Cape plc Interim Management Statement (8339Q)
November 12 2012 - 1:01AM
UK Regulatory
TIDMCIU
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 GBP1.5m 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 GBP80m and GBP90m.
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
GBP722.5 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
END
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