Defence giant Babcock has rubbished a second “malicious” analyst note by shadowy research firm Boatman Capital Research.
The report, published this morning by the anonymous group which is untraceable on Companies House, made a number of fresh claims against the FTSE 250 firm, which Babcock slammed as “inaccurate and misleading” in a market update this afternoon.
Boatman claimed the defence contractor “needs to write down” the value of its Defence Support Group (DSG) subsidiary, which it bought for £140m from the Ministry of Defence in 2015, and repairs and maintains a range of army vehicles as well as looking after other ground equipment.
“According to our calculations, Babcock DSG has overvalued its main contract by £50 million, based on an average assessment of underlying operating profits,” it said. The Boatman report falsely said Babcock bought the DSG for £148m, rather than the correct £140m figure.
The report also hit out at Babcock’s corporate structure, calling it “opaque, needlessly complex, needlessly expensive and prone to errors”.
Babcock responded to both claims hours later, saying its corporate structure – of being comprised of several entities – “does not add any significant costs or complications in the running of the group”.
“Our DSG business is performing to financial expectations and we continue to see opportunities for growth. We have regularly updated the market on progress and can confirm that we do not intend to make any impairment in regard to DSG,” the company added.
“Whilst the minor allegations made are inaccurate and misleading, this is the second malicious attack by Boatman and we feel it is right to, once again, refute their allegations publicly as we are unable to engage with them directly.”
The defence contractor took a hit on the markets last year after a report by Boatman Capital, an anonymous and unregistered entity purporting to be an analyst group, released a report which criticised several parts of Babcock’s operations – including its relationship with the Ministry of Defence, its biggest customer.
It claimed there were fissures between the company and its key client, and that bosses were given a “bollocking” from the MoD.
But this time shareholders seemed unfazed. Babcock’s share price was up 0.7 per cent this afternoon after it put out its rebuttal.
After the first report went out last year, Babcock chief Archie Bethel told the Sunday Telegraph: “The source of the report is the big mystery. We are frustrated, but the bottom line is unless [Boatman] puts something else out we may never know.”
City A.M. understands Babcock is no closer to knowing the identity of those behind the report than before. Boatman has not replied to requests for comment, but sent the report via email, saying: "We have focused on the need for further write downs and on the complexity of the company's structure."
Whoever is behind Boatman appears to have registered two web addresses – theboatmancapital.com and theboatmanresearch.com – at around the same time, in early July. Only the former is active. Both sites are registered to a company called WhoisGuard in Panama, which is being used to mask their actual ownership.