16:18 24 Apr 2014

1,195.00p

-0.17%

Strategic Objectives

We have an overriding objective that drives the way we do business:

Our objective is to develop from our position as the UK's leading engineering support services company and grow in both the UK and overseas.

We will achieve this by sticking to our clear strategy and business model. This helps us to differentiate ourselves from our competitors and enables us to deliver sustainable and long-term value to both our shareholders and customers. It also makes Babcock a rewarding place to work for our employees.

Business Model

The depth and breadth of our knowledge and experience as well as the unique infrastructures we own or manage ensure we are able to operate in the higher value sectors of the market. We seek to add further value by becoming our customers’ strategic partner and entering into long-term, integrated output based contracts where both parties share in the risk and reward of its outcome.

Business Model _b

Underpinning our business model is our strategy

Please also see Babcock Library and Annual and Half Year Reports for further information.

Leading market positions

Aim:

We expect our businesses to be one of the top three in their market sector. If they are not, they will have clear plans to acheive this goal.

Progress:

We are the largest support services provider to the Royal Navy, providing 100% of submarine refit and repair work including the long period overhaul and refuel of HMS Vengeance, a key component of the UK’s nuclear deterrent

Key Examples:

  • Leading apprentice training supplier in the UK
  • Number one support provider to the Royal Navy
  • Largest supplier of support services to the MoD

Preferred customer characteristics

Aim:

We seek to work with customers who own large strategically important assets. These customers tend to be government departments, public bodies or private companies operating in highly regulated markets.

Progress:

In 2013 we were trusted to deliver vehicle support to the London Fire Brigade following an 18 month interim contract win.

Key Examples:

  • The MoD is our largest customer in both the Marine and Defence and Security divisions
  • Network Rail, our Rail division's largest customer, owns and operates Britain's rail infrastructure
  • We provide support to British Energy's fleet of AGR nuclear power stations and Eskom, the South African power utility
  • The Babcock Dounreay Partnership will deliver the UK's first major closure project for the NDA at Dounreay

Customer focused, long-term relationships

Aim:

We seek to work collaboratively with our customers to support the long-term nature of our contracts.

Progress:

We extended our excellent working relationship with Heathrow Airport Limited and British Airways by another five years following successful rebids in baggage handling and ground fleet support.

Key Examples:

  • Ten year Submarine Engineering Support Contract for Royal Navy's submarine fleet
  • 30 year RSME training and training support contract
  • Five year extension of our in service support contract with the Canadian government for the support of Victoria Class submarines

Integrated engineering and technical expertise

Aim:

We seek to use our skills, integrating engineering and technical expertise to deliver projects and long-term asset management.

Progress:

The majority of our employees are technically qualified and their skills are used to support our customers' strategically important assets. We have 251 graduates on our graduate programme, 76% of whom are engineers.

Key Examples:

  • Babcock in the largest specialist nuclear services company in the UK with a skilled nuclear workforce of 5,600 operating at all levels of the civil and defence nuclear markets
  • 2,500 qualified engineers in our Marine and Technology division work on all aspects of the UK's submarine fleet, some of the most complex machines in the world
  • Babcock engineers are providing around 50% of the design input in the CVF programme

Balancing risk and reward

Aim:

We seek to enter into contracts that fairly balance the risk and reward with our customers, so we can each share the financial effects of success or failure.

Progress:

We continue to move away from cost plus and we seek out pain/gain share contracting arrangements with new and existing customers.

Key Examples:

  • Our recent contract awards in mobile asset fleet management allow us to share in the efficiency gains with our customers.
  • We continue to deliver additional efficiencies on a large number of contracts for the MoD

Excellent health and safety record

Aim:

We expect all our divisions to deliver a sector-leading safety performance. We believe all our employees and others working on or visiting our operations should be able to return home safe and well at the end of the working day.

Progress:

This year we reduced our overall RIDDOR rate per 100,000 hours worked by 19% to 0.17, down from 0.21 in 2012.

Key Examples:

  • British Safety Council 5 Star Award 2013 and 2012 – Marine and Technology
  • Sword of Honour 2012 – Marine and Technology
  • Engineering Employers Federation Future Manufacturing Awards 2012 – national winner for our employee “Time Out for Safety” programme – Marine and Technology

 

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