TIDMCIU
RNS Number : 5899O
Cape plc
22 August 2017
22 August 2017
Cape plc
('Cape' or 'the Company', and together with its subsidiaries,
the 'Group')
Interim Results
Cape plc (CIU.LN), 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 2
July 2017.
Strong trading performance and financial results in challenging
market conditions
Financial summary
H1 2017 H1 2016 Change
Financial highlights:
Continuing operations:
Revenue GBP581.9m GBP396.3m +46.8%
Adjusted operating profit GBP42.7m GBP18.9m +125.9%
Adjusted operating profit
margin 7.3% 4.8% +250bps
Adjusted profit before
tax GBP39.2m GBP14.9m +163.1%
Adjusted diluted earnings
per share 24.7p 8.9p +177.5%
Interim dividend per share - 4.5p -
Adjusted net debt GBP76.4m GBP113.7m (32.8%)
Statutory results:
Revenue GBP581.9m GBP396.3m +46.8%
Operating profit GBP37.6m GBP6.8m +452.9%
Profit before tax GBP32.9m GBP1.4m +2,250.0%
Diluted earnings per share 19.8p 0.2p +9,800.0%
Throughout this document, various management measures are used
and referred to as adjusted. These are defined and reconciled to
statutory measures within note 6 'Adjusted measures' and within
"Adjusted operating and free cash flow' on page 9.
Highlights
-- As anticipated, the Group delivered a strong trading performance in the first half of 2017:
- UK margins increased, driven by an improved commercial
performance and the benefit of the restructuring undertaken in
2016
- Middle East operating margins were significantly lower, driven
by increasing pricing pressure and mix of services with lower
activity levels for higher margin access work
- The Asia Pacific region achieved both excellent operational
performance and a significant increase in project activity
-- Robust cash performance leading to lower adjusted net debt of
GBP76.4m (31 Dec 2016: GBP80.4m, 3 July 2016: GBP113.7m):
- Strong adjusted operating cash flow of GBP38.6m (H1 2016:
GBP13.8m) reflecting good working capital management and a
temporary benefit at the period end from the timing of certain
customer receipts
- Partially offset by the April payment of the GBP18.0m insurer
product liability claims settlement announced in March 2017
-- Robust order intake, up 85% to GBP572m (H1 2016: GBP309m)
leading to a closing order book at 2 July 2017 of GBP902m
(31 December 2016: GBP918m)
-- Continued strong safety performance
-- The Board's expectation for the Group's full year performance
remains unchanged, with the balance of earnings weighted strongly
towards the first half
-- Recommended all cash Offer of 265 pence per share from Altrad
made on 1 August 2017; representing a premium of 46.2% on the
closing share price prior to the announcement of the Offer
-- Given the timing and terms of the recommended cash Offer for
Cape plc by Altrad, the Board has decided not to declare an interim
dividend (H1 2016: 4.5p)
Commenting on the results, Joe Oatley, Chief Executive of Cape
said:
"The Group has delivered a very strong operational and financial
performance in the period. Revenue, operating profit, margins and
cash conversion have all improved, reflecting operational
excellence in the delivery of key projects in Australia and
South Korea, and effective management of the Group's working
capital. The Group was also successful in securing strategic
contract wins in the UK, with the renewal of the long-term
maintenance contract with BP, and in Australia, with the award of
an initial contract at the Ichthys onshore LNG project.
"The Board's expectation for the Group's full year performance
remains unchanged with the anticipated reduction in construction
related activities in Asia Pacific resulting in the Group's
earnings being strongly weighted towards the first half of 2017.
The Board continues to anticipate that 2018 will be a more
challenging year, driven by the expected reduction in volume from
the current high level of construction activity in Asia Pacific and
the effect of project delays and margin pressures in the Middle
East."
Analyst meeting
The Group will be presenting to a meeting of analysts at 10.30
a.m. 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 +44 (0) 1895 459 979
Joe Oatley, Chief Executive
Michael Speakman, Chief Financial Officer
Ian Wood, Head of Investor Relations
Buchanan +44 (0) 207 466 5000
Bobby Morse, Ben Romney, Chris Judd
This announcement contains inside information.
Forward-looking statements
Certain statements in this document are forward looking. By
their nature, forward-looking statements involve a number of risks,
uncertainties or assumptions that may or may not occur and could
cause actual results or events to differ materially from those
expressed or implied by the forward-looking statements. Such risks,
uncertainties or assumptions could adversely affect the outcome and
financial effects of the expectations, beliefs, hopes, plans,
intentions, strategies and events described herein. Therefore,
forward-looking statements contained in this document regarding
past trends or activities should not be taken as representation
that such trends or activities will continue in the future. You
should not place undue reliance on forward-looking statements,
which are based on the knowledge and information available only at
the date of this document's preparation. For a description of
certain factors that may affect Cape's business, financial
performance or results of operations, please refer to the Principal
risks on page 33 of the
2016 Annual Report and Accounts.
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, insulation, engineering,
specialist coatings and fireproofing, environmental services, heat
exchanger replacement and refurbishment, storage tanks and
refractory.
In 2016, Cape employed c.16,100 people working across 23
countries and reported revenue of GBP863.5 million.
INTERIM MANAGEMENT REVIEW
Summary
As expected, trading for the first six months of 2017 has been
strong, reflecting both the increase in project volume and improved
margin performance in the Asia Pacific region. Elsewhere, results
have been mixed. The UK business, as anticipated, delivered an
improved margin performance compared to the prior period; however,
the operating margin in the Middle East business reduced markedly,
driven by increased pricing pressure and the impact of the mix of
work being weighted toward lower margin activities. Overall, the
Group achieved strong growth in both revenue and adjusted operating
profit compared to the first half of 2016, up 47% and 126%
respectively. The Group also achieved an outstanding cash
performance, driven by both a strong focus on working capital and
the temporary benefit at the period end from the timing of certain
customer receipts, resulting in a 180% improvement in adjusted
operating cash flow to GBP38.6 million (H1 2016: GBP13.8 million).
As a result of the strong cash performance, adjusted net debt was
significantly lower than at the end of the equivalent period in
2016 at GBP76.4 million (3 July 2016: GBP113.7 million; 31 December
2016: GBP80.4 million).
Order intake for the first half of 2017 increased by 85% to
GBP572 million (H1 2016: GBP309 million), reflecting the timing of
award of a small number of significant contracts. In Australia, the
Group was successful in securing a strategically important initial
multi-disciplinary contract from JKC Australia LNG at the Ichthys
LNG project, while the Group has also received additional volumes
of work at the Chevron-operated Wheatstone LNG project. In the UK,
the Group secured two contracts with BP in the UK North Sea,
extending this long-standing relationship for a further three
years. While the release of work on existing contracts remains
slow, bidding activity in the Middle East remains high and the
Group has secured further scope expansion on the Jazan project in
the Kingdom of Saudi Arabia (KSA) and a strategically important
contract award in Kuwait for painting, insulation and passive fire
protection at Kuwait National Petroleum Company's (KNPC) Fifth Gas
Train project.
The Group's order book was GBP902 million at 2 July 2017 in
comparison to GBP918 million at 31 December 2016 and GBP820 million
at
3 July 2016. The reported order book excludes the order book
value associated with joint ventures where the Group holds a
minority interest. Cape's share of the SOCAR-Cape joint venture
order book in Azerbaijan was GBP20 million at 2 July 2017
(31 December 2016: GBP34 million; 3 July 2016: GBP54
million).
Group revenue from continuing operations increased by 47% to
GBP581.9 million (H1 2016: GBP396.3 million) with 8% of this growth
reflecting the benefit of positive foreign exchange movements.
Organic growth of 39% was largely driven by the phasing of project
related volumes in Asia Pacific, primarily in Australia, at
Wheatstone and Woodside's Karratha Gas Plant Life Extension
programme (KLE), and South Korea, at Shell's Prelude Floating LNG
(FLNG) facility. These increases were partially offset by lower
volumes in both the UK and the Middle East, reflecting the
challenging market conditions in both regions.
Adjusted operating profit from continuing operations increased
by 126% to GBP42.7 million (H1 2016: GBP18.9 million) with adjusted
operating margin increasing to 7.3% (H1 2016: 4.8%). The increase
in margin was largely driven by a combination of excellent
operational performance on the key projects in Australia and South
Korea and the operational leverage from higher volumes on those
projects. The UK business also delivered an improved operating
margin as a result of an improved commercial performance and the
benefit of the 2016 restructuring activity. Margins in the Middle
East business declined, driven by increased pricing pressure and a
change in mix of services delivered with relatively low volumes of
higher margin access activity in KSA and Qatar.
The Group achieved a strong cash performance, reflecting both a
continued focus on working capital management across the business
and the temporary benefit at the period end from the timing of
certain customer receipts. Adjusted operating cash inflow for the
first half of 2017 was 180% higher than the first half of 2016 at
GBP38.6 million (H1 2016: GBP13.8 million), driving a significant
reduction in adjusted net debt to GBP76.4 million (3 July 2016:
GBP113.7 million; 31 December 2016: GBP80.4 million) despite the
GBP18.0 million payment made in April 2017 as part of the insurer
product liability litigation (Insurer PL Litigation) settlement
announced in March 2017.
Impressive safety milestones have been recorded across the Group
and both the Total Recordable Incident Rate and Lost Time Incident
Frequency remain broadly in line with the Group's full year
performance in 2016.
On 7 July 2017, the boards of directors of Altrad Investment
Authority SAS (Altrad) and Cape plc (Cape) announced that they had
reached agreement on the terms of a recommended cash offer for Cape
by Altrad. The Offer of 265 pence per Cape share is a premium of
46.2% to the closing share price on 6 July 2017. The Offer Document
was posted to Shareholders on 1 August 2017. The First Closing Date
of the Offer is 1.00 p.m. (London Time) on 22 August 2017.
Given the timing and terms of the recommended cash Offer for
Cape plc by Altrad, the Board has decided not to declare an interim
dividend. Should circumstances around the Offer change, the Board
may revisit this decision in the future.
Progress on strategy
Cape's strategy has continued to prove resilient in challenging
market conditions. The Group's drive to deliver operational
excellence combined with geographical diversity has underpinned the
strong first half financial and operational performance.
Operational Excellence remains the cornerstone of our strategy
as it enables Cape to deliver better value to our clients whilst
seeking to protect margins in today's challenging market
conditions. We continue to invest in our people and processes to
drive productivity and operational safety improvements, which in
turn delivers increased value to our clients. Our growing
reputation for excellence in delivery has been a key enabler for
securing the growth we have achieved this year.
The value of customer intimacy has been demonstrated by the
extension of our long-standing relationship with BP in the UK North
Sea as the Group secured two three-year maintenance contracts with
a combined estimated value in excess of GBP150 million, while in
the Middle East we continue to secure additional work packages at
major projects from existing customers, such as Nasser S Al Hajri
and Consolidated Contractors Company.
Progress on strategy (continued)
We continue to pursue growth in our maintenance business to
provide stability against the natural variability in demand from
the construction market. Revenue from maintenance activities in the
first half of 2017 was GBP273 million (H1 2016: GBP237 million)
representing 47% of total revenue (H1 2016: 60%). The growth in
maintenance revenue was largely from Australia, with a ramp-up in
volumes at Woodside's Karratha Gas Plant and Newmont's Boddington
gold mine, combined with the shutdown works at BP Kwinana.
Given the challenging market conditions in the Middle East, with
the resulting delays and deferrals of discretionary spend, progress
on developing our specialist service offering in the region
continues to be slower than we had hoped.
During the period, the Group was awarded its first
multi-disciplinary contract in Kuwait, further increasing Cape's
presence in the country. In line with our strategy, the Group
continues to identify and review a number of opportunities for
further geographic expansion both within and outside our existing
regions.
Financial overview
A summary income statement with explanatory discussion of each
of the key items is provided below:
GBPm unless otherwise H1 2017 H1 2016 H1 2017 H1 2016
stated
------------------------ --------- --------- ----------------------- -------- --------
Continuing operations: Adjusted measures Continuing operations: Statutory
reporting
Revenue 581.9 396.3 Revenue 581.9 396.3
Adjusted operating
profit 42.7 18.9 Operating profit 37.6 6.8
Adjusted operating Operating profit
profit margin 7.3% 4.8% margin 6.5% 1.7%
Adjusted profit Profit before
before tax 39.2 14.9 tax 32.9 1.4
Adjusted diluted Diluted earnings
earnings per share 24.7p 8.9p per share 19.7p 0.1p
------------------------ --------- --------- ----------------------- -------- --------
Revenue from continuing operations increased by 47% to GBP581.9
million (H1 2016: GBP396.3 million) of which 8% relates to
favourable foreign exchange rate movements and 39% from organic
growth. The underlying increase of 39% was driven by the phasing
and quantum of project related volumes in the Asia Pacific region.
Lower volumes reflecting difficult market conditions in both the UK
and the Middle East drove underlying revenues down 9% and 6% in
each region respectively.
Adjusted operating profit from continuing operations increased
by 126% to GBP42.7 million (H1 2016: GBP18.9 million) of which 13%
relates to favourable foreign exchange rate movements and 113% from
organic growth. The increase in organic adjusted operating profit
primarily reflects the excellent operational performance on the
Group's key projects in Asia Pacific, an improved commercial
performance and the benefits of the 2016 restructuring in the UK,
partially offset by significantly lower margins in the Middle East
reflecting increased pricing pressure and a change in mix of
services delivered with relatively low volumes of higher margin
access activity.
Adjusted diluted earnings per share from continuing operations
was 24.7p (H1 2016: 8.9p) on adjusted earnings attributable to
equity shareholders of GBP30.0 million (H1 2016: GBP10.8
million).
Diluted earnings per share from continuing operations were 19.7p
(H1 2016: 0.1p). The prior period included a charge to the
Industrial Disease Claims (IDC) provision of GBP9.7 million
reflecting the adverse legal judgement in relation to the insurer
employer liability claims (Insurer EL Claims) announced on 20 July
2016. The Insurer EL Claims settlement in April 2017 did not
require any cash consideration to be paid by the Company, nor any
change to the IDC provision.
Regional review
The Group reports its financial results from a geographic
perspective under three reporting regions and a central support
function that align external reporting with the internal management
structure.
Revenue Adjusted operating Adjusted operating
(GBPm) profit profit margin
(GBPm) (%)
H1 2017 H1 2016 H1 2017 H1 2016 H1 2017 H1 2016
-------------- -------- -------- ---------- --------- ---------- ---------
Region
UK 175.9 194.0 10.8 8.4 6.1% 4.3%
Middle East 102.1 94.2 9.5 13.0 9.3% 13.8%
Asia Pacific 303.9 108.1 31.8 5.0 10.5% 4.6%
Central - - (9.4) (7.5) n/a n/a
581.9 396.3 42.7 18.9 7.3% 4.8%
-------------- -------- -------- ---------- --------- ---------- ---------
Throughout this document, various management measures are used
and referred to as adjusted. These are defined and reconciled to
statutory measures within note 6 'Adjusted measures' and within
"Adjusted operating and free cash flow' on page 9.
Regional review (continued)
UK
Market conditions
Market conditions in the UK region continued to be challenging
throughout the first half of the year. Although there has been a
small recovery in oil prices to an average of US$53/bbl in the
first half of 2017 (H1 2016: average US$41/bbl), demand from the
upstream sector in the North Sea remains subdued. Construction and
discretionary maintenance spend has remained low, in particular for
the Group's higher margin specialist services. In addition to the
reduced levels of demand, customers continue to seek ways in which
to control or reduce their costs, resulting in ongoing pressure on
prices across the upstream sector.
As expected, demand from the thermal coal power generation
sector was lower in the period reflecting the closure of Longannet
and Ferrybridge power stations in March 2016 and the reduction in
scope and deferral of a number of shutdowns. Demand from the
general industrial segments remained steady throughout the period
whilst the business experienced a small reduction in demand from
the downstream sector driven by the timing of shutdown
activity.
Results
Order intake increased by 48% to GBP239 million (H1 2016: GBP162
million), primarily reflecting the business' success in securing
the strategically important three-year BP fabric maintenance
contracts across the midstream and upstream sectors. Other
important contract wins included: a three-year access, insulation
and painting contract from Huntsman, expanding the range of
maintenance services provided by the Group at this facility; a
five-year maintenance contract to provide insulation and
environmental services work at Uniper; and multi-disciplinary
services project work offshore for Perenco.
Revenue decreased by 9% from the prior period to GBP175.9
million (H1 2016: GBP194.0 million). The lower volume was largely
due to a reduction in demand from the thermal coal power generation
market, lower activity levels on the Exxon Mobil refinery at
Fawley, and the completion of the ethane storage tank for Samsung,
which was successfully delivered to our customer in December
2016.
The region continues to be predominantly maintenance based with
93% (H1 2016: 82%) of revenues derived from maintenance
activity.
Adjusted operating profit margin increased to 6.1% (H1 2016:
4.3%), as the effect of lower volume was more than offset by
improved commercial performance across a number of contracts and
the benefit of the restructuring activities implemented in 2016. As
a result of the improved margin, adjusted operating profit
increased by 29% to GBP10.8 million (H1 2016: GBP8.4 million)
despite the lower volumes.
The business was proud to receive a number of safety awards
during the first half of 2017, including the Safety Innovations
Award at the Offshore Achievement Awards 2017 for its fully
immersed behavioural safety programme using Virtual Reality
technology.
Middle East
Market conditions
Market conditions in the Middle East remain challenging,
exacerbated by increased political uncertainty in the region. The
National Oil Companies across the region continue to show
commitment to their investment programmes, in particular in the
downstream sector; however, the Group is seeing an increased amount
of delays and deferrals across the region for both project work and
shutdowns. The business is also seeing signs of increased financial
stress in parts of its customer base, in particular the local and
regional contractors, resulting in slower payment cycles. Whilst
the diplomatic isolation of Qatar has not impacted the Group's
ability to maintain the safety and welfare of its people within the
country, there has been a negative impact on operational costs due
to the increased complexity of importing materials into Qatar. The
diplomatic situation has also led to increased uncertainty relating
to Qatari-linked business activities in the region. As expected,
construction demand in Azerbaijan decreased compared to the high
level seen in the second half of 2016 with maintenance demand
remaining steady.
Results
Despite the challenging market conditions, order intake
increased by 47% to GBP131 million (H1 2016: GBP89 million),
reflecting a particularly strong order intake in KSA, where the
Group won a number of scaffolding and insulation work packages at
the prestigious Jazan project, a contract for the provision of
scaffold services at the Ma'aden Phosphate Mining Project and a
two-year maintenance contract with Sadara Chemical Company for the
provision of insulation, painting and refractory services. The
Group also secured its first
multi-disciplinary contract in Kuwait with the award from Heavy
Engineering Industries & Shipbuilding Co. for painting,
insulation and passive fire protection at KNPC's Fifth Gas Train
project.
Revenue increased by 8.4% from the prior period to GBP102.1
million (H1 2016: GBP94.2 million), benefitting from a 14%
favourable impact of foreign exchange rate movement. At constant
currency, revenue decreased by 6%, largely driven by lower levels
of project work in KSA, with particularly high levels of activity
on the Petro Rabigh construction project in 2016, and reduced
maintenance and shutdown activities in Qatar. Volumes in UAE fell
slightly due to the timing of project completions and shutdown
activities. Project activity increased in both Oman and Kuwait from
the very low levels seen in the first half of 2016, although
activity levels in both countries remained below expectations due
to project delays and deferrals.
The Group has continued to sustain a strong maintenance business
in the Middle East with approximately 57% of revenues coming from
maintenance work (H1 2016: 50%).
Adjusted operating margin decreased to 9.3% (H1 2016: 13.8%),
primarily driven by a combination of increased pricing pressure and
a change in the mix of services with a relatively low proportion of
higher margin access work across the region. As a result of this
lower margin, adjusted operating profit decreased by 27% to GBP9.5
million (H1 2016: GBP13.0 million) despite benefitting from a 14%
favourable gain from foreign exchange rate movements. At constant
currency, adjusted operating profit decreased by 41%. The
SOCAR-Cape joint venture in Azerbaijan continued to perform
strongly both operationally and financially.
Regional review (continued)
In June, the Middle East business surpassed 30 million man-hours
without a lost-time incident, a significant achievement by everyone
in the business and a testament to the commitment and diligence
every employee takes to safety. The Group's businesses in KSA,
Qatar and Oman secured Gold Awards from the Royal Society for the
Prevention of Accidents in June 2017.
Asia Pacific
Market conditions
In Australia, LNG related construction driven demand remained
strong through the first half of 2017, with the major LNG
construction projects in the country moving towards completion. No
significant new LNG construction projects are planned in Australia
in the near future. Demand from the maintenance sector in Australia
remains stable, albeit at relatively low levels. As expected,
construction activity in Asian yards on modules for the Australian
LNG plants reduced significantly. Activity levels on the Prelude
FLNG construction project were very high as the topsides
construction neared completion during the period. New construction
demand elsewhere across Asia was subdued, with maintenance demand
remaining stable.
Results
Order intake increased by 248% to GBP202 million compared to the
first half of 2016 (H1 2016: GBP58 million) with the most
significant driver being the award of a strategically important
multi-disciplinary contract at the Ichthys Project Onshore LNG
Facilities in Darwin, Australia. Order intake was also strengthened
by further increases in the scope of work for Chevron's Wheatstone
LNG project in Australia and at Shell's Prelude FLNG project in
South Korea.
Revenue increased by 181% to GBP303.9 million (H1 2016:
GBP108.1m) with 164% growth at constant currency and a 17% impact
from favourable foreign exchange rate movements. The strong growth
was driven by high volumes of work at the Wheatstone LNG project
and on Woodside's Karratha Gas Plant life extension project, both
in Australia, and in South Korea on the Shell Prelude FLNG project,
where the Group's activities are now largely complete. Shutdown and
maintenance volumes in Australia have also increased compared to
the first half of 2016 as the business focussed on growing its core
maintenance base. The Singapore business delivered strong growth,
largely due to increased project activities for Exxon Mobil.
Activity in the region was primarily construction related,
accounting for approximately 83% of revenues in the period (H1
2016: 72%), with the majority of the construction activities being
on the Wheatstone LNG project, where manning levels reached their
peak toward the end of the first half of 2017, and the Shell
Prelude FLNG project, which largely completed in the period.
As expected, the business achieved a substantial increase in
adjusted operating profit, up 536% compared to prior period at
GBP31.8m
(H1 2016: GBP5.0m), with organic growth at constant currency of
519% and a 17% impact from favourable foreign exchange rate
movements. The organic growth in operating profit was driven by an
increase in both volumes and margin, with adjusted operating margin
increasing to 10.5% (H1 2016: 4.6%) reflecting both excellent
operational performance on the major projects and the operational
leverage of the increased volume.
As at the end of July, the teams in Australia had surpassed 8
million man-hours without a lost-time incident across all
projects.
Outlook
The Board's expectation for the Group's full year performance
remains unchanged from the trading statement issued on 5 June 2017,
with the balance of earnings weighted strongly towards the first
half. The Board continues to anticipate that 2018 will be a more
challenging year, driven by the expected reduction in volume from
the current high level of construction activity in Asia Pacific and
the effect of project delays and margin pressures in the Middle
East.
Recommended cash offer for Cape plc from Altrad
On 7 July 2017, the boards of directors of Altrad Investment
Authority SAS (Altrad) and Cape plc (Cape) announced that they had
reached agreement on the terms of a recommended cash offer for Cape
by Altrad, through its wholly-owned subsidiary, Altrad UK Limited
(Altrad Bidco), pursuant to which Altrad Bidco would acquire the
entire issued and to be issued ordinary share capital of Cape
(which does not include the IDC Scheme Share) (the 'Offer'). The
Offer is being implemented by means of a takeover offer under the
UK Takeover Code and within the meaning given to that term in Part
18 of the Jersey Companies Law
Under the leadership of its current management team, Cape has
made significant strategic, operational and financial progress.
This progress has been characterised by a record safety performance
in 2016, year-on-year revenue growth achieved for a third
consecutive year, good progress on its portfolio diversification
strategy (including developing specialist services and securing
additional services at existing customer sites), excellence in
delivery across key maintenance and project sites, and entry into
selected new geographies.
Since mid-2014, there has been a significant deterioration in
the oil price, which has resulted in a reduction in investment and
activity levels by companies operating in the oil and gas sector.
The Directors believe that this reduction has had a consequential
negative impact on companies for which the oil and gas sector is a
significant end-market, including Cape, and that the overall
outlook for the sector remains subdued. Cape has successfully taken
a number of mitigating actions to manage this risk, including
ensuring the diversity of its customers, geographies, end-markets
and services, and reducing its overhead cost base whilst also
investing for growth.
As previously disclosed in the recent announcement of contract
awards and trading update on 5 June 2017, Cape has continued to
trade strongly and, with the additional benefit of the Ichthys
award, the Board expects that Cape's full year performance for 2017
will be materially ahead of its previous expectations. The Board
anticipates that 2018 will be a more challenging year, driven by
the expected reduction in volume from the current high level of
construction activity in Asia Pacific and the effect of project
delays and margin pressures in the Middle East.
The Directors have considered the terms of the Offer in relation
to the value of Cape as a standalone company and believe the Offer
recognises Cape's prospects and growth potential. The Directors
have carefully considered the terms of the Offer in the context of
the dynamics of the markets in which Cape operates. In considering
the terms of the Offer, the Cape Directors have taken into account
a number of factors including:
-- that the Offer will represent an opportunity for Cape
Shareholders to realise their investment in Cape for cash at a fair
and reasonable value;
-- that the Offer Price represents a premium of approximately
46.2 per cent. to the Closing Price of 181 pence per Cape Share on
6 July 2017 (being the last Business Day prior to the date of this
Announcement) and a premium of approximately
31.4 per cent. to the volume-weighted average Closing Price of
202 pence per Cape Share for the 12 months ended on the same
date;
-- that the certainty of the Offer should be weighed against the
inherent uncertainty of the delivery of future value that exists in
the Cape Group's business; and
-- uncertainty arising from the risk of future IDC-related claims.
Following careful consideration of the above factors, the Cape
Directors unanimously recommend that Cape Shareholders accept the
Offer. The Offer provides the certainty of a cash exit for all Cape
Shareholders at a level which the Cape Directors believe to be fair
and reasonable, given that there remain risks and uncertainties
inherent in progressing the Cape Group's business and delivering
its strategy.
On 1 August 2017, the formal Offer Document was posted to
Shareholders. The First Closing Date for the Offer is 1.00 p.m.
(London Time) on 22 August 2017. Documentation associated with
the Offer from Altrad can be found on the Group's website at
www.capeplc.com.
Financial review
Revenue
Revenue from continuing operations increased by 47% to GBP581.9
million (H1 2016: GBP396.3 million). There was an 8% favourable
impact from foreign exchange rate movements on revenue. Organic
growth at constant currency was 39%, largely driven by the phasing
and quantum of project related volumes in the Asia Pacific region,
with Wheatstone and KLE in Australia and Shell Prelude in South
Korea all delivering significant volumes in the period.
Revenue from maintenance activities in the first half of 2017
increased to GBP273 million, representing 47% of total revenue
(H1 2016: GBP237 million; 60% of total revenue). The growth in
maintenance revenue comes largely from Australia, with a ramp-up in
volumes at KLE and Newmont's Boddington gold mine, combined with
the shutdown works at BP Kwinana. Maintenance revenue as a
proportion of Group revenue has declined as a result of the timing
and scale of significant construction related revenues in Australia
and South Korea. Revenue invoiced to the largest client represented
33% of total revenue (H1 2016: 15%), relating to the phasing of
activities in the Asia Pacific region, and the top 10 clients
represented 63% of revenue (H1 2016: 52%).
Share of post-tax profit from joint ventures
The post-tax profit of GBP2.7 million (H1 2016: GBP2.8 million)
is attributable to the Group's joint venture in Azerbaijan.
Adjusted operating profit
Adjusted operating profit from continuing operations increased
by 126% to GBP42.7 million (H1 2016: GBP18.9 million), primarily
reflecting the increased project related volumes in the Asia
Pacific region. Adjusted operating profit in the UK improved
largely as a result of an improved commercial performance and the
recognition in the first half of 2016 of restructuring related
costs, partially offset by lower volumes. The Middle East saw
operating profits decline, largely reflecting increased pricing
pressure and a change in mix of services delivered with relatively
low volumes of higher margin access activity in KSA and Qatar.
Favourable translational foreign exchange movements accounted for a
13% growth in the adjusted operating profit from continuing
operations.
Other items
Other items decreased to GBP3.3 million (H1 2016: GBP12.1
million) mainly due to the absence of the 2016 charge to the
Industrial Disease Claims ("IDC") provision of GBP9.7 million
following the adverse legal judgment with regard to the Insurer EL
Litigation. The GBP3.3 million charge in the period is made up of
GBP2.1 million of IDC legal and other costs (H1 2016: GBP0.6
million) and amortisation of intangibles arising on business
acquisitions of GBP1.2 million (H1 2016: GBP1.8 million).
Exceptional items
During the period ended 2 July 2017, legal and professional fees
of GBP1.8 million have been incurred in relation to the Offer made
by Altrad UK Limited to acquire the entire issued and to be issued
ordinary share capital of Cape.
Operating profit
Operating profit from continuing operations was GBP37.6 million
(H1 2016: GBP6.8 million) comprising an adjusted operating profit
of
GBP42.7 million (H1 2016: GBP18.9 million) less exceptional and
other items of GBP5.1 million (H1 2016: GBP12.1 million).
Finance costs
Total net finance costs decreased to GBP4.7 million (H1 2016:
GBP5.4 million). The charge includes a net GBP3.4 million (H1 2016:
GBP4.0 million) of interest payable on bank borrowings, a GBP1.4
million (H1 2016: GBP1.6 million) non-cash charge relating to the
unwinding of the discount on the long-term IDC provision and
finance lease interest of GBP0.1 million (H1 2016: GBP0.1 million),
partially offset by interest income on the IDC scheme funds in the
period of GBP0.2 million (H1 2016: GBP0.2 million) and interest
income on the defined benefit pension assets of GBPnil (H1 2016:
GBP0.1 million).
Adjusted finance costs decreased slightly to GBP3.6 million (H1
2016: GBP4.1 million), primarily reflecting lower interest charges
on borrowings. Interest cover (calculated by dividing adjusted
operating profit by the adjusted finance costs) increased to 11.9
times
(H1 2016: 4.6 times).
Profit before tax
Total profit before tax from continuing operations was GBP32.9
million (H1 2016: GBP1.4 million) reflecting an operating profit of
GBP37.6 million (H1 2016: GBP6.8 million) less net finance costs of
GBP4.7 million (H1 2016: GBP5.4 million).
Financial review (continued)
Taxation
The tax charge on adjusted profit before tax (which excludes
exceptional and other items), excluding the share of post-tax
result from joint ventures, was GBP8.1 million (H1 2016: GBP3.0
million) representing an effective tax rate of 22% (H1 2016: 25%).
This is lower than the first half of 2016 primarily as a result of
further recognition of prior period tax losses in Australia,
partially offset by an increase in profits in high tax
jurisdictions and losses arising in the UK on which a deferred tax
asset has not been recognised. On an adjusted basis, the Group's
overall effective tax rate, including the share of post-tax result
from joint ventures, was 21% (H1 2016: 20%).
The total tax charge on profit before tax was GBP7.8 million (H1
2016: GBP0.2 million). The cash tax paid during the period was
GBP7.9 million (H1 2016: GBP2.4 million).
Earnings per share
For continuing operations adjusted diluted earnings per share
were 24.7p (H1 2016: 8.9p) and adjusted basic earnings per share
were 24.9p (H1 2016: 8.9p). For total operations, the basic
earnings per share were 20.0p (H1 2016: 0.2p). The diluted weighted
number of shares increased to 121.5 million (H1 2016: 121.4
million).
Dividend
Given the timing and terms of the recommended cash Offer for
Cape plc by Altrad, the Board has decided not to declare an interim
dividend (H1 2016: 4.5p). Should circumstances around the Offer
change, the Board may revisit this decision in the future.
Adjusted operating and free cash flow
GBPm Full year
H1 2017 H1 2016 2016
Unaudited Unaudited Audited
-------------------------------------- ----------- ------------ ---------
Adjusted operating profit(1) 42.7 18.9 55.4
Depreciation 8.6 8.7 18.0
-------------------------------------- ----------- ------------ ---------
Adjusted EBITDA 51.3 27.6 73.4
Non-cash items (2.2) (1.8) (3.4)
Dividends from joint venture 0.8 2.3 3.9
(Increase)/decrease in working
capital(2) (8.9) (7.2) 9.6
Net capital expenditure (2.4) (7.1) (12.0)
-------------------------------------- ----------- ------------ ---------
Adjusted operating cash flow 38.6 13.8 71.5
Adjusted operating cash flow
to adjusted operating profit 90.4% 73.0% 129.1%
Net interest paid (3.1) (3.6) (7.1)
Cash tax paid (7.9) (2.4) (7.2)
-------------------------------------- ----------- ------------ ---------
Free cash flow 27.6 7.8 57.2
Dividends paid to shareholders
and non-controlling interests (4.0) (13.3) (18.8)
Decrease in loans to joint ventures 6.3 0.4 3.4
Net transfer to restricted funds - - (13.0)
Payments made on behalf of the
industrial disease claim scheme (21.4) (1.6) (6.6)
Discontinued operations - 0.6 0.3
Other movements in adjusted
net debt (4.5) 2.3 7.0
-------------------------------------- ----------- ------------ ---------
Movement in adjusted net debt 4.0 (3.8) 29.5
-------------------------------------- ----------- ------------ ---------
Opening adjusted net debt (80.4) (109.9) (109.9)
Closing adjusted net debt (76.4) (113.7) (80.4)
-------------------------------------- ----------- ------------ ---------
1 A reconciliation of the Group's adjusted operating profit to
the Group's statutory operating profit/(loss) can be found in note
6, 'Adjusted measures'
(2 Converted at monthly rates of exchange.)
Working capital
Trade and other receivables and inventories at 2 July 2017 were
GBP275.0 million (31 December 2016: GBP258.3 million). The GBP16.7
million increase reflected the Group's strong focus on working
capital management and a temporary benefit at the period end from
the timing of customer receipts and was partially offset by an
increase in trade and other payables of GBP15.2 million to GBP187.5
million
(31 December 2016: GBP172.3 million). Overall, the Group's net
working capital increased by GBP1.5 million (at balance sheet
rates) to
GBP87.5 million (31 December 2016: GBP86.0m).
Significantly higher operating profit drives the improvement in
adjusted operating cash flow to adjusted operating profit to
90.4%
(H1 2016: 73.0%).
Financial review (continued)
Capital expenditure
Gross capital expenditure of GBP3.0 million was GBP5.0 million
lower than the prior period (H1 2016: GBP8.0 million) reflecting
the phasing of project work in the Middle East. The Asset
Replacement Ratio (calculated by dividing gross capital expenditure
spend by the depreciation charge) decreased to 35% (H1 2016:
92%).
Financing
The Group's adjusted net debt decreased by GBP37.3 million at 2
July 2017 to GBP76.4 million compared to the same period in the
prior year (3 July 2016: GBP113.7 million). Adjusted net debt
includes finance lease obligations of GBP2.8 million (3 July 2016:
GBP3.0 million). The reduction in adjusted net debt reflects an
improved operating performance combined with lower joint venture
receivables, dividend payments and capital expenditure, offset by
the payment of GBP18.0 million in relation to the Insurer PL
Litigation settlement announced in March 2017 and IDC litigation
costs. Included within H1 2016 were GBP1.6 million of banking fees
relating to the banking facility entered into in February 2014 and
GBP2.1 million of fees relating to the amendment of the banking
facility in June 2016.
Balance sheet gearing (calculated by dividing adjusted net debt
by total equity), excluding ring-fenced IDC Scheme funds, decreased
to 60.8% (31 December 2016: 70.7% (restated); 3 July 2016:
80.2%).
The Group's existing revolving credit facility is GBP300 million
with a GBP50 million accordion feature. The facility has a
contractual maturity of 23 June 2020.
Provision for pensions
The defined benefit pension scheme had a net surplus of GBP14.1
million as at 2 July 2017 (H1 2016: GBP4.8 million) and continues
to be restricted to GBPnil in the accounts under IFRIC 14.
Provision for estimated future asbestos related liabilities and
IDC Scheme funds
The discounted IDC provision decreased to GBP153.2 million (31
December 2016: GBP172.5 million) reflecting the initial payment
from the Group's existing cash resources of GBP18.0 million in
relation to the Insurer PL Litigation settlement announced in March
2017,
GBP2.7 million utilised in the period (H1 2016: GBP2.6 million)
offset by the unwinding of the discount of GBP1.4 million in the
half year
(H1 2016: GBP1.6 million). The level of Scheme cash settlements
remained in line with actuarial assumptions. The settlement in
relation to the Insurer EL Claims announced in April 2017 did not
require any cash consideration to be paid by the Company, nor any
change to the IDC provision held at 31 December 2016.
The ring-fenced IDC Scheme funds decreased to GBP39.9 million
(31 December 2016: GBP41.8 million) comprising cash settlements and
costs paid to scheme claimants of GBP2.1 million (H1 2016: GBP1.4
million) offset by income interest of GBP0.2 million (H1 2016:
GBP0.2 million) in the period, shown as finance income other items
in the Condensed Consolidated Income Statement. No contribution was
made to Scheme funds during the period (H1 2016: GBP0.5
million).
Other provisions
Other provisions have fallen from GBP9.7 million at 31 December
2016 to GBP8.2 million as at 2 July 2017 as a result of
utilisations of
GBP1.5 million.
Related parties
As at 2 July 2017, there was a net balance of GBP0.9 million
owed by joint ventures (H1 2016: GBP6.9 million; 31 December 2016:
GBP4.0 million) (see note 19 for further information).
Financial review (continued)
Currencies
The Group is exposed to both translational and, to a lesser
extent, transactional foreign currency gains or losses through
fluctuations in foreign exchange rates through its global
operations. The Group's primary currency exposures are Sterling in
the UK, Australian dollars in Australia and US dollars, primarily
in the Middle East.
Translational gains or losses: With the Group reporting in
Sterling but conducting business in other currencies, the weakening
of Sterling during the first half of 2017 has resulted in
significant currency translation effects on the primary statements
and associated balance sheet metrics, such as working capital. The
weakening in Sterling has favourably impacted both revenue and
operating profit during the first half of 2017 by 8% and 13%
respectively. In 2017, around 25% (H1 2016: 26%) of revenues were
contracted in US dollars or US dollar pegged currencies and around
41% (H1 2016: 21%) in Australian dollars. However, the
significantly lower closing Sterling exchange rate as at 2 July
2017 compared to the prior period has adversely impacted our
working capital balance.
Transactional gains or losses: With a large proportion of the
Group's operating costs matched with corresponding revenues in the
same currency, the impacts of transactional foreign exchange gains
or losses are limited and are recognised in the period in which
they arise.
The following significant exchange rates against Sterling
applied during the half year:
H1 2017 H1 2016
Closing Average Closing Average
----- -------- -------- -------- --------
AUD 1.70 1.68 1.80 2.04
USD 1.30 1.27 1.34 1.47
----- -------- -------- -------- --------
Principal risks
Cape operates globally in the energy and natural resources
sectors and in varied geographic markets. Cape's performance and
prospects may be affected by risks and uncertainties in relation to
the industry and the environments in which it undertakes its
operations around the world. Those risks range from external
geo-political, security and economic conditions such as
geo-political events, sanctions, terrorist events, disease
outbreaks or environmental hazards; key customer and market
dependency risks; operational risks including HSE, contracting,
project execution; cyber security; credit and other generic
financial risks.
There are two specific sources of risk associated with the
Group's historical industrial disease claims legacy liabilities.
The first relates to the inherent uncertainty in predicting the
future level of asbestos-related industrial disease claims and of
the costs arising from such claims relating to the liabilities for
which the Board believes the Group to be liable. Whilst the 2016
triennial actuarial revaluation was in line with expectations,
there can be no guarantee that the assumptions used to estimate the
provision will result in an accurate prediction of the actual costs
that may be incurred in the future. As such, the provision may be
subject to potentially material revisions from time to time if new
information becomes available as a result of future events.
The second source of industrial disease claims risk relates to
any change in legal precedent or judgment that leads to a material
expansion of the scope of liability for which the Group is held to
be liable in the future.
Cape operates across a number of economies and jurisdictions
which therefore exposes the Group to a range of tax laws that vary
significantly and are rapidly evolving toward global transparency
and harmonisation. Uncertainty may occur when the Group is required
to interpret laws and treaties.
The Group is alert to the challenges of managing risk and has
systems and procedures in place across the Group to identify,
assess and mitigate major business risks. As part of the long-term
strategic operational excellence programme, the Group continues to
improve its detailed process of project risk identification and
mitigation from contract tender through to project completion.
The Directors have reviewed risk and related controls at the
half year. The Directors consider that the nature of the principal
risks and uncertainties which may have a material effect on the
Group's performance in the second half of the year is unchanged
from those detailed on pages 33 to 39 of the Group's 2016 Annual
Report and Accounts.
Going concern
After making the appropriate enquiries, the Directors have
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future. The
Group therefore continues to adopt the going concern basis in
preparing its interim condensed consolidated financial
statements.
Joe Oatley Michael Speakman
Chief Executive Chief Financial Officer
21 August 2017 21 August 2017
Statement of Directors' Responsibilities
The Interim Report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for
preparing the Interim Report in accordance with the Disclosure and
Transparency Rules ("DTR") of the United Kingdom's Financial
Conduct Authority ("FCA").
The DTR require that the accounting policies and presentation
applied to the half yearly figures must be consistent with those
applied in the latest published annual accounts, except where the
accounting policies and presentation are to be changed in the
subsequent annual accounts, in which case the new accounting
policies and presentation should be followed, and the changes and
the reasons for the changes should be disclosed in the Interim
report, unless the United Kingdom's FCA agrees otherwise.
The Directors confirm that to the best of their knowledge the
condensed set of financial statements, which have been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting' as adopted by the European Union give a true
and fair view of the assets, liabilities, financial position and
profit and loss of the Group, as required by DTR 4.2.2 and in
particular include a fair review of:
-- the important events that have occurred during the first six
months of the financial year and their impact on the interim
condensed consolidated set of financial statements as required by
DTR 4.2.7R;
-- the principal risks and uncertainties for the remaining half
of the year as required by DTR 4.2.7R; and
-- related party transactions that have taken place in the first
half of the current financial year and changes in the related party
transactions described in the previous annual report that have
materially affected the financial position or performance of the
Group during the first half of the current financial year as
required by DTR 4.2.8R.
The Directors of Cape plc are listed in the Group's 2016 Annual
Report and Accounts.
For and on behalf of the Board of Directors.
Joe Oatley Michael Speakman
Chief Executive Chief Financial Officer
21 August 2017 21 August 2017
Independent review report to Cape plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half yearly financial report for the
six months ended 2 July 2017 which comprises the Interim Condensed
Consolidated Income Statement, Interim Condensed Consolidated
Statement of Comprehensive Income, Interim Condensed Consolidated
Statement of Financial Position, Interim Condensed Consolidated
Statement of Changes in Equity, Interim Condensed Consolidated Cash
Flow Statement and the related explanatory notes 1 to 20. We have
read the other information contained in the half yearly financial
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The half yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK and Ireland), "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half yearly financial report for the six months ended 2 July
2017 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Ernst & Young LLP
Reading, UK
21 August 2017
Interim Condensed Consolidated Income Statement
for the period ended 02 July 2017
27 weeks ended 27 weeks ended
02 July 2017 (unaudited) 03 July 2016 (unaudited)
Exceptional Exceptional
Business and other Business and other
performance items Total performance items Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Revenue from continuing
operations 581.9 - 581.9 396.3 - 396.3
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Operating profit
before other items 40.0 - 40.0 16.1 - 16.1
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Other items 7 - (3.3) (3.3) - (12.1) (12.1)
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Operating profit/(loss)
before exceptional
items 40.0 (3.3) 36.7 16.1 (12.1) 4.0
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Share of post-tax
result of joint
ventures 2.7 - 2.7 2.8 - 2.8
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Exceptional items 7 - (1.8) (1.8) - - -
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Operating profit/(loss) 42.7 (5.1) 37.6 18.9 (12.1) 6.8
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Finance income 9 0.1 0.2 0.3 0.1 0.2 0.3
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Finance costs 9 (3.6) (1.4) (5.0) (4.1) (1.6) (5.7)
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Net finance costs (3.5) (1.2) (4.7) (4.0) (1.4) (5.4)
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Profit/(loss) before
tax 39.2 (6.3) 32.9 14.9 (13.5) 1.4
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Income tax (expense)/credit 10 (8.1) 0.3 (7.8) (3.0) 2.8 (0.2)
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Profit/(loss) from
continuing operations 31.1 (6.0) 25.1 11.9 (10.7) 1.2
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Profit from discontinued
operations 8 0.1 - 0.1 0.1 - 0.1
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Profit/(loss) for
the period 31.2 (6.0) 25.2 12.0 (10.7) 1.3
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Attributable to:
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Owners of Cape plc 24.1 0.2
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Non-controlling
interests 1.1 1.1
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
25.2 1.3
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Earnings per share attributable
to the owners of Cape plc
Pence Pence Pence Pence
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Basic
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Continuing operations 24.9 19.9 8.9 0.1
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Discontinued operations 0.1 0.1 0.1 0.1
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Total operations 12 25.0 20.0 9.0 0.2
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Diluted
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Continuing operations 24.7 19.7 8.9 0.1
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Discontinued operations 0.1 0.1 0.1 0.1
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Total operations 12 24.8 19.8 9.0 0.2
---------------------------- ---- ------------ ----------- ------------------ ------------ ----------- ------
Interim Condensed Consolidated Statement of Comprehensive
Income
for the period ended 02 July 2017
27 weeks 27 weeks
ended ended
02 July 03 July
2017 2016
(unaudited) (unaudited)
GBPm GBPm
---------------------------------------------- ------------ ------------
Profit for the period 25.2 1.3
----------------------------------------------- ------------ ------------
Other comprehensive income/(expense)
---------------------------------------------- ------------ ------------
Other comprehensive income to be reclassified
to profit or loss in subsequent periods:
---------------------------------------------- ------------ ------------
Currency translation differences (9.7) 24.9
----------------------------------------------- ------------ ------------
Net other comprehensive income/(expense)
to be reclassified to profit or loss
in subsequent periods (9.7) 24.9
----------------------------------------------- ------------ ------------
Other comprehensive income/(expense)
not to be reclassified to profit or
loss in subsequent periods:
Re-measurement of defined benefit pension
plan 4.0 (6.1)
----------------------------------------------- ------------ ------------
Tax effect - -
---------------------------------------------- ------------ ------------
4.0 (6.1)
---------------------------------------------- ------------ ------------
Movement in restriction of retirement
benefit asset in accordance with IFRIC
14 (4.2) 5.7
----------------------------------------------- ------------ ------------
Restriction of interest income in accordance
with IFRIC 14 0.2 0.2
----------------------------------------------- ------------ ------------
Tax effect - 0.1
----------------------------------------------- ------------ ------------
Net other comprehensive income/(expense)
not to be reclassified to profit or
loss in subsequent periods - (0.1)
----------------------------------------------- ------------ ------------
Other comprehensive income/(expense)
for the period (9.7) 24.8
----------------------------------------------- ------------ ------------
Total comprehensive income for the period 15.5 26.1
----------------------------------------------- ------------ ------------
Attributable to:
---------------------------------------------- ------------ ------------
Owners of Cape plc 14.6 24.7
----------------------------------------------- ------------ ------------
Non-controlling interests 0.9 1.4
----------------------------------------------- ------------ ------------
15.5 26.1
---------------------------------------------- ------------ ------------
Interim Condensed Consolidated Statement of Financial
Position
for the period ended 02 July 2017
31 December 03 July
02 July 2016
2017 2016
(unaudited) (audited) (unaudited)
Note GBPm GBPm GBPm
----------------------------------------- ---- ------------- ----------- -------------
Assets
----------------------------------------- ---- ------------- ----------- -------------
Non-current assets
----------------------------------------- ---- ------------- ----------- -------------
Intangible assets 146.5 150.3 146.1
----------------------------------------- ---- ------------- ----------- -------------
Investment property 2.0 2.0 2.0
----------------------------------------- ---- ------------- ----------- -------------
Property, plant and equipment 76.0 84.0 84.3
----------------------------------------- ---- ------------- ----------- -------------
Investments accounted for using the
equity method 5.5 7.2 3.8
----------------------------------------- ---- ------------- ----------- -------------
Deferred tax assets 38.6 39.1 22.3
----------------------------------------- ---- ------------- ----------- -------------
Restricted deposits 3.5 3.5 9.0
----------------------------------------- ---- ------------- ----------- -------------
Total non-current assets 272.1 286.1 267.5
----------------------------------------- ---- ------------- ----------- -------------
Current assets
----------------------------------------- ---- ------------- ----------- -------------
Inventories 13.0 13.7 14.0
----------------------------------------- ---- ------------- ----------- -------------
Trade and other receivables 262.0 244.6 238.7
----------------------------------------- ---- ------------- ----------- -------------
Cash and cash equivalents 122.2 121.5 78.8
----------------------------------------- ---- ------------- ----------- -------------
Restricted deposits 36.6 38.5 22.5
----------------------------------------- ---- ------------- ----------- -------------
Non-current asset held for sale 0.3 0.3 -
----------------------------------------- ---- ------------- ----------- -------------
Assets directly associated with disposal
group held for sale 1.0 1.2 1.6
----------------------------------------- ---- ------------- ----------- -------------
Total current assets 435.1 419.8 355.6
----------------------------------------- ---- ------------- ----------- -------------
Total assets 707.2 705.9 623.1
----------------------------------------- ---- ------------- ----------- -------------
Equity
----------------------------------------- ----
Share capital 15 30.3 30.3 30.3
----------------------------------------- ---- ------------- ----------- -------------
Share premium account 1.0 1.0 1.0
----------------------------------------- ---- ------------- ----------- -------------
Treasury shares 15 (0.9) (0.1) (0.1)
----------------------------------------- ---- ------------- ----------- -------------
Special reserve 15 1.0 1.0 1.0
----------------------------------------- ---- ------------- ----------- -------------
Other reserves 15 9.6 9.6 9.6
----------------------------------------- ----
Translation reserve 15 131.4 140.9 124.0
----------------------------------------- ---- ------------- ----------- -------------
Retained (losses) (49.7) (72.0) (26.6)
----------------------------------------- ---- ------------- ----------- -------------
Equity attributable to equity holders
of the parent 122.7 110.7 139.2
----------------------------------------- ---- ------------- ----------- -------------
Non-controlling interests 2.9 3.0 2.5
----------------------------------------- ---- ------------- ----------- -------------
Total equity 125.6 113.7 141.7
----------------------------------------- ---- ------------- ----------- -------------
Liabilities
----------------------------------------- ---- ------------- ----------- -------------
Non-current liabilities
----------------------------------------- ---- ------------- ----------- -------------
Borrowings 196.6 198.7 190.3
----------------------------------------- ---- ------------- ----------- -------------
Retirement benefit obligations 16.5 17.2 15.6
----------------------------------------- ---- ------------- ----------- -------------
Deferred tax liabilities 4.3 4.7 4.7
----------------------------------------- ---- ------------- ----------- -------------
Provision for industrial disease
claims 17 141.9 137.9 93.0
----------------------------------------- ---- ------------- ----------- -------------
Other provisions 2.9 3.0 2.8
----------------------------------------- ---- ------------- ----------- -------------
Total non-current liabilities 362.2 361.5 306.4
----------------------------------------- ---- ------------- ----------- -------------
Current liabilities
----------------------------------------- ---- ------------- ----------- -------------
Borrowings 0.1 1.0 0.1
----------------------------------------- ---- ------------- ----------- -------------
Trade and other payables 187.5 172.3 151.6
----------------------------------------- ---- ------------- ----------- -------------
Current income tax liabilities 13.1 13.7 5.0
----------------------------------------- ---- ------------- ----------- -------------
Provision for industrial disease
claims 17 11.3 34.6 11.2
----------------------------------------- ---- ------------- ----------- -------------
Other provisions 5.3 6.7 4.8
----------------------------------------- ---- ------------- ----------- -------------
Liabilities directly associated with
disposal group held for sale 2.1 2.4 2.3
----------------------------------------- ---- ------------- ----------- -------------
Total current liabilities 219.4 230.7 175.0
----------------------------------------- ---- ------------- ----------- -------------
Total liabilities 581.6 592.2 481.4
----------------------------------------- ---- ------------- ----------- -------------
Total equity and liabilities 707.2 705.9 623.1
----------------------------------------- ---- ------------- ----------- -------------
Interim Condensed Consolidated Statement of Changes in
Equity
for the period ended 02 July 2017
Share Retained Total Non-
Share premium Treasury Special Other Translation earnings/ attributable controlling Total
capital account shares reserve reserves reserve (losses) to parent interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
At 01 January
2017 (audited) 30.3 1.0 (0.1) 1.0 9.6 140.9 (72.0) 110.7 3.0 113.7
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
Profit for the
period - - - - - - 24.1 24.1 1.1 25.2
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
Other
comprehensive
income/(expense):
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
Currency
translation
differences - - - - - (9.5) - (9.5) (0.2) (9.7)
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
Re-measurement
of defined
benefit
pension plan - - - - - - 4.0 4.0 - 4.0
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
Movement in
restriction
of retirement
benefit asset
in accordance
with
IFRIC 14 - - - - - - (4.2) (4.2) - (4.2)
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
Restriction
of interest
income in
accordance
with IFRIC 14 - - - - - - 0.2 0.2 - 0.2
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
Tax effect on
retirement benefit
asset - - - - - - - - - -
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
Total
comprehensive
income/(expense)
for the period - - - - - (9.5) 24.1 14.6 0.9 15.5
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
Transactions
with owners
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
Dividends - - - - - - (3.0) (3.0) (1.0) (4.0)
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
Share options:
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
- value of
employee
services - - - - - - 1.7 1.7 - 1.7
-------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
- share buyback - - (1.3) - - - - (1.3) - (1.3)
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
- exercise of
share options - - 0.5 - - - (0.5) - - -
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
- - (0.8) - - - (1.8) (2.6) (1.0) (3.6)
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
At 02 July 2017
(unaudited) 30.3 1.0 (0.9) 1.0 9.6 131.4 (49.7) 122.7 2.9 125.6
------------------ -------- ------- --------- -------- --------- ------------ --------- ------------ ----------- -------
for the period ended 03 July 2016
Share Retained Total Non--
Share premium Treasury Special Other Translation earnings/ attributable controlling Total
capital account shares reserve reserves reserve (losses) to parent interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------- ------- -------- ------- -------- ----------- --------- ------------ ----------- ------
At 01 January
2016 (audited) 30.3 1.0 - 1.0 9.6 99.4 (14.9) 126.4 2.9 129.3
------------------ ------- ------- -------- ------- -------- ----------- --------- ------------ ----------- ------
Profit for the
period - - - - - - 0.2 0.2 1.1 1.3
------------------ ------- ------- -------- ------- -------- ----------- --------- ------------ ----------- ------
Other
comprehensive
income/(expense):
------------------ ------- ------- -------- ------- -------- ----------- --------- ------------ ----------- ------
Currency
translation
differences - - - - - 24.6 - 24.6 0.3 24.9
------------------ ------- ------- -------- ------- -------- ----------- --------- ------------ ----------- ------
Re-measurement
of defined
benefit
pension plan - - - - - - (6.1) (6.1) - (6.1)
------------------ ------- ------- -------- ------- -------- ----------- --------- ------------ ----------- ------
Movement in
restriction
of retirement
benefit asset
in accordance
with
IFRIC 14 - - - - - - 5.7 5.7 - 5.7
Restriction
of interest
income in
accordance
with IFRIC 14 - - - - - - 0.2 0.2 - 0.2
------------------ ------- ------- -------- ------- -------- ----------- --------- ------------ ----------- ------
Tax effect on
retirement
benefit
asset - - - - - - 0.1 0.1 - 0.1
------------------ ------- ------- -------- ------- -------- ----------- --------- ------------ ----------- ------
Total
comprehensive
income for the
period - - - - - 24.6 0.1 24.7 1.4 26.1
------------------ ------- ------- -------- ------- -------- ----------- --------- ------------ ----------- ------
Transactions
with owners
------------------ ------- ------- -------- ------- -------- ----------- --------- ------------ ----------- ------
Dividends - - - - - - (11.5) (11.5) (1.8) (13.3)
------------------ ------- ------- -------- ------- -------- ----------- --------- ------------ ----------- ------
Share options:
- value of
employee
services - - - - - - 0.3 0.3 - 0.3
------------------ ------- ------- -------- ------- -------- ----------- --------- ------------ ----------- ------
- exercise of
share options - - (0.1) - - - (0.6) (0.7) - (0.7)
------------------ ------- ------- -------- ------- -------- ----------- --------- ------------ ----------- ------
- - (0.1) - - - (11.8) (11.9) (1.8) (13.7)
------------------ ------- ------- -------- ------- -------- ----------- --------- ------------ ----------- ------
At 03 July 2016
(unaudited) 30.3 1.0 (0.1) 1.0 9.6 124.0 (26.6) 139.2 2.5 141.7
------------------ ------- ------- -------- ------- -------- ----------- --------- ------------ ----------- ------
Interim Condensed Consolidated Statement of Cash Flows
for the period ended 02 July 2017
02 July 02 July 02 03 July 03 July 03
2017 2017 July 2016 2016 July
Continuing Discontinued 2017 Continuing Discontinued 2016
operations operations Total operations operations Total
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Note GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Cash flows from operating
activities
--------------------------
Profit before tax 32.9 0.1 33.0 1.4 0.1 1.5
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Finance costs - net 4.7 - 4.7 5.4 - 5.4
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Share of post-tax result
of joint ventures (2.7) - (2.7) (2.8) - (2.8)
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Other items 0.1 - 0.1 - - -
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Other non-cash movements 0.2 - 0.2 10.1 - 10.1
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Payments made on behalf
of IDC scheme (19.3) - (19.3) (1.6) - (1.6)
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Share option charge 1.7 - 1.7 0.3 - 0.3
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Depreciation and
amortisation 9.8 - 9.8 10.4 - 10.4
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Difference between pension
charge and cash
contributions 0.3 - 0.3 0.7 - 0.7
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Decrease/(increase) in
inventories 0.3 - 0.3 (0.1) - (0.1)
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
(Increase) in trade and
other receivables (32.5) - (32.5) (13.2) - (13.2)
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Increase in trade and
other payables 22.8 - 22.8 6.0 - 6.0
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
(Decrease) in provisions (1.4) - (1.4) (0.6) (0.1) (0.7)
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
(Loss)/gain on sale of
property, plant and
equipment - - - 0.1 - 0.1
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Net cash generated from
continuing and
discontinued
operations 16.9 0.1 17.0 16.1 - 16.1
---- ------------ ------------- ------------ ------------ ------------- ------------
Interest received 0.1 - 0.1 0.1 - 0.1
Interest paid (3.2) - (3.2) (3.7) - (3.7)
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Tax paid (7.9) - (7.9) (2.4) - (2.4)
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Net cash flow from
operating
activities 5.9 0.1 6.0 10.1 - 10.1
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Investing activities
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Proceeds from sale of
property, plant and
equipment 13 0.6 0.9
--------------------------
Purchase of property,
plant and equipment 13 (3.0) (8.0)
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Decrease in loans to joint
ventures 6.3 0.4
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Dividends received from
joint ventures 0.8 2.3
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Net cash from/(used in)
investing activities -
continuing operations 4.7 (4.4)
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Financing activities
--------------------------
Movement in revolving
facility (3.7) (1.1)
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Share buyback (1.3) (0.8)
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Dividends paid to
shareholders (3.0) (11.5)
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Dividends paid to
non-controlling
interests (1.0) (1.8)
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Net cash flows used in
financing activities -
continuing operations (9.0) (15.2)
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Net increase/(decrease)
in cash and cash
equivalents 1.7 (9.5)
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Net foreign exchange
difference
on cash and cash
equivalents (1.0) 6.9
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Cash and cash equivalents
at 01 January 121.5 81.4
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Cash and cash equivalents
at end of period 122.2 78.8
-------------------------- ---- ------------ ------------- ------------ ------------ ------------- ------------
Notes to the Interim Condensed Consolidated Financial
Statements
1. Corporate information
The interim condensed consolidated financial statements of Cape
plc and its subsidiaries, collectively 'the Group' for the 27 weeks
ended 2 July 2017 were authorised for issue in accordance with a
resolution of the Directors on 21 August 2017.
Cape plc, 'the Company' or 'the Parent', is a limited company
incorporated in Jersey and resident in the United Kingdom and
Jersey whose shares are publicly traded on the London Stock
Exchange. The registered office is located at 47 Esplanade, St
Helier, Jersey JE1 0BD. The Group is principally engaged in the
provision of critical industrial services focused on the energy and
natural resource sectors.
2. Basis of preparation
The interim condensed consolidated financial statements for the
period ended 2 July 2017 have been prepared in accordance with IAS
34 'Interim Financial Reporting', as adopted by the European Union
and the Disclosure and Transparency Rules of the Financial Conduct
Authority. The interim condensed consolidated financial statements
do not include all the information and disclosures required in the
Group's annual audited consolidated financial statements, and
should be read in conjunction with the Group's annual audited
consolidated financial statements for the year ended 31 December
2016 which are prepared in accordance with IFRS, as adopted by the
European Union.
The accounting policies and methods of computation adopted in
preparation of the Group's interim condensed consolidated financial
statements are the same as those followed in the preparation of the
Group's annual consolidated financial statements for the year ended
31 December 2016, except for the adoption of new standards and
interpretations effective as of 1 January 2017.
Refer to the financial review within the Interim Management
Review section for further commentary on key movements in the
interim income statement and interim statement of financial
position during the period.
Adoption of new standards and interpretations
Several amendments to existing standards apply for the first
time in 2017, however these are not yet adopted by the European
Union. Adoption of these amendments to existing standards does not
have a significant impact on the annual financial statements of the
Group or the interim condensed consolidated financial statements of
the Group. These amendments to existing standards are listed
below:
- Amendments to IAS 7 'Statement of Cash Flows: Disclosure Initiative'
- Amendments to IAS 12 'Income Taxes: Recognition of Deferred
Tax Assets for Unrecognised Losses'
- Annual Improvements Cycle 2012-2014
- Amendments to IFRS 12 'Disclosure of Interests in Other
Entities: Clarification of the scope of disclosure requirements in
IFRS 12'
The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective. The Directors do not anticipate that the adoption of any
of the new standards and interpretations issued by the IASB and
IFRIC which are effective after the date of these interim financial
statements will have a material impact on the Group's financial
statements in the period of initial application.
IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 'Revenue from Contracts with Customers' introduces a new
five-step approach to recognising revenue from contracts with
customers and will be adopted by the Group with effect from 1
January 2018. Under IFRS 15, revenue is recognised at an amount
that reflects the consideration to which an entity expects to be
entitled to, in exchange for transferring goods or services to a
customer.
The new revenue standard will supersede all current revenue
recognition requirements under IAS 11 'Construction Contracts' and
IAS 18 'Revenue'. IFRS 15 gives a choice of either a full
retrospective application or a modified retrospective application.
The Group will confirm which application it will adopt in the 2017
Group Annual Report and Accounts.
The Group has performed a preliminary assessment of the impact
of the adoption of IFRS 15 and is currently evaluating the
potential impact on the Group's revenue recognition policies. For
the purpose of assessing IFRS 15, the Group's contracts have been
reviewed according to their nature, i.e. whether these are
'construction' or 'other', and the different disciplines of work
provided.
The Group will continue to work during 2017 to design, implement
and refine procedures and controls to apply the new requirements of
IFRS 15, identify the transitional impact and to finalise its new
revenue recognition accounting policy. In preparing to adopt IFRS
15, the initial assessment of the potential impact of the new
standard has identified the following focus areas:
(i) Identifying performance obligations
IFRS 15 requires the identification of separate performance
obligations within a contract. For those contracts where the Group
provides a single discipline, there is not expected to be any
impact under the new standard. Where the Group provides
multi-disciplinary services within a maintenance type contract, the
identification of performance obligations is not expected to have
an impact on how the Group currently recognises revenue and profit
or loss, as maintenance contracts are accounted for on an earned
value basis.
For those multi-disciplinary construction type contracts
accounted for under the percentage of completion method, the Group
currently accounts for these multi-disciplinary construction
contracts as a single performance obligation. Under IFRS 15,
revenue must be recognised separately for each performance
obligation identified. As a result, this will require the
allocation of contract costs and consideration to each performance
obligation, based on the fair value of each obligation being
fulfilled, in order to apply the percentage of completion method,
and may impact the amount and timing of revenue recognised over the
life of the contract.
(ii) Variable consideration
IFRS 15 requires any variable consideration to be estimated at
contract inception to assess whether this should form part of the
transaction price. To prevent over-recognition of revenue, revenue
shall only be recognised to the extent that it is highly probable
that a significant reversal will not occur.
Currently, the Group only recognises revenue from variable
consideration when all uncertainty has been resolved, which tends
to be at the end of the period over which variable consideration is
determined, whereas the new standard requires an assessment of
whether it is appropriate to recognise over time.
The majority of the Group's variable consideration relates to
performance during the 12-month calendar period. There may be an
impact on the phasing and recognition of variable consideration
over the 12 months, but this is only expected to affect the interim
numbers reported but not the revenue and profit or loss reported at
the year end.
The Group will continue to assess contracts on an individual
basis to determine elements of variable consideration and how to
recognise any associated revenue.
2. Basis of preparation (continued)
(iii) Presentation and disclosure requirements
IFRS 15 requires more extensive presentational and disclosure
requirements than under current accounting standards, which will
increase the volume of disclosures in the Group's Annual Report and
Accounts. As the effective period for IFRS 15 is for periods
beginning 1 January 2018, these revised disclosures will be in the
2018 Group Annual Report and Accounts.
IFRS 9 'Financial Instruments'
IFRS 9 'Financial Instruments' becomes effective from 1 January
2018. The standard covers recognition, classification, measurement
and impairment of financial assets and financial liabilities,
together with a new hedge accounting model. This standard is not
expected to have a material impact on the Group.
IFRS 16 'Leases'
IFRS 16 'Leases' becomes effective from 1 January 2019. The new
standard eliminates the classification of leases as either
operating leases or finance leases and instead introduces a single
lessee accounting model. This new standard is expected to result in
an increase in both assets and liabilities on the statement of
financial position whilst the nature of expense in the income
statement will also change, as operating lease costs will be
replaced with depreciation charges and lease interest expense. The
Group is currently assessing the impact of the new standard.
Estimates
The preparation of the interim condensed consolidated financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing these interim condensed consolidated financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were in line with those that applied to the
Group's annual audited consolidated financial statements for the
year ended 31 December 2016.
Foreign exchange
The Group is exposed to foreign currency risk in two key
currencies. The movements in exchange rates for these two
currencies against Sterling are detailed below:
27 weeks 27 weeks Year ended
ended ended 31 December
02 July 2017 03 July 2016 2016
---- --------------- ---------------- ----------------
Closing Closing Average Closing Average
Average
---- --------------- ------- ------- ------- -------
AUD 1.70 1.68 1.80 2.04 1.71 1.81
---- --------------- ------- ------- ------- -------
USD 1.30 1.27 1.34 1.47 1.24 1.35
---- --------------- ------- ------- ------- -------
3. Cape specific accounting measures
To be able to provide readers with clear, meaningful and
consistent presentation of financial performance, the Group
reflects its underlying financial results in the 'business
performance' column within the interim condensed consolidated
income statement. Business performance excludes 'Other items' and
'Exceptional items', which are considered non-operational in their
nature and which are reported separately in a different column
within the interim condensed consolidated income statement.
Other items
Other items are those items which the Directors believe are
relevant to the understanding of the result for the period and
which are excluded from the adjusted measures. Other items include
administration expenses, financial incomes and financial costs
associated with industrial disease claims and certain
post-acquisition charges, including amortisation of acquired
intangibles arising from business combinations.
Exceptional items
Exceptional items are those items which are of a non-recurring
nature and, in the judgement of the Directors, need to be disclosed
separately by virtue of their nature, size or incidence. Items
which may be considered exceptional in nature include significant
write-downs of goodwill and other assets, significant changes in
asset values as a result of changes in accounting estimates,
restructuring costs and other legal and professional fees which
meet the aforementioned definition.
4. Critical accounting estimates and judgements
Certain of the Group's accounting policies require critical
accounting estimates that involve subjective judgements and the use
of assumptions, some of which may relate to matters that are
inherently uncertain and susceptible to change.
Judgements
Areas of judgement that have the most significant effect on the
amounts recognised in the interim condensed consolidated financial
statements are:
(i) Revenue recognition and assessment of long term contract
performance
The Group generally accounts for long term construction
contracts using the percentage of completion method as performance
of the contract progresses. This method requires judgement to
determine accurate estimates of the extent of progress towards
contract completion and may involve estimates of the total contract
costs, remaining costs to completion, total revenues, contract
risks and other judgements.
(ii) Carrying value of property, plant and equipment
Assessing whether property, plant and equipment may be impaired
requires a review for indicators of impairment and, where such
indicators exist, an estimate of the asset's recoverable amount by
reference to value in use. Management are required to exercise
significant judgement in reviewing for and identifying asset
indicators of impairment and subsequently calculating value in
use.
(iii) Trade and other receivables
The Group provides for likely non-recovery of receivables to the
extent that the carrying value exceeds the present value of
expected future cash flows. Assessing the value of the provision
requires significant management judgement and review of individual
receivables based upon individual customer creditworthiness,
current economic trends and analysis of historical bad debts.
4. Critical accounting estimates and judgements (continued)
(iv) Tax
The Group recognises deferred tax assets on all applicable
temporary differences where it is probable that future taxable
profits will be available for utilisation. This requires management
to make judgements and assumptions regarding the amount of deferred
tax that can be recognised based on the magnitude and likelihood of
future taxable profits.
The Group has a number of uncertain tax positions that are yet
to be resolved. Provisions have been made where it is probable an
economic outflow will be required to settle an obligation and where
the amount can be reliably estimated. The Board believes no further
provision or disclosure is required in respect of these uncertain
positions.
(v) Defined benefit pension plans
The cost and the obligation of the Group's defined benefit
pension plans are based on a number of selection assumptions; these
include the discount rate, inflation rate, salary growth, longevity
and expected return on the assets of the plans. Differences arising
from actual experience or future changes in assumptions will be
reflected in future periods.
Estimates
The key assumptions affected by future uncertainty that have a
significant risk of causing material adjustment to the carrying
value of assets and liabilities within the next financial year
are:
(i) Onerous contracts
Provision is made for future losses on long-term contracts where
it is considered that the contract costs are likely to exceed
revenues in future years. Estimating future losses involves
assumptions of contract performance targets and likely levels of
future cost escalation over time.
(ii) Impairment of goodwill
Goodwill is tested at least annually for impairment. This
requires estimation of the value in use of the cash-generating
units to which the goodwill is allocated. Calculation of value in
use requires estimation of expected future cash flows from each of
the cash-generating units and also to determine a suitable discount
rate to calculate the present value of those cash flows. Management
have reviewed the assumptions made as part of the goodwill
impairment review carried out for the year ended 31 December 2016
and have not identified an impairment of goodwill in any of the
cash generating units.
(iii) Provision for industrial disease claims
To the extent that such costs can be reliably estimated as at 2
July 2017, a provision has been made for the costs which the Group
is expected to incur in respect of lodged and future industrial
disease claims for which the Board believes the Group to be liable
arising on alleged exposure to previously manufactured asbestos
products, notwithstanding the matters disclosed under note 17
'Industrial disease claims provision and contingent liabilities'.
The most recent full actuarial valuation was performed in January
2017 in respect of the period up to 31 December 2016 and the next
full valuation is scheduled to be completed in respect of the
period up to 31 December 2019. The amount of the provision is based
on historic patterns of claim numbers and monetary settlements as
well as published tables of projected disease incidence. Key
assumptions made in assessing the appropriate level of provision
include the period over which future claims can be expected, the
nature of claims received, the rate at which claims will be filed,
the rate of successful resolution as well as future trends in both
compensation payments and legal costs. Management monitors claims
received on an ongoing basis as well as any other factors which
would require a change to the assumptions or trigger a full
actuarial review in the current year. When determining the
appropriate level of provision, the Board has considered various
potential, threatened and actual claim types and has relied on
appropriate legal and other professional advice.
(iv) Income tax
Group entities can be subject to routine tax audits and also a
process whereby tax computations are discussed and agreed with the
appropriate authorities. Whilst the ultimate outcome of such tax
audits and discussions cannot be determined with certainty,
management estimates the level of required tax provisions on the
basis of professional advice and the nature of current discussions
with the tax authority concerned.
5. Segment information
Management has determined the operating segments based on the
reports reviewed by the Board (Chief Operating Decision Maker or
'CODM') that are used to make strategic decisions. The CODM
considers the business from a geographic perspective and the Group
reports three regional segments and a central support function. The
main profit measure used by the CODM in its review is adjusted
operating profit.
Each regional segment derives its revenues from the provision of
critical industrial services focussed on the energy and natural
resources sectors. No operating segments have been aggregated.
The segment information for the periods ended 2 July 2017 and 3
July 2016 are as follows:
Middle Asia
27 weeks ended 02 July 2017 UK East Pacific Central Group
(unaudited) GBPm GBPm GBPm GBPm GBPm
--------------------------------- ----- ------ -------- ------- -----
Continuing operations
--------------------------------- ----- ------ -------- ------- -----
Revenue 175.9 102.1 303.9 - 581.9
--------------------------------- ----- ------ -------- ------- -----
Adjusted operating profit/(loss)
before joint ventures 10.8 5.5 26.1 (2.4) 40.0
--------------------------------- ----- ------ -------- ------- -----
Share of post-tax profit
from joint ventures - 2.7 - - 2.7
--------------------------------- ----- ------ -------- ------- -----
Adjusted operating profit/(loss)
after franchise fees 10.8 8.2 26.1 (2.4) 42.7
--------------------------------- ----- ------ -------- ------- -----
Other and exceptional items (5.1)
--------------------------------- ----- ------ -------- ------- -----
Net finance costs (4.7)
--------------------------------- ----- ------ -------- ------- -----
Profit before tax 32.9
--------------------------------- ----- ------ -------- ------- -----
Middle Asia
27 weeks ended 03 July 2016 UK East Pacific Central Group
(unaudited) GBPm GBPm GBPm GBPm GBPm
--------------------------------- ----- ------ -------- ------- ------
Continuing operations
---------------------------------
Revenue 194.0 94.2 108.1 - 396.3
--------------------------------- ----- ------ -------- ------- ------
Adjusted operating profit/(loss)
before joint ventures 8.4 8.3 1.9 (2.5) 16.1
--------------------------------- ----- ------ -------- ------- ------
Share of post-tax profit
from joint ventures - 2.8 - - 2.8
--------------------------------- ----- ------ -------- ------- ------
Adjusted operating profit/(loss)
after franchise fees 8.4 11.1 1.9 (2.5) 18.9
--------------------------------- ----- ------ -------- ------- ------
Other and exceptional items (12.1)
--------------------------------- ----- ------ -------- ------- ------
Net finance costs (5.4)
--------------------------------- ----- ------ -------- ------- ------
Profit before tax 1.4
--------------------------------- ----- ------ -------- ------- ------
5. Segment information (continued)
Segmental adjusted operating profit/(loss) in the table above is
shown after charging franchise fees. Adjusted operating profit
before franchise fees is set out in note 6. There were no
significant sales between segments in either period.
Other segment items included in the interim condensed
consolidated income statement are as follows:
Middle Asia
27 weeks ended 02 July UK East Pacific Central Group
2017 (unaudited) GBPm GBPm GBPm GBPm GBPm
-------------------------- ----- ------ -------- ------- -----
Depreciation (excluding
discontinued operations) 2.2 4.3 2.1 - 8.6
--------------------------- ----- ------ -------- ------- -----
Amortisation 1.2 - - - 1.2
--------------------------- ----- ------ -------- ------- -----
Middle Asia
27 weeks ended 03 July UK East Pacific Central Group
2016 (unaudited) GBPm GBPm GBPm GBPm GBPm
-------------------------- ----- ------ -------- ------- -----
Depreciation (excluding
discontinued operations) 2.6 4.1 2.0 - 8.7
--------------------------- ----- ------ -------- ------- -----
Amortisation 1.7 - - - 1.7
--------------------------- ----- ------ -------- ------- -----
The segment assets and liabilities at 2 July 2017 are as
follows:
Middle Asia
27 weeks ended UK East Pacific Central Unallocated Group
02 July 2017 (unaudited) GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ------ ------ -------- ------- ----------- -------
Assets - continuing 159.0 206.9 138.5 0.6 200.9 705.9
---------------------------- ------ ------ -------- ------- ----------- -------
Assets held for
sale 0.3 - - - - 0.3
---------------------------- ------ ------ -------- ------- ----------- -------
Assets directly
associated with
disposal group
held for sale - - 1.0 - - 1.0
---------------------------- ------ ------ -------- ------- ----------- -------
Total assets 159.3 206.9 139.5 0.6 200.9 707.2
---------------------------- ------ ------ -------- ------- ----------- -------
Non-current assets
included in total
assets
--------------------------- ------ ------ -------- ------- ----------- -------
Goodwill and intangibles
- continuing 57.4 54.8 34.3 - - 146.5
---------------------------- ------ ------ -------- ------- ----------- -------
Other - continuing 24.9 38.4 17.2 3.0 42.1 125.6
---------------------------- ------ ------ -------- ------- ----------- -------
Total non-current
assets 82.3 93.2 51.5 3.0 42.1 272.1
---------------------------- ------ ------ -------- ------- ----------- -------
Liabilities - continuing (58.9) (60.9) (84.9) (163.5) (211.2) (579.4)
---------------------------- ------ ------ -------- ------- ----------- -------
Liabilities - discontinued
operations - (0.1) - - - (0.1)
---------------------------- ------ ------ -------- ------- ----------- -------
Liabilities directly
associated with
disposal group
held for sale - (0.3) (1.8) - - (2.1)
---------------------------- ------ ------ -------- ------- ----------- -------
Total liabilities (58.9) (61.3) (86.7) (163.5) (211.2) (581.6)
---------------------------- ------ ------ -------- ------- ----------- -------
The segment assets and liabilities at 31 December 2016 are as
follows:
Middle Asia
31 December 2016 UK East Pacific Central Unallocated Group
(audited) GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ------ ------ -------- ------- ----------- -------
Assets - continuing 165.2 202.9 127.5 6.2 202.6 704.4
Assets held for
sale 0.3 - - - - 0.3
---------------------------- ------ ------ -------- ------- ----------- -------
Assets directly
associated with
disposal group
held for sale - - 1.2 - - 1.2
---------------------------- ------ ------ -------- ------- ----------- -------
Total assets 165.5 202.9 128.7 6.2 202.6 705.9
---------------------------- ------ ------ -------- ------- ----------- -------
Non-current assets
included in total
assets
--------------------------- ------ ------ -------- ------- ----------- -------
Goodwill and intangibles
- continuing 58.6 57.8 33.9 - - 150.3
---------------------------- ------ ------ -------- ------- ----------- -------
Other - continuing 26.8 45.2 18.9 2.3 42.6 135.8
---------------------------- ------ ------ -------- ------- ----------- -------
Total non-current
assets 85.4 103.0 52.8 2.3 42.6 286.1
---------------------------- ------ ------ -------- ------- ----------- -------
Liabilities - continuing (59.1) (63.8) (69.6) (183.0) (214.2) (589.7)
---------------------------- ------ ------ -------- ------- ----------- -------
Liabilities - discontinued
operations - (0.1) - - - (0.1)
---------------------------- ------ ------ -------- ------- ----------- -------
Liabilities directly
associated with
disposal group
held for sale - (0.3) (2.1) - - (2.4)
---------------------------- ------ ------ -------- ------- ----------- -------
Total liabilities (59.1) (64.2) (71.7) (183.0) (214.2) (592.2)
---------------------------- ------ ------ -------- ------- ----------- -------
The geographical origin of non-current assets held by the Group
has not been disclosed as the necessary information is not
available and the cost to develop it would be excessive for interim
reporting purposes.
Assets and liabilities directly associated with the disposal
group held for sale in both 2017 and 2016 relate to the planned
termination of operations in
Hong Kong and Kazakhstan. Refer to note 13 for details of the
asset held for sale.
5. Segment information (continued)
Unallocated assets and liabilities comprise:
02 July 2017 31 December
2016
(unaudited) (audited)
---------------------------------
Assets Liabilities Assets Liabilities
GBPm GBPm GBPm GBPm
--------------------------------- ------ ----------- ------ -----------
Deferred tax 38.6 (4.3) 39.1 (4.7)
------------------------------------- ------ ----------- ------ -----------
Current tax - (13.1) - (13.7)
------------------------------------- ------ ----------- ------ -----------
Cash and cash equivalents 122.2 - 121.5 -
------------------------------------- ------ ----------- ------ -----------
Restricted deposits: current 36.6 - 38.5 -
------------------------------------- ------ ----------- ------ -----------
Restricted deposits: non-current 3.5 - 3.5 -
------------------------------------- ------ ----------- ------ -----------
Bank loans - (193.8) - (195.8)
------------------------------------- ------ ----------- ------ -----------
Total unallocated 200.9 (211.2) 202.6 (214.2)
------------------------------------- ------ ----------- ------ -----------
6. Adjusted measures
The Group seeks to present a measure of underlying performance
which is not impacted by exceptional or other items, both
considered non-operational in nature. These measures are described
as 'adjusted' and are used by management to measure and monitor
performance. Other items and exceptional items have been excluded
from the adjusted measures.
27 weeks 27 weeks
ended ended
02 July 03 July
2017 2016
GBPm GBPm
------------------------------------- -------- -----------
Profit before tax 32.9 1.4
Other items 3.3 12.1
Exceptional items 1.8 -
Interest income on restricted funds (0.2) (0.2)
--------------------------------------
Unwind of discount on provision for
industrial disease claims 1.4 1.6
-------------------------------------- -------- -----------
Adjusted profit before tax 39.2 14.9
-------------------------------------- -------- -----------
Operating profit 37.6 6.8
Other items 3.3 12.1
--------------------------------------
Exceptional items 1.8 -
------------------------------------- -------- -----------
Adjusted operating profit 42.7 18.9
-------------------------------------- -------- -----------
Adjusted operating profit margin 7.3% 4.8%
-------------------------------------- -------- -----------
Adjusted operating profit 42.7 18.9
--------------------------------------
Depreciation - continuing operations 8.6 8.7
-------------------------------------- -------- -----------
Adjusted EBITDA 51.3 27.6
-------------------------------------- -------- -----------
Finance costs (5.0) (5.7)
Unwind of discount on provision for
industrial disease claims 1.4 1.6
-------------------------------------- -------- -----------
Adjusted finance costs (3.6) (4.1)
-------------------------------------- -------- -----------
02 July 31 December
2017 2016
GBPm GBPm
------------------------------------- -------- -----------
Net debt 34.4 36.2
Unamortised borrowing arrangement costs 2.9 3.4
Restricted funds 40.1 42.0
Less: cash transferred to assets of
disposal group held for sale (1.0) (1.2)
----------------------------------------- ----- -----
Adjusted net debt 76.4 80.4
----------------------------------------- ----- -----
Certain central operations and management are based in Singapore
with responsibility for management and development of non-UK
intellectual property. Franchise agreements facilitate the charging
of franchise fees from Singapore to the Group's non-UK trading
businesses with such costs being reported through segment operating
profit.
6. Adjusted measures (continued)
The segmental adjusted operating profit before franchise fee
charges is as follows:
Middle Asia
27 weeks ended 02 July 2017 UK East Pacific Central Group
(unaudited) GBPm GBPm GBPm GBPm GBPm
--------------------------------- ----- ------ -------- ------- -----
Adjusted operating profit/(loss)
before joint ventures 10.8 6.8 31.8 (9.4) 40.0
----- ------ -------- ------- -----
Share of post-tax result
of joint ventures - 2.7 - - 2.7
--------------------------------- ----- ------ -------- ------- -----
Adjusted operating profit/(loss) 10.8 9.5 31.8 (9.4) 42.7
--------------------------------- ----- ------ -------- ------- -----
Middle Asia
27 weeks ended 03 July 2016 UK East Pacific Central Group
(unaudited) GBPm GBPm GBPm GBPm GBPm
--------------------------------- ----- ------ -------- ------- -----
Adjusted operating profit/(loss)
before joint ventures 8.4 10.2 5.0 (7.5) 16.1
---------------------------------
Share of post-tax result
of joint ventures - 2.8 - - 2.8
--------------------------------- ----- ------ -------- ------- -----
Adjusted operating profit/(loss) 8.4 13.0 5.0 (7.5) 18.9
--------------------------------- ----- ------ -------- ------- -----
7. Other and exceptional items
27 weeks 27 weeks
ended ended
02 July 03 July
2017 2016
i) Other items GBPm GBPm
----------------------------------------- -------- -----------------
Continuing operations
----------------------------------------- -------- -----------------
In operating profit:
----------------------------------------- -------- -----------------
Amortisation of intangibles arising
on business acquisitions 1.2 1.6
------------------------------------------ -------- -----------------
Post-acquisition management compensation - 0.2
------------------------------------------ -------- -----------------
Charge to provision for industrial
disease claims - 9.7
------------------------------------------ -------- -----------------
Litigation costs and other expenses
for industrial disease claims 2.1 0.6
------------------------------------------ -------- -----------------
Other items from continuing operations
included within operating profit 3.3 12.1
------------------------------------------ -------- -----------------
27 weeks 27 weeks
ended ended
02 July 03 July
2017 2016
ii) Exceptional items GBPm GBPm
--------------------------------------------- -------- --------
Continuing operations
--------------------------------------------- -------- --------
In operating profit:
--------------------------------------------- -------- --------
Legal and professional fees 1.8 -
---------------------------------------------- -------- --------
Exceptional items from continuing operations
included within operating profit 1.8 -
---------------------------------------------- -------- --------
During the period ended 2 July 2017, legal and professional fees
of GBP1.8 million have been incurred in relation to the Offer made
by Altrad UK Limited to acquire the entire issued and to be issued
ordinary share capital of Cape. Further details are provided in
note 20.
8. Discontinued operations
Discontinued operations in 2017 and 2016 primarily relate to the
planned termination of operations in Hong Kong. Analysis of the
results of discontinued operations is as follows:
27 weeks 27 weeks
ended ended
02 July 03 July
2017 2016
GBPm GBPm
-------------------------------------------- -------- --------
Revenue 4.2 2.9
Expenses (4.1) (2.8)
--------------------------------------------- -------- --------
Profit before and after tax of discontinued
operations before exceptional and other
items 0.1 0.1
--------------------------------------------- -------- --------
9. Finance income and costs
27 weeks 27 weeks
ended ended
02 July 03 July
2017 2016
GBPm GBPm
------------------------------------ -------- --------
Interest income:
Short-term bank deposits 0.1 -
Interest on pension assets - 0.1
Interest on restricted funds 0.2 0.2
------------------------------------- -------- --------
Finance income 0.3 0.3
------------------------------------- -------- --------
Interest expense:
Bank borrowings (3.5) (4.0)
Finance leases (0.1) (0.1)
Unwind of discount on provision for
industrial disease claims (1.4) (1.6)
------------------------------------- -------- --------
Finance costs (5.0) (5.7)
------------------------------------- -------- --------
Net finance costs (4.7) (5.4)
------------------------------------- -------- --------
10. Income tax
The Group's effective tax rate on its business performance of
21% (H1 2016: 20%) is calculated using the tax rate that would be
applicable to the expected total annual earnings. The income tax
expense for the period increased by GBP7.6 million to GBP7.8
million (H1 2016: decrease of GBP3.9 million) due to an increase in
profits and a change in the geographic mix of profits.
Factors affecting current and future tax charges
Profits arising in the Company for the 2017 year of assessment
will be subject to Jersey tax at the standard corporate income tax
rate of 0%. As a Group involved in worldwide operations, Cape is
subject to several factors that may affect future tax charges,
principally the levels and mix of profitability in different
jurisdictions, tax rates imposed and tax regime reforms.
Legislation has been enacted in the UK to reduce the standard rate
of corporation tax to 19% from 1 April 2017 and to 17% from 1 April
2020.
11. Dividends per share
A final dividend in respect of the year ended 31 December 2016
of 2.5 pence per share, amounting to GBP3.0 million, was paid in
the period ended 2 July 2017. Given the current circumstances,
timing and terms of the recommended cash offer for Cape plc by
Altrad, the Board has decided not to declare an interim dividend at
this point in time (H1 2016: 4.5 pence per share). Should
circumstances around the Offer change, the Board may revisit this
decision in the future.
12. Earnings per ordinary share
Basic earnings per share (EPS) for the half year ended 2 July
2017 is based on the profit after tax attributable to the Company's
ordinary shareholders of GBP24.1 million (H1 2016: profit after tax
of GBP0.2 million) divided by the weighted average number of issued
ordinary shares of 120,754,840
(H1 2016: 121,019,813).
When the Group makes a profit from continuing operations,
diluted EPS equals the profit attributable to the Company's
ordinary shareholders divided by the diluted weighted average
number of issued and outstanding potential issuance of ordinary
shares. When the Group makes a loss from continuing operations,
diluted EPS equals the loss attributable to the Company's ordinary
shareholders divided by the basic (undiluted) weighted average
number of issued ordinary shares. This ensures that EPS on losses
is shown in full and not diluted by unexercised share options or
awards.
Diluted earnings per share for the half year ended 2 July 2017
is based on the profit after tax attributable to the Company's
ordinary shareholders of GBP24.1 million (H1 2016: profit after tax
of GBP0.2 million) divided by the diluted weighted average number
of issued ordinary shares of 121,545,128
(H1 2016: 121,429,319).
Share options and awards are considered outstanding for diluted
EPS purposes when the performance criteria are deemed to have been
met, based on the information available, at the end of the
reporting period and when the average share price during the period
is higher than the exercise price of the option or award.
The basic weighted average number of shares excludes shares that
the Company holds in an employee benefit trust. The weighted
average number of shares held in the trust during the period ended
2 July 2017 was 349,097 (H1 2016: 84,124).
27 weeks 27 weeks
ended ended
02 July 03 July
2017 2016
Shares Shares
------------------------------------------ ----------- -----------
Basic weighted average number of shares 120,754,840 121,019,813
------------------------------------------
Adjustments:
------------------------------------------ ----------- -----------
Weighted average number of outstanding
share options 790,288 409,506
------------------------------------------ ----------- -----------
Diluted weighted average number of shares 121,545,128 121,429,319
------------------------------------------ ----------- -----------
12. Earnings per ordinary share (continued)
27 weeks 27 weeks
ended ended
02 July 03 July
2017 2016
---------------- -------------------------
Earnings EPS Earnings EPS
GBPm pence GBPm pence
----------------------------------------- -------- ------ ---------------- -------
Basic earnings per share
----------------------------------------- -------- ------ ---------------- -------
Continuing operations 24.0 19.9 0.1 0.1
----------------------------------------- -------- ------ ---------------- -------
Discontinued operations 0.1 0.1 0.1 0.1
----------------------------------------- -------- ------ ---------------- -------
Basic earnings per share 24.1 20.0 0.2 0.2
----------------------------------------- -------- ------ ---------------- -------
Diluted earnings per share
----------------------------------------- -------
Continuing operations 24.0 19.7 0.1 0.1
----------------------------------------- -------- ------ ---------------- -------
Discontinued operations 0.1 0.1 0.1 0.1
----------------------------------------- -------- ------ ---------------- -------
Diluted earnings per share 24.1 19.8 0.2 0.2
----------------------------------------- -------- ------ ---------------- -------
Adjusted basic earnings per share
- continuing operations
----------------------------------------- -------- ------ ---------------- -------
Earnings from continuing operations 24.0 19.9 0.1 0.1
----------------------------------------- -------- ------ ---------------- -------
Amortisation of intangibles 1.2 1.0 1.6 1.3
----------------------------------------- -------- ------ ---------------- -------
Post-acquisition management compensation - - 0.2 0.2
----------------------------------------- -------- ------ ---------------- -------
Exceptional items 1.8 1.5 - -
----------------------------------------- -------- ------ ---------------- -------
Industrial disease related costs
and interest income 3.3 2.7 11.7 9.6
----------------------------------------- -------- ------ ---------------- -------
Tax effect of adjusting items (0.3) (0.2) (2.8) (2.3)
----------------------------------------- -------- ------ ---------------- -------
Adjusted basic earnings per share 30.0 24.9 10.8 8.9
----------------------------------------- -------- ------ ---------------- -------
Adjusted diluted earnings per
share - continuing operations
----------------------------------------- -------- ------ ---------------- -------
Earnings from continuing operations 24.0 19.7 0.1 0.1
Amortisation of intangibles 1.2 1.0 1.6 1.3
----------------------------------------- -------- ------ ---------------- -------
Post-acquisition management compensation - - 0.2 0.2
----------------------------------------- -------- ------ ---------------- -------
Exceptional items 1.8 1.5 - -
----------------------------------------- -------- ------ ---------------- -------
Industrial disease related costs
and interest income 3.3 2.7 11.7 9.6
----------------------------------------- -------- ------ ---------------- -------
Tax effect of adjusting items (0.3) (0.2) (2.8) (2.3)
----------------------------------------- -------- ------ ---------------- -------
Adjusted diluted earnings per
share 30.0 24.7 10.8 8.9
----------------------------------------- -------- ------ ---------------- -------
The adjusted earnings per share calculations have been
calculated after excluding the impact of other and exceptional
items (note 7), and interest income on restricted funds (note 9)
and the tax impact of these items.
13. Property, plant and equipment
During the period ended 2 July 2017, the Group acquired items of
property, plant and equipment with a cost of GBP3.0 million (H1
2016: GBP8.0 million) and received proceeds from asset sales of
GBP0.6 million (H1 2016: GBP0.9 million) arising from assets with a
carrying amount of GBP0.6 million (H1 2016: GBP1.0 million). Net
capital expenditure of GBP2.4 million (H1 2016: GBP7.1 million)
shown in the cash flow statement represents the actual cash outflow
and therefore excludes purchases funded through finance leases.
During 2016, GBP0.3 million of land and buildings were
reclassified to non-current assets held for sale and presented
separately within current assets on the face of the condensed
consolidated statement of financial position. The sale was
completed subsequent to the period end.
Capital expenditure contracted for at the balance sheet date but
not yet incurred:
27 weeks 27 weeks Year
ended ended ended
02 July 03 July 31 December
2017 2016 2016
GBPm GBPm GBPm
------------------------------ ---------------- -------- -------------
Property, plant and equipment 0.6 0.4 3.0
------------------------------- ---------------- -------- -------------
14. Financial instruments
a) Except for cash and restricted deposits, details of financial
instruments are set out below.
Fair Other
value financial
Loans through liabilities
and income at amortised
receivables statement cost Total
02 July 2017 (unaudited) GBPm GBPm GBPm GBPm
--------------------------------------- ------------ ---------- ------------- -------
Assets per the condensed consolidated
statement of financial position
--------------------------------------- ------------ ---------- ------------- -------
Trade and other receivables (excluding
prepayments) 254.3 - - 254.3
--------------------------------------- ------------ ---------- ------------- -------
254.3 - - 254.3
--------------------------------------- ------------ ---------- ------------- -------
Liabilities per the condensed
consolidated statement of financial
position
--------------------------------------- ------------ ---------- ------------- -------
Borrowings (excluding finance
lease liabilities) - - (193.9) (193.9)
--------------------------------------- ------------ ---------- ------------- -------
Finance lease liabilities - - (2.8) (2.8)
--------------------------------------- ------------ ---------- ------------- -------
Trade and other payables (excluding
statutory liabilities and payments
on account) - - (147.1) (147.1)
--------------------------------------- ------------ ---------- ------------- -------
- - (343.8) (343.8)
--------------------------------------- ------------ ---------- ------------- -------
Fair Other
value financial
Loans through liabilities
and income at amortised
receivables statement cost Total
31 December 2016 (audited) GBPm GBPm GBPm GBPm
--------------------------------------- ------------ ---------- ------------- --------
Assets per the consolidated statement
of financial position
--------------------------------------- ------------ ---------- ------------- --------
Trade and other receivables (excluding
prepayments) 234.0 - - 234.0
--------------------------------------- ------------ ---------- ------------- --------
234.0 - - 234.0
--------------------------------------- ------------ ---------- ------------- --------
Liabilities per the consolidated
statement of financial position
--------------------------------------- ------------ ---------- ------------- --------
Borrowings (excluding finance
lease liabilities) - - (196.7) (196.7)
--------------------------------------- ------------ ---------- ------------- --------
Finance lease liabilities - - (3.0) (3.0)
--------------------------------------- ------------ ---------- ------------- --------
Trade and other payables (excluding
statutory liabilities and payments
on account) - - (129.1) (129.1)
--------------------------------------- ------------ ---------- ------------- --------
- - (328.8) (328.8)
--------------------------------------- ------------ ---------- ------------- --------
b) Fair values
The fair values of short-term deposits, trade and other
payables, loans and other borrowings with a maturity of less than
one year are assumed to approximate to their book values.
In the case of the bank loans and other borrowings due in more
than one year, the fair value of financial liabilities for
disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate
available to the Group for similar financial instruments. The fair
value of bank loans as at 2 July 2017 is GBP191.7 million (31
December 2016: GBP193.6 million). Accordingly, the related fair
values disclosed are classified as Level 2 in the fair value
measurement hierarchy.
The fair value of trade and other receivables equal the carrying
amounts.
There have been no transfers between Level 1 and Level 2, and no
transfers into or out of Level 3 fair value measurements during the
27-week period ended 2 July 2017. The Group determines whether
transfers have occurred between levels in the hierarchy by
re-assessing categorisation at the end of the reporting period.
15. Share capital and reserves
03 July
02 July 2016
2017 02 July Number 03 July
Number 2017 of 2016
Ordinary shares of 25p each of shares GBPm shares GBPm
------------------------------ ----------- --------- ----------- ------------------
Authorised 200,000,000 50.0 200,000,000 50.0
------------------------------ ----------- --------- ----------- ------------------
plc Scheme Share of GBP1 each
------------------------------ ----------- --------- ----------- ------------------
Authorised, issued and fully
paid at beginning and end of
period 1 - 1 -
------------------------------ ----------- --------- ----------- ------------------
Share Share
capital capital
Issued and fully paid: Number GBPm
------------------------------ ----------- --------- ----------- ------------------
At 01 January 2017 121,103,937 30.3
------------------------------ ----------- --------- ----------- ------------------
Issue of shares - -
------------------------------ ----------- --------- ----------- ------------------
Exercise of share options - -
------------------------------ ----------- --------- ----------- ------------------
At 02 July 2017 121,103,937 30.3
------------------------------ ----------- --------- ----------- ------------------
Treasury Treasury
shares shares
Treasury shares: Number GBPm
------------------------------ ----------- --------- ----------- ------------------
At 01 January 2017 81,514 (0.1)
------------------------------ ----------- --------- ----------- ------------------
Share buyback 627,477 (1.3)
------------------------------ ----------- --------- ----------- ------------------
Exercise of share options (261,170) 0.5
------------------------------ ----------- --------- ----------- ------------------
At 02 July 2017 447,821 (0.9)
------------------------------ ----------- --------- ----------- ------------------
Treasury shares
The Group has an employee benefit trust holding shares to
satisfy the exercise of share options. All these shares have been
classified in the condensed consolidated statement of financial
position as treasury shares within equity. During April 2017, the
Trust purchased 627,477 ordinary shares in the capital of the
Company for the purpose of enabling the Trustee to satisfy existing
awards and future awards granted by the Company. As at 2 July 2017,
261,170 options had been exercised, of which 30,878 options relate
to the 2013 PSP scheme and 230,292 options relate to the 2014 PSP
scheme, with 447,821 shares being held by the Cape plc Employee
Benefit Trust. The weighted average price of share options
exercised during the period was 236.3 pence.
Special reserve
The special reserve was created in 2008 by court order upon
cancellation of the share premium and retained earnings. The
special reserve is not distributable and restrictions exist over
its use.
Translation reserve
The translation reserve comprises all foreign currency
differences arising from the translation of financial statements of
foreign operations.
Other reserves
Other reserves relates to hedging reserves held in respect of
net investment hedges.
plc Scheme Share
The plc Scheme Share is held by the Law Debenture Trust
Corporation plc on behalf of the Scheme creditors.
The rights attaching to the share are designed to ensure that
Scheme assets are only used to settle Scheme claims and ancillary
costs and do not confer any right to receive a distribution or
return of surplus capital save that the holder will have the right
to require the Company to redeem the share at par value on or at
any time after the termination of the Scheme. The share carries two
votes for every vote which the holders of the other classes of
shares in issue are entitled to exercise on any resolution proposed
during the life of the Scheme to engage in certain activities
specified in the Company's Articles of Association.
The Company will not be permitted to engage in certain
activities specified in the Company's Articles of Association
without the prior consent of the holder of the share.
16. Reconciliation of net cash flow to movement in net debt
(excluding restricted deposits)
27 weeks 31 December 27 weeks
ended 2016 ended
02 July GBPm 03 July
2017 (audited) 2016
GBPm GBPm
----------------------------------------- -------- ----------- --------
Net increase/(decrease) in cash and
cash equivalents including net foreign
exchange differences 0.7 40.1 (2.6)
----------------------------------------- -------- ----------- --------
Movement in revolving facility 3.7 (7.3) 1.1
----------------------------------------- -------- ----------- --------
Foreign exchange movements on foreign
currency denominated loans (0.2) (3.5) (2.9)
----------------------------------------- -------- ----------- --------
Movement in cash transferred to disposal
group held for sale (0.2) 0.2 0.6
----------------------------------------- -------- ----------- --------
Movements in adjusted net debt during
the period 4.0 29.5 (3.8)
----------------------------------------- -------- ----------- --------
Adjusted net debt excluding restricted
deposits - opening (80.4) (109.9) (109.9)
----------------------------------------- -------- ----------- --------
Adjusted net debt excluding restricted
deposits - closing (76.4) (80.4) (113.7)
----------------------------------------- -------- ----------- --------
Adjusted net debt excluding restricted deposits is calculated by
deducting current and non-current borrowings from cash and cash
equivalents
(see note 6).
17. Industrial disease claims provision and contingent
liabilities
The Board considers that the provision of GBP153.2 million for
industrial disease claims as at 2 July 2017 captures all expected
material industrial disease scheme liabilities for which the Board
believes the Group to be liable at the balance sheet date.
The Group continues to receive claims, from both individuals and
insurance companies, in connection with historical alleged exposure
to asbestos. Where claims are determined to have merit, the costs
are provided for and claims are settled in the ordinary course,
otherwise claims are defended. As legal precedent in the area of
industrial disease claims continues to evolve, new developments and
new types of claims give rise to inherent uncertainty in both the
future level of asbestos-related disease claims and of the legal
and other costs arising from such claims. If any such claims were
to be successful, it might lead to future claims against the Group
which may result in significant additional liability over and above
that recognised under the current provision.
As previously disclosed, the Group had been engaged in
litigation funded by Aviva plc, RSA Group and Zurich in respect of
historic and current payments made by them in their capacity as
providers of employers' liability insurance in relation to claims
by employees and former employees of third-party companies arising
from asbestos-related diseases (Insurer PL Litigation).
As disclosed in the Group's 2016 annual audited consolidated
financial statements, Cape reached agreement to settle the Insurer
PL Litigation on
12 March 2017 for a consideration of GBP18.0 million which was
paid in April 2017 and a deferred payment of up to GBP34.5 million
payable in the period 2018 to 2023, enabling this litigation to be
resolved outside of the court process. These payments and an
additional allowance to reflect the potential of further claims of
a similar nature, discounted using an appropriate discount rate,
were charged to profit or loss in 2016. The settlement of the
Insurer PL Litigation does not imply any acceptance of liability on
Cape's behalf.
Also as previously disclosed, Aviva plc had sought to establish
contribution and indemnity claims (Insurer EL Claims) against the
Group in respect of employee liability settlements that it has made
in response to policies that Aviva underwrote for a liquidated Cape
subsidiary in the period 1956 to 1966. As announced on 10 April
2017, the Insurer EL Claims were settled, with the current claims
being withdrawn with no admission of liability and each party
bearing their own legal costs. Notwithstanding the Board's
continued belief in the strength of its position in relation to the
trial conducted in January and February 2017 and thus its recovery
of all legal expenses incurred, the Board concluded that it was in
the best interests of Cape and its shareholders to settle this
litigation. The settlement did not require any cash consideration
to be payable by the Company and did not require any change to the
existing IDC provision held.
The Group previously disclosed it was responding to an enquiry
by HMRC with regard to the UK tax consequences of a transfer of
intellectual property to Singapore in 2011. During April 2017, HMRC
decided not to take the matter any further and closed the
enquiry.
During 2014, a fatality of a Cape employee was suffered at a
client's offshore installation. The investigation by the enforcing
authorities is ongoing. No amounts have been provided in respect of
this matter as at the period ended 2 July 2017. It is not
practicable to provide an estimate of the financial effect and
there is uncertainty relating to the amount or timing of any
outflow.
The Group has contingent liabilities in respect of guarantees
and bonds entered into in the normal course of business, in respect
of which no loss is expected. The Group is required to issue trade
finance instruments to certain customers; these include tender
bonds, performance bonds, retention bonds, advance payment bonds
and standby letters of credit. As at 2 July 2017, the Group's bank
facilities relating to the issue of bonds, guarantees and letters
of credit amounted to GBP72.2 million (31 December 2016: GBP66.3
million).
18. The Scheme of Arrangement
On 14 June 2006, the Cape Scheme became effective and binding
upon the following 13 companies:
Cape Intermediate Holdings Limited (formerly Cape
Intermediate Holdings plc)
-------------------------------------------------
Cape Building Products Limited
-------------------------------------------------
Cape Calsil Systems Limited
-------------------------------------------------
Cape Contracts International Limited
-------------------------------------------------
Cape Durasteel Limited
-------------------------------------------------
Cape East Limited
-------------------------------------------------
Cape Industrial Services Limited
-------------------------------------------------
Cape Industries Limited
-------------------------------------------------
Cape Insulation Limited
-------------------------------------------------
Cape Specialist Coatings Limited
-------------------------------------------------
Predart Limited
-------------------------------------------------
Somewatch Limited
-------------------------------------------------
Somewin Limited
-------------------------------------------------
The Cape Scheme is a court-sanctioned scheme established to
provide recompense for individual claimants in respect of
asbestos-related industrial diseases contracted as a result of
Cape's historic use of asbestos in manufacturing processes and who
are unable to recover under insurance policies. The Cape Scheme
also provides a structural protection for the Group's trading
stakeholders.
The detailed terms of the Scheme are set out in the Scheme
itself, a copy of which has been filed with the Registrar of
Companies, which is also on the Cape plc website
www.capeplc.com/investors/shareholder-information/shareholder-documents,
the Articles of Association of Cape Intermediate Holdings Limited
(CIH), Cape Claims Services Limited (CCS) and Cape plc and a number
of other ancillary agreements. The effect of the Scheme as a whole
can be summarised as follows:
(a) While Scheme creditors retain their rights against Scheme
companies, and may bring proceedings against Scheme companies for
declaratory relief to determine whether they have a claim and, if
so, of what amount, their rights, subject as provided in
sub--paragraphs (k) and (m) below are only enforceable against CCS
under the terms of the Scheme guarantee.
(b) CCS was funded in the first instance with a sum of GBP40.0
million which represented what was considered to be a sufficient
sum to discharge CCS's liabilities to Scheme creditors payable over
at least eight years from 1 January 2006. The use of these funds is
restricted to the payment of established Scheme claims and Scheme
creditor costs.
18. The Scheme of Arrangement (continued)
(c) The sum of GBP40.0 million was not calculated by reference
to an estimate of the likely amount of Scheme claims. It simply
represented the aggregate of the amount that Cape was able to raise
from its shareholders and the level of debt which Cape could
reasonably maintain for the purposes of the Scheme. Of fundamental
importance to the Scheme are the provisions as to topping up of
that sum described below.
(d) Every three years an assessment of the projected Scheme
claims against Scheme companies payable by CCS over the following
nine years is undertaken, by reference to which there will be
established the Funding Requirement.
(e) In the event that an assessment reveals a shortfall between
the Scheme assets and the Funding Requirement, Cape will top up
CCS's funding over the following three years provided that
sufficient cash is available, Cape's obligation being limited to
70% of the Group's consolidated adjusted operational cash flow
(including, for example, adjustments to take account of
acquisitions, an element of capital expenditure and repayment of
borrowing facilities). During the period ended 2 July 2017, no top
up was made to the Scheme (H1 2016: GBP0.5 million).
(f) Should Cape not be able to meet its top up obligation in any
one year, it will be required to make good the shortfall in the
next year, again subject to sufficient cash being available.
(g) Alongside the Funding Requirement there is the Scheme
Funding Requirement which will be assessed every year by reference
to projected Scheme claims against Scheme companies payable by CCS
over the next six years.
(h) If at any time the ratio of the Scheme assets to the Scheme
Funding Requirement (the Scheme Funding Percentage) falls below
60%, CCS will have the ability to reduce the percentage (the
Payment Percentage) of each established claim which it pays to
Scheme creditors until such time as the Scheme Funding Percentage
is restored to 60%.
(i) Cape plc is permitted to pay dividends provided that at the
time of payment (i) the Scheme Funding Percentage in relation to
the last preceding financial year was certified to be not less than
110%, (ii) the directors of Cape plc certify that they anticipate
that the Scheme Funding Percentage for the current and following
financial year will be not less than 110% and (iii) the Payment
Percentage has not at any time within the previous 40 business days
been below 100%. Any distribution which Cape plc proposes to make
to its shareholders may not, without the consent of the Scheme
Shareholder, exceed the greater of (i) 50% of the consolidated
adjusted operating profit of the Group for the last preceding
financial year and (ii) the aggregate of any permitted dividends
made in the preceding financial year. This restriction therefore
places a cap on the amount of dividends that Cape plc may pay in
any one year.
(j) There have been established special voting shares (the
Scheme Shares) in CCS, CIH and Cape plc which are held by an
independent third party (the Scheme Shareholder) on trust for
Scheme creditors. The Scheme Shares have special rights which are
designed to enable the Scheme Shareholder to protect the interests
of Scheme creditors.
(k) In the case of certain Scheme creditors (Recourse Scheme
Creditors), who are those Scheme creditors whose claims are in
whole or in part the subject of a contract of insurance (Recourse
Scheme Claims), their rights to enforce their Recourse Scheme
Claims against a relevant Scheme Company will revive in certain
circumstances. These circumstances are where the relevant Scheme
Company is insolvent or where there has been a specified reduction
in the Payment Percentage and if the Scheme creditor was able to
bring about the insolvency of the relevant Scheme Company he would
be able to recover greater compensation from the Financial Services
Compensation Scheme (FSCS) or, in certain circumstances, from a
solvent insurer than is available from CCS at that time under the
Scheme. There will be a specified reduction if either (i) the
Payment Percentage has been reduced below 100% but above 50% and
the Scheme creditor has not been paid in full after 12 months or
(ii) the Payment Percentage is reduced to 50% or below.
(l) Each Scheme Company will agree to hold on trust for any
Scheme creditor concerned the proceeds of any policy of insurance
(or any compensation received from the FSCS) referable to that
Scheme claim.
(m) The restriction described in sub-paragraph (a) above will
not apply to proceedings to enforce the right to confer under
sub--paragraph (l) above.
(n) There are provisions contained in two reimbursement
agreements which preserve certain rights of proof by CCS and Cape
plc respectively in any insolvency of Cape plc or any of the other
Scheme companies.
(o) In support of the above, on 6 May 2011, CIH, Cape plc and
CCS entered into a new Guarantee and Funding Agreement whereby Cape
plc agreed to make certain additional funding available to CIH in
connection with CIH's commitments under the Funding Agreement, as
well as to guarantee all present and future payment obligations of
Cape plc and CCS under the Funding Agreement. In addition, a Scheme
Share in Cape plc (referred to in paragraph (j) above) was issued
to the Scheme Shareholder which has similar rights to the Scheme
Shares in CIH and CCS and which will afford the Scheme Shareholder
substantially the same rights to those provided by the Scheme
Shares in CIH and CCS.
19. Related party transactions
Balances and transactions between the Company and its
subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note.
As at 2 July 2017, there was a net balance of GBP0.9 million
owed by joint ventures (H1 2016: GBP6.9 million; 31 December 2016:
GBP4.0 million). These amounts are unsecured, have no fixed date of
repayment and are repayable on demand. Amounts owed by joint
ventures are assessed for recoverability and, where necessary,
provided for in line with normal commercial transactions. Sales by
the Group to joint ventures during the period ended 2 July 2017 was
GBP4.3 million (H1 2016: GBP6.8 million; 31 December 2016: GBP13.1
million).
20. Post balance sheet events
On 7 July 2017, the boards of directors of Altrad Investment
Authority SAS and Cape plc announced that they had reached
agreement on the terms of a recommended cash offer (the 'Offer')
for Cape pursuant to which Altrad UK Limited, a wholly owned
subsidiary of Altrad Investment Authority SAS, will acquire the
entire issued and to be issued ordinary share capital of Cape plc,
other than the IDC Scheme Share and that it was intended that the
Offer will be implemented by means of a takeover offer under the
Takeover Code and within the meaning given to that term in Part 18
of the Jersey Companies Law.
The Offer is conditional upon, amongst other things, valid
acceptances being received in respect of Cape plc ordinary shares
which, constitute not less than 90 per cent in nominal value of the
Cape plc shares to which the Offer relates. The Offer is also
subject to the certain other contractual conditions and further
terms, including the requisite merger control clearance. Full
acceptance of the Offer will result in the payment by Altrad of an
amount up to approximately GBP332.3 million in cash to Cape plc
shareholders and participants in the Cape plc Share Scheme, subject
to the extent to which share options are exercised, at which point
Cape plc will be de-listed from the main market of the London Stock
Exchange.
On 1 August 2017, the formal Offer Document was posted to
Shareholders. The First Closing Date for the Offer is 1.00 p.m.
(London Time) on
22 August 2017. Documentation associated with the Offer from
Altrad can be found on the Group's website at www.capeplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SEAFMFFWSEEA
(END) Dow Jones Newswires
August 22, 2017 02:00 ET (06:00 GMT)
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