Cape : Interim results for the period ended 3 July 2016

Cape plc

('Cape' or 'the Group')

Interim Results

Cape plc, an international leader in the provision of critical industrial services to the energy and natural resources sectors,

announces its unaudited half-year results for the period ended 3 July 2016.

Mixed results for the first half with full year expectation unchanged

Financial summary

H1 2016

H1 2015

Change

Financial highlights:

Continuing operations:

Revenue

£396.3m

£359.5m

+10%

Adjusted operating profit

£18.9m

£25.1m

(25%)

Adjusted operating profit margin

4.8%

7.0%

(220bps)

Adjusted profit before tax

£14.9m

£21.4m

(30%)

Adjusted diluted earnings per share

8.9p

13.2p

(33%)

Interim dividend per share

4.5p

4.5p

-

Adjusted net debt

£113.7m

£131.3m

(13%)

Statutory results:

Operating profit

£6.8m

£22.8m

(70%)

Profit before tax

£1.4m

£17.6m

(92%)

Diluted earnings per share

0.2p

10.3p

(98%)

Prior year figures have been restated to exclude Hong Kong operations which were discontinued in 2015.

Operating Highlights

• A strong revenue performance, driven by Asia Pacific, partially offsetting weaker than expected margins in the UK resulting in 25% reduction in group operating profit
  • The UK business performed below expectation as operating margins were adversely affected by weakness in the offshore North Sea and thermal coal power generation markets, and poor commercial performance on the ExxonMobil contract at Fawley
  • The Asia Pacific business performed above expectation driven by increased project activity in Australia, South Korea and Singapore
  • The Middle East business delivered a solid performance with a strong contribution from the SOCAR-Cape joint venture in Azerbaijan mitigating the effect of increased cost pressures from clients across the region
• The Redhall Engineering Solutions acquisition, rebranded as Cape Engineering Services, is now fully integrated into the UK business and has performed ahead of expectations
• The UK business is being restructured to maximise capability for growth through delivering the full portfolio of services to the Group's customer base whilst reducing overhead costs

Financial Highlights

• Order intake during the first half decreased to £309m (H1 2015: £399m), largely due to the timing of key contract awards resulting in an order book of £820m at period end (5 July 2015: £800m; 31 December 2015: £861m)
• Revenue increased by 10% to £396.3m (H1 2015: £359.5m) with a small benefit from exchange rate movement and a full period from the Redhall Engineering Solutions acquisition completed in May 2015. At constant currency organic revenues increased by 6%
• The Group achieved an excellent cash conversion of 73%, resulting in a period-end adjusted net debt of £113.7m (5 July 2015: £131.3m; 31 December 2015: £109.9m)
• Adjusted diluted earnings per share from continuing operations was 8.9p (H1 2015: 13.2p)
• IDC provision increased by £8.7m largely reflecting the result of recent litigation in respect of employer liability claims being brought by Aviva
• The Group has declared an interim dividend of 4.5p (H1 2015: 4.5p) per share underlying the Board's confidence in the business
• Expectations for the full year unchanged with a higher profit weighting in the second half driven by increasing project activity, the effects of the restructuring in the UK and the benefit of foreign exchange tailwinds.

Changes to segmental reporting

The Group has re-organised its geographical reporting segments during the period as outlined below. The change in reporting segments has been performed to align external reporting with the revised internal management structure. All prior year figures have been restated accordingly.

Old segments

New segments

UK, Europe & CIS

UK

MENA

Middle East

Asia Pacific

Asia Pacific

CIS refers to Kazakhstan, Azerbaijan and Sakhalin.

Includes Kazakhstan and Azerbaijan.

Includes Sakhalin.

Commenting on the results, Joe Oatley, Chief Executive of Cape said:

'The first half results demonstrate the value of Cape's strategy of developing a balanced business across the maintenance and new construction segments with a broad geographical spread. Although we have seen a deterioration in a number of our markets, overall the Group has delivered solid top-line growth, highlighting the resilience of our business. We continue to invest in order to deliver on strategic goals whilst adapting our cost base where necessary to match market conditions. Despite the challenges in many of our markets, our expectation of the financial result for the full year is unchanged.'

Throughout this document, various management measures are used and referred to as adjusted. These are defined and reconciled within note 6 'Adjusted measures'.

Analyst meeting

The Group will be presenting to a meeting of analysts at 9.30am today at the office of Buchanan, 107 Cheapside, London, EC2V 6DN.  The presentation will shortly be available on the Company's website at: www.capeplc.com/investors/financial-results-and-presentations.aspx

Enquiries

Cape plc

Joe Oatley, Chief Executive +44 (0) 1895 459 979

Michael Speakman, Chief Financial Officer +44 (0) 1895 459 979

Ronan Tyrrell, Interim Head of Investor Relations +44 (0) 1895 459 979

Buchanan

Bobby Morse, Ben Romney, Chris Judd +44 (0) 207 466 5000

Forward looking statements

Any forward looking statements made in this document represent the Board's best judgement 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 (www.capeplc.com), which is premium listed on the main market of the London Stock Exchange, is an international leader in the provision of critical industrial services principally to the energy and natural resources sectors. Our multi-disciplinary service offering includes access systems, insulation, specialist coatings, passive fire protection, refractory linings, environmental services, oil and gas storage tanks and heat exchanger replacement and refurbishment.

Cape employs c. 16,400 people working across 19 countries and in 2015 reported revenue of £711.4 million.