Cape plc (CIU) - Interim Management Statement
RNS Number : 8339Q
12 November 2012
Embargoed: 0700hrs, 12 November 2012
("Cape" or the "Group")
Interim Management Statement
Cape plc, the international provider of essential, non-mechanical support
services to the energy and mineral resources sectors, today issues the
following interim management statement for the period 1 July 2012 to date.
For the three months ended 30 September 2012 Cape delivered year-on-year
revenue growth of 6% driven by higher activity levels primarily in the CIS and
Gulf/Middle East regions, partially offset by lower activity levels in
The trading performance of the Group's businesses in the UK, CIS/Mediterranean
& North Africa and Gulf/Middle East regions and Asia was in line with
expectations.However, the Group's operating margin was impacted by a
substantial deterioration in the performance of the Group's onshore Australian
business driven by both a further downturn in current trading and the
recognition of a number of legacy issues.As part of the previously reported
review of the Group's Australian operations, a detailed review of the onshore
Australian business' balance sheet was initiated which has led to the
identification and correction of a number of issues relating to the valuation
of certain balance sheet items.This review is expected to be complete before
year-end; until then there remains some uncertainty over the full year
performance for this business.
In light of the legacy issues identified in the onshore Australian business,
the Board has prudently extended the review to a detailed analysis of all
balance sheet items Group-wide. It is expected that this review will be
complete for year-end reporting.
The provision taken in H1 2012 relating to the Arzew Project remains
unchanged. During Q3 Cape has demonstrated its ability to deliver in line with
the required levels of productivity; however, the project is currently
progressing slower than anticipated due to the inadequacy of work package
releases.Achievement of acceptable levels of productivity and completion at
the end of Q1 2013 are both dependent on the timely release of work packages
from the client. Cape is initiating discussions with its client in order to
secure compensation for any additional costs incurred due to delays caused by
inadequate work package releases.
During October the Group has recognised a £1.5m provision in the Gulf/Middle
East region relating to a potential bad debt with a customer in the Kingdom of
Saudi Arabia reported to be in financial difficulty; this potential bad debt
is not deemed reflective of a structural change in the region.
As a result of the above issues the Board anticipates that the Group will
deliver a full year operating profit performance significantly below previous
expectations.Until the detailed review of balance sheet items is complete
there remains uncertainty in the eventual outcome of the full year
The Group's financial position remains robust. The H2 working capital inflow
in the UK arising from seasonal shutdown related activity in the region is
progressing as expected.The unwinding of working capital relating to early
stage projects in the Middle East, the Arzew Project and a specific large
project in Asia is occurring more slowly than anticipated. It is expected that
the year-end net debt position will be between £80m and £90m.
The Board announces that Richard Bingham is standing down as Group CFO by
mutual consent with immediate effect.
The previously announced review of operations in Australia has identified the
need to focus the business on core Cape activities of providing
multi-disciplined services on-site to industrial clients both for maintenance
and new capital projects. The review has identified actions to address the
underperformance by investing in developing these core capabilities,
strengthening the management team and reducing overheads. The Group has
appointed Gary McLean as Divisional Managing Director to lead the Australian
business. Gary has successfully led a significant part of the Middle
East/Gulf operations of Cape for the last five years and will bring a wealth
of experience and leadership capability to the Group's Australian operations.
The organisational changes will include the divestment of the following
non-core operations: the two hire and sales scaffolding businesses with
operations focussed on the residential and commercial construction markets in
Melbourne and Perth; and the stand-alone blasting and painting workshop
facility in Kwinana (Perth).
As previously announced, the carrying value of the assets acquired in
Australia in 2007 is being assessed as part of this review. It is expected
that a charge, recognised against the carrying value of these assets and
treated as a non-cash exceptional item, will be taken in the full year 2012
Cape expects to announce its preliminary results for the year ending 31
December 2012 on 6 March 2013.
Joe Oatley, Chief Executive +44 (0)20 3178 5380
Karen Menzel, Director of Investor Relations +44 (0)20 3178 5408
Patrick d'Ancona +44 (0)20 7920 2347
Ben Simons +44 (0)20 7920 2340
Forward looking statements
Any forward looking statements made in this document represent the Board's
best judgment as to what may occur in the future. However, the Group's actual
results for the current and future fiscal periods and corporate developments
will depend on a number of economic, competitive and other factors, some of
which will be outside the control of the Group. Such factors could cause the
Group's actual results for future periods to differ materially from those
expressed in any forward looking statements included in this announcement.
Cape plc (www.capeplc.com), which is listed on the main market of the London
Stock Exchange, provides a range of non-mechanical industrial services
including access systems, insulation, painting, coatings, blasting, industrial
cleaning, training and assessment to both industrial plant operators and major
international engineering and construction companies.
As a single source provider, Cape is able to provide a range of specialist
multi-disciplinary services specifically tailored to meet the needs of the
client providing the most intelligent and cost efficient solutions for our
customers non-mechanical in-plant maintenance and capital needs.
In the year ended 31 December 2011, Cape reported revenues of £722.5 million.
With scale and leading market positions across its international footprint,
Cape employs over 19,000 people around the world.
This information is provided by RNS
The company news service from the London Stock Exchange
IMSDGBDBXXBBGDB -0- Nov/12/2012 07:00 GMT
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