15 Nov 2013 07:00
Embargoed: 0700hrs 15 November 2013
Cape plc
("Cape" or the "Group")
Interim Management Statement
Cape plc, the international provider of essential support services to the energy and mineral resources sectors, today issues the following Interim Management Statement for the period 1 July 2013 to date.
Trading
The Group's overall trading for the third quarter was in line with the Board's expectations. Overall revenues were slightly ahead of expectations, offset by the margin impact of a less favourable mix of activity in the UK and lower than expected margin project work in the Middle East. Whilst the third quarter was in line with expectations, the Board expects that the full year result will be further impacted by operational challenges on a specific project in the Middle East.
UK & CIS
The UK business continues its robust performance and is trading in line with expectations, with higher revenue being offset by a slightly lower margin resulting from a mix of work weighted more toward the lower margin offshore market. Volumes in Kazakhstan reduced as anticipated as major project work there, such as the Kashagan development project, nears completion. Mobilisation of the significant maintenance project in Azerbaijan continues to plan and the business is focused on working with the State Oil Company of Azerbaijan (SOCAR) to agree outstanding commercial and financing arrangements for the Joint Venture.
MENA
As expected, activity levels in KSA continue to be high, partially offsetting a slowdown in UAE as several significant projects in that part of the region are coming to completion. Competitive pressures, combined with operational difficulties on a specific project in Qatar, will impact the region's performance in the second half. These operational issues have been recognised early in the project lifecycle and the necessary corrective actions are being taken. It is anticipated that second half margins for this region will be significantly below those delivered in the first half.
The Arzew Project in Algeria has been largely completed as anticipated in the revised plan; the cost to complete is within the previously disclosed provisions and cash receipts continue to be in line with agreed commercial terms.
Asia Pacific
As expected, market conditions continue to be challenging in both Asia and Australia. Despite this, the business delivered a better than expected performance in the third quarter as the benefits of the performance improvement plan for the Group's Australian business began to bear fruit. It is anticipated that this region will achieve a breakeven position by the end of the current financial year and return to profitability in FY14. This improvement in the outlook for the Australian business will be further strengthened by the award of the access contract for the Wheatstone project announced today, expected to be worth in excess of £45m. A decision on the award of the substantial insulation, fireproofing and coatings contract for the same project is expected shortly.
Order Book
The Group's order book as at 30 September 2013 stood at £482m (30 June 2013: £593m) reflecting expected timing of key target contracts and the on-going challenges in a number of the Group's markets.
The Group's financial position remains robust with net debt at 30 September 2013 of £78.3m (30 June 2013 £73.9m).
Outlook
The Board anticipates that the full year operating profit will be materially below previous expectations as a result of the project specific operational challenges in the Middle East. Group earnings per share is expected to be slightly below previous expectations as a result of the mitigating effect of the minority interest in the Qatar business and an improvement in the Group's overall tax rate.
The Group has targeted a number of key prospects to be secured during the next two quarters which will be important in delivering the Board's expectation of improved performance in 2014. The near term strategy and focus for the Management team is on securing these prospects and continuing to drive operational excellence throughout the Group.
Conference Call: 8.00am GMT 15 November 2013
A conference call for analysts and investors will take place at 8.00am this morning. The conference call can be accessed by dialling +44 (0)203 139 4830 and pin code 99360776#.
Financial calendar
Cape expects to announce its preliminary results for the year ending 31 December 2013 on 18 March 2014.
Enquiries:
Cape plc
Joe Oatley, Chief Executive +44 (0) 1895 459 979
Michael Speakman, CFO +44 (0) 1895 459 979
Buchanan +44 (0) 207 466 5000
Bobby Morse, Ben Romney, Louise Mason
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 financial 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 premium 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 2012, Cape reported adjusted revenues of £749.4 million. With scale and leading market positions across its international footprint, Cape employs over 21,000 people around the world.