Peterhouse delivers goods for Babcock

Babcock International is delighted to have the former Peterhouse Group on board.
Bought in June, the £99m acquisition has immediately produced a profit. Chief executive Peter Rogers said: "I've not had any nasty surprises and there have been no black holes. We got exactly what we expected."
Included in the bid price was £66m for goodwill, which Rogers did not think excessive. "If
you buy something with a turnover of £100m, and the cost of borrowing capital is 8% to 10%, then you need to make a profit of £10m for it to work. The first three months with Peterhouse have shown that such returns are achievable.
"It was the right deal for Peterhouse - being part of a bigger company is helpful."
Babcock's interim financial results (six months to 30 September) show a pre-tax profit of £17m on a £240m turnover.
During the three months that Peterhouse was included, its £96m of turnover generated an operating profit of £12m, although this figure included a £10m exceptional figure by way of goodwill - the result of Network Rail (NR) taking rail maintenance operations in-house.
Exactly how much NR would cough up was one of the key
differences between David Jackson, Peterhouse founder and former chairman, and Babcock during the acrimonious takeover period.
"David was being disingenuous with his higher figure," said Rogers. "There was £20m in cash but, for example, £6m of this was for buying assets from us to be used in the business, so that element was just an exchange, as machinery and equipment was exchanged for cash."