Babcock to end Magnox deal, taking £800m from order book
The arrangement to end the Magnox reactor deal by August 2019 was agreed with the UK's Nuclear Decommissioning Authority (NDA).
"Following the detailed contract Consolidation phase, it has become apparent that the work that needs to be done at the 12 Magnox sites is now materially different in volume from that specified in the NDA's tender, and this puts the contract at risk of a legal challenge," Babcock said in a statement.
Last year a High Court judge said the NDA had "manipulated" the £7bn cleanup contract for the UK's nuclear plants.
Babcock said the latest decision will cut around £100m from revenues "which we would expect to replace in the normal course of business over that timeframe".
"Around £1bn will be removed from the £11bn bidding pipeline; however a number of new identified opportunities coming forward from our tracking pipeline is likely to result in the bidding pipeline being broadly unchanged" it added.
"This contract change is not expected to have any negative financial impacts over the next three years and we do not expect this announcement to change the financial guidance we expect to give at the group's full year results in May." ■