TIDMCIU
RNS Number : 5203P
Cape plc
18 November 2016
18 November 2016
Cape plc
("Cape" or "the Group" or "the Company")
Trading and industrial disease claim litigation update
Cape plc (CIU.LN), an international leader in the provision of
critical industrial services to the energy and natural resources
sectors, today issues the following trading update for the period 4
July 2016 to 30 October 2016.
Key trading highlights
-- Trading in the period was in line with the Board's expectations
-- The Board anticipates that the full year result for 2016 will
be slightly ahead of expectations, largely driven by an improved
performance in the Asia Pacific business and translational impacts
of current foreign exchange rates
-- Despite continued challenging market conditions, the Group's
prospects for 2017 are encouraging
Trading and market conditions
Cape has delivered a trading result for the period in line with
the Company's board of directors' ("the Board") expectations, which
incorporated the favourable impacts from the further weakening of
Sterling since June. A strong performance in Asia Pacific offset
lower demand and margin pressure in the UK, and lower demand in the
Middle East.
Within the UK, market conditions have continued to prove
challenging with clients deferring discretionary spend and pursuing
cost reduction programmes. Consequently, margin pressures have
persisted throughout the period together with low levels of demand
for the Group's specialist services. The majority of the
restructuring programme for the UK business has now been completed
and good progress has been made on the ExxonMobil contract at
Fawley, where it is anticipated that the commercial performance
issues will be largely resolved by the end of 2016.
In the Middle East, the sustained low oil price has continued to
drive a strong focus by our clients on cost reduction. This is
reflected in a slower pace of new project awards and delay in some
maintenance activities.
The subsequent lower than expected demand across much of the
region was partially mitigated by strong performances in Azerbaijan
and Qatar.
Activity levels have been strong across the Asia Pacific region,
driving a significant improvement in the business' performance. A
continued ramp-up of activity in South Korea on the Prelude FLNG
project and in Australia on the Wheatstone LNG and Karratha Gas
Plant Life Extension projects more than offset low levels of
activity elsewhere in the region.
Outlook
The Board anticipates that the business will perform slightly
ahead of current expectations for the year ending
31 December 2016, largely reflecting a continuing strong
performance in Asia Pacific, an improved performance in the Middle
East and the translation effect of current favourable foreign
exchange rates.
While the outlook for the markets in which the Group operates
remains uncertain, prospects for Cape in 2017 are encouraging. The
delivery of the Group's strategy continues to provide resilience
and the opportunity for growth despite the current challenging
market conditions.
Update on insurer EL industrial disease claims
The Company has previously confirmed that, following a
determinant judgment on 19 July 2016, Cape Intermediate Holdings
Limited ("CIH") was seeking leave to appeal a number of aspects of
such judgment and that the Company had increased the provision held
against industrial disease claims by GBP9.7 million. CIH has now
been granted leave to appeal on the majority of potential appeal
issues it had raised. At the same time, Aviva plc was granted leave
to cross-appeal. The appeal hearing will be held on 25/26 July
2017.
Update on insurer PL industrial disease claims
As disclosed in the Group's 2015 Preliminary Results, a six-week
trial in respect of a number of product liability claims ("Insurer
PL Claims") received by the Group from insurers has been listed to
commence on 16 January 2017. As part of the preparations for the
trial, Leading Counsel has now reviewed detailed evidence and
expert witness statements and recently provided updated advice to
the Board. The Board remains of the view that the Insurer PL Claims
place very substantial evidential burdens upon the claimants, the
merits of our defence are persuasive and no provision is currently
required. The Company will therefore continue to vigorously defend
these claims. However, due to the emerging complexity of this
litigation, the Board believes that there is an increased risk that
the litigation could have an adverse impact on the Cape Scheme, and
in turn upon the Cape group of companies. As disclosed in the
Group's Interim Results, Cape's potential liability in respect of
the Insurer PL Claims outlined above and from any potential further
claims and associated costs cannot be accurately estimated at this
time. It is possible that a number of issues may be subject to
appeal which would lead to an extended period of uncertainty for
the Cape Scheme and the Group.
If the Insurer PL Claims litigation were to succeed, it could
result in the suspension of payments by the Cape Scheme to
individual claimants (and insurer claimants) or the discounting of
such payments. Any decision to suspend or discount payments to
individual claimants (and insurer claimants) will be made by the
independent board of directors of Cape Claims Services Ltd. As
previously disclosed, whilst the initial impact of any adverse
judgment in the Insurer PL Litigation will fall upon the Cape
Scheme, it may also have material and continuing impacts on the
Group and its stakeholders including but not limited to impacting
the implementation of the Group's strategic plans, potentially
including the Company's capacity to pay a dividend.
The Board will continue to monitor the progress of the
litigation, evaluate options to minimise the potential impact on
the Group and its stakeholders, and provide updated disclosures as
appropriate.
Details of the Cape Scheme have been filed with the Registrar of
Companies and can also be found on the
Cape plc website
(http://www.capeplc.com/corporate-responsibility/asbestos-scheme-of-arrangement.aspx).
Cape expects to announce its results for the full year ending 31
December 2016 on 15 March 2017.
This announcement contains inside information.
Enquiries:
Cape plc +44 (0) 1895 459 500
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
Forward looking statements
Any forward looking statements made in this document represent
the Board's best judgement as to what may occur in the future.
However, the Group's actual results for the current and future
fiscal periods and corporate developments will depend on a number
of economic, competitive and other factors, some of which will be
outside the control of the Group. Such factors could cause the
Group's actual results for future periods to differ materially from
those expressed in any forward looking statements included in this
announcement. For details of the Group's principal risks and
uncertainties, please see pages 18 to 25 of the Group's 2015 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 systems, insulation, specialist
coatings, passive fire protection, refractory linings, mechanical
services, environmental services, oil and gas storage tanks and
heat exchanger replacement and refurbishment. Cape employs c.16,400
people working across 19 countries and in 2015 reported adjusted
revenue of GBP711.4 million
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCUBUURNKAAAUA
(END) Dow Jones Newswires
November 18, 2016 02:00 ET (07:00 GMT)
Cape PLC (LSE:CIU)
Historical Stock Chart
From Mar 2024 to Apr 2024
Cape PLC (LSE:CIU)
Historical Stock Chart
From Apr 2023 to Apr 2024