Cape (CIU) may be operating in choppy waters, but its latest half-year figures suggest the oil service provider's focus on maintenance contracts has added ballast to the ship. The group increased adjusted operating profits by 8.3 per cent to £24.9m, albeit at a slightly reduced margin. Excess capacity, particularly in the North Sea, has been weighing on prices within the oil services sector. But Cape's 70-30 bias to maintenance ensures a more predictable revenue stream. Oil companies can always defer capital projects, but rigs always require tender loving care.
Although order intake was subdued across the Asia Pacific region, a new five-year UK contract with US major ExxonMobil and the renewal of an existing maintenance contract with BP helped to drive first-half order intake up by a quarter to £399m. The SOCAR-Cape joint venture also generated an additional $65m (£41.4m) from three contracts in Azerbaijan. The overall order book stood at £800m at the period-end, representing a 7 per cent increase since the end of 2014.
And although some regions performed better than others, Cape’s increased - and more lucrative - presence in the MENA area (Middle East and North Africa) provides another bulwark against the effects of falling crude prices. The group managed to achieve an operating margin of 16.8 per cent across the region, compared to 13 per cent a year earlier.
Canaccord Genuity raised its adjusted EPS forecast for the full year to 27.1p, against 30p in 2014.
| CAPE (CAPE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 229p | MARKET VALUE: | £277m | |
| TOUCH: | 228-230p | 12-MONTH HIGH: | 327p | LOW: 177p |
| DIVIDEND YIELD: | 6.1% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 102p* | NET DEBT: | 103% | |
| Half-year to 5 July | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 † | 320 | 16.7 | 10.7 | 4.5 |
| 2015 | 363 | 17.4 | 10.3 | 4.5 |
| % change | +13 | +4 | -4 | - |
Ex-div: 10 Sep Payment: 9 Oct *Includes intangible assets of £151m, or 124p a share. † Restated covering 26 weeks to 26 June 2014. | ||||
