES Jumping Jack to drive dolphins for jetty BABCOCK DEFENCE SERVICES Hawk maintenance at RAF Valley Our DTR credentials BABCOCK AFRICA Equipping the Vaal Pipeline project Cutting it with the diamond diggers BABCOCK ENGINEERING SERVICES Ark Royal’s new mast passes muster Fort Rosalie refit completed BD&T design centres of excellence FIRST ENGINEERING Stirling-Alloa-Kincardine rail project HEALTH & SAFETY An evolution in H&S at BIS ALSTEC reviews SHEQ and releases H&S movie TRAINING & TEAM BUILDING Eve training awards successes Apprentices join and move up at BNS Babcock DynCorp team development day BIS recognises long service BDS’s flying Mike McKinley retires BABCOCK SPORT BDS yacht, squash and football sponsorships, plus charity run BES charity golf day Babcock Africa rugby sponsorship

Peter Rogers, Chief Executive

Babcock partnering enables Government to deliver This Autumn and into early 2007 the Government will reach the climax of its third comprehensive spending review or ‘CSR’. This is the process by which the political priorities for public spending and the allocations for their delivery by departments are set. In short, CSR determines who gets what, when and also the performance criteria that are to be met. Among the largest areas of capital spending in the last spending review, known as CSR 2004, were Defence, Rail and Scotland – all three of these are areas where Babcock, through its partnering efforts, continues to deliver improvements without compromise to safety, efficiency or value for money.

... i n D e fe n c e The breadth of Babcock activity for the MoD can surprise some observers. We are very well known for our maritime support of surface warships, including aircraft carriers, at Rosyth and for the waterfront support and services provided to nuclear submarines at HMNB Clyde. Babcock is active in supporting key infrastructure and activities which underpin the conduct of military training.

... i n R a i l For Network Rail the specialist activities delivered by First Engineering assist the national infrastructure owner in meeting its commitments to shareholders. High output track renewals is a case in point, where First and its Austrian partners are delivering innovative technology in the form of an integrated, largely automated chain of equipment which enables replacement track to be laid more rapidly than is possible through traditional methods.

On 2 October 2006 Eve Group Ltd became Babcock Networks Ltd. This is more than a name change, the move followed an in-depth research and consultation exercise with clients to understand their perceptions of the group and its brands in the marketplace.

... i n S c o t l a n d Babcock is actively providing support for transportation to the Scottish Executive. On a broader scale, however, the comprehensive activities carried out by Babcock in Scotland as a whole, through Babcock Engineering Services, Babcock Naval Services and First Engineering, make our group one of the larger employers of engineering services in the country.

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Future

Looking to the future, whilst the Comprehensive Spending Review is not yet finalised, it is clear that the partnering approach which Babcock performs with Government in supporting national infrastructure critical to the wellbeing of society and everyday life will remain of importance. In highly regulated industries, such as high voltage electricity transmission, telecommunications, nuclear decomissioning and airports, Babcock is working to utilise its storehouse of experience in partnering alliances that deliver safe, efficient, cost-effective solutions to more and more customers. Whatever the outcome of CSR 2007, Babcock will continue to Jeffrey Bradford, Group Business Development Manager do so and to assist Government in meeting its objectives. Left: The Rt. Hon. Gordon Brown MP, Chancellor of the Exchequer, holds aloft the budget box. The Treasury plays a key role in guiding the CSR process. Cover story: The Armed Services training and support credentials of Babcock Defence Services are second to none. It is uniquely equipped to play its leading role in the delivery of Package 2 of the MoD’s Defence Training Review. See pages 13 to 16.

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Eve Group was acquired by Babcock International Group in July 2004 and since then the Babcock brand has gradually gained more recognition within Eve’s markets. The research and consultation exercise showed that the Babcock brand is very high profile and that a number of major clients would like to deal with the Babcock name at a senior contracting level.

Those of you with a long memory may recall our ‘Babcock budget box built to last’ story in the Summer 2004 issue of The Big Picture. The budget box used by the Chancellor today was hand-made by Babcock employee Eric Axford in 1997 to replace the original box made for Lord Gladstone in 1860.

Transmission Training Communications Consulting

It also became clear, however, that clients value the individual brands of Eve and Turner & Partners, both of which are well established in their own right within their respective market sectors. As a result, the heritage and reputations of both brands will be preserved and services will continue to be delivered under these brand names – Eve within its transmission and communications sectors and in working-at-height training and Turner & Partners within the consultancy sector. More about Babcock Networks and Eve on pages 4 & 5... 3