Chairman's Statement

Babcock International Group PLC
28 July 2000


Contact:  Dr T John Parker
          Chairman

          Nigel Young
          Finance Director
          Telephone:  [phone]

          Ginny Pulbrook
          Citigate Dewe Rogerson
          Telephone: [phone]


               Babcock International Group PLC
                   Annual General Meeting
                    Chairman's Statement
                              
                              
                              
At the Annual General Meeting, Dr. T John Parker, Chairman,
stated:

'I am happy to report that the outlook for the year remains
in line with that expressed at our preliminary results in
June.  Good progress is also being made on a number of the
new business opportunities which we highlighted in our
Annual Report.

The search for the new CEO is proceeding and we expect to be
in a position to ensure a smooth handover later in the year.

Enhancing Shareholder Value
Over the last 3 financial years Group EPS (before non-
operating exceptional items and goodwill amortisation) has
increased from 4.78p per share to 11.43p per share and Net
Cash from £21m to £105m.  Despite the fact that the
company's share price has significantly outperformed the
FTSE Engineering Sector, the Board nonetheless believes that
there is still potential to generate greater shareholder
value.

Against this background the Board has, with the assistance
of its advisors, concluded that shareholder value can best
be enhanced by focussing the Group's resources on expanding
and developing its Support and Defence Services operations,
currently centred within its BES Division, with the
objective of building it into a strong and specialist
service provider.

As a consequence, the Group intends to dispose of its
materials processing technologies and engineered systems
division, BMH Technologies, and discussions with interested
parties have recently been initiated.

In addition, the Board plans to return £30m of cash to
shareholders.  A further announcement regarding the details
and timing of this return will be made in due course.

The Support Services activities of BES will be expanded via:
1. Organic development, with a primary focus on the
   expansion of its Facilities Management ('FM') capability
   in Naval and Marine Support Services.  In particular it
   will target further expansion of its services in the
   facility management of Naval Bases and other 'secure'
   facilities.

2. Acquisitions, to build a broader based Support Services
   capability in order to address other sectors of the
   Marine and Defence markets.

 Following the sale of BMH Technologies the Board will
review the appropriate capital requirements for the
refocused Group, after taking account of ongoing acquisition
opportunities at that time.

The Board is convinced that, by taking these various steps,
there is significant scope to enhance value for shareholders
and to build an important player in the area of Support and
Defence Services.'