Cape plc CIU Interim Management Statement

  Cape plc (CIU) - Interim Management Statement

RNS Number : 8339Q
Cape plc
12 November 2012






Embargoed: 0700hrs, 12 November 2012



                                   Cape plc

                           ("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 
Australia.



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 
performance.



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.



Australia restructuring



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 
results.



Cape expects  to announce  its  preliminary results  for  the year  ending  31 
December 2012 on 6 March 2013.







Enquiries:



Cape plc
Joe Oatley, Chief Executive                  +44 (0)20 3178 5380
Karen Menzel, Director of Investor Relations +44 (0)20 3178 5408
M:Communications
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.



About Cape:

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

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IMSDGBDBXXBBGDB -0- Nov/12/2012 07:00 GMT