Preliminary results for year ended 31 December 2016

15th March 2016

Preliminary results for the twelve months to 31 December 2016

Cape plc, the international provider of critical support services to the energy and natural resources sectors, announces its results for the twelve months ended 31 December 2016.

Financial summary

Audited
2016 2015 Change
Financial highlights:
Continuing operations:
Revenue £863.5m £711.4m +21.4%
Adjusted operating profit £55.4m £52.5m +5.5%
Adjusted operating profit margin 6.4% 7.4% (100bps)
Adjusted profit before tax £47.4m £44.7m +6.0%
Adjusted diluted earnings per share 29.9p 29.9p -
Full year dividend per share 7.0p 14.0p (50.0%)
Adjusted net debt £80.4m £109.9m (26.8%)
Statutory results:
Revenue £863.5m £711.4m +21.4%
Operating profit/(loss) (£32.8m) £39.9m (182.2%)
Profit/(loss) before tax (£43.6m) £29.1m (249.8%)
Diluted earnings/(loss) per share (34.0p) 12.7p (367.7%)


Throughout this document, various management measures are used and referred to as adjusted. These are defined and reconciled within note 8 ‘Adjusted measures’.


Highlights

  • Strong trading performance driven by increased activity in Asia Pacific and favourable foreign exchange:

- UK margins were adversely impacted by oil price driven weakness in the North Sea, reduced demand from the
coal-fired power generation market and a small number of commercial issues. Corrective measures have been implemented and the business is expected to deliver a much improved performance in 2017

- The Middle East business delivered a solid performance. A number of key contract wins and increased activity in the Kingdom of Saudi Arabia, combined with a strong performance from the SOCAR-Cape joint venture in Azerbaijan mitigated the effect of increased cost pressures, slow-downs and deferrals from customers in other parts of the region

- The Asia Pacific business benefitted from excellent operational performance on increased project activity in Australia, South Korea and Singapore, more than offsetting continuing low levels of demand in the Australian mining sector, and intense competition across the whole Asia Pacific region

  • Strong adjusted operating cash flow of £71.5m (2015: £43.9m); significantly lower adjusted net debt of £80.4m
    (31 December 2015: £109.9m)
  • Record closing order book, up 6.5% at £917.6m (2015: £861.3m)
  • Record safety performance
  • Settlement of insurer product liability litigation agreed on 12 March 2017 for a consideration of £18.0 million payable immediately and a deferred payment of up to £34.5 million payable in the period 2018 to 2023
  • Final dividend per share of 2.5 pence resulting in full year dividend of 7.0 pence; progressive dividend policy from 2018
  • The business is expected to deliver another strong trading performance in 2017

 

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

“I am delighted to report we have delivered strong top line growth and solid earnings per share despite the challenging market backdrop, demonstrating the resilience of our strategy. The settlement of the insurer product liability litigation on 12 March 2017 has removed a significant risk to the business and its stakeholders. In light of that litigation, our focus during 2016 has been on the delivery of our organic growth strategy and I am pleased to report that this is yielding results. Whilst market pressures are expected to persist for the near-term, with a strong order book and a good start to 2017, the Board is confident that the business will deliver another strong trading performance in 2017. We continue to invest in our strategy and I remain convinced that it will deliver increased shareholder value over the medium to long-term.”

 

Changes to segmental reporting

The Group has re-organised its geographical reporting segments during the period as outlined below. The change in reporting segments is effective from 1 January 2016 and has been performed to align external reporting with the revised internal management structure. All prior year figures have been restated accordingly.

Old segments New segments
UK, Europe & CIS1 UK
MENA Middle East2
Asia Pacific Asia Pacific3

1 CIS refers to Kazakhstan, Azerbaijan and Sakhalin

2 Includes Kazakhstan and Azerbaijan

3 Includes Sakhalin

 

Analyst meeting

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

 

Enquiries

Cape plc +44 (0) 1895 459 979
Joe Oatley, Chief Executive
Michael Speakman, Chief Financial Officer
Ian Wood, Head of Investor Relations
Buchanan +44 (0) 2017 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 20 of the 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, mechanical, specialist coatings and fireproofing, refractory linings services, environmental services, storage tanks and heat exchanger replacement and refurbishment.

 

Cape employs c. 16,000 people working across 23 countries and in 2016 reported revenue of £863.5 million.

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