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Cape comes clean

RESULTS: Cape's shares recover as the company reveals an underlying pre-tax profit after writing off hundreds of millions in overambitious Australian investments
March 6, 2013

Shares in scaffolder and painter Cape (CIU) jumped 13 per cent as the company came clean on bad investments. Following an extensive balance sheet clean-up operation, Joe Oatley, chief executive, now believes the company is on a solid, cash-generative footing and exposed to continued investment in the oil and gas sector. He underlined his confidence by holding the 14p full-year dividend.

IC TIP: Hold at 262p

Cape's reported results were hit by £150.4m in exceptional costs mainly related to assets in Australia built up during an overambitious expansion strategy, there was also a further £5.8m on the Arzew project in Algeria bringing total charges there to £19.8m. Adjust for this, and underlying pre-tax profits plummeted 66 per cent to £23.8m as margins fell across the Middle East, Far East and Pacific Rim, and Commonwealth of Independent States, Mediterranean and North African markets. Mr Oatley unveiled a new company structure based around three geographic regions.

The outlook has weakened, too, with the forward order book down £128m on the prior period to £725m. Broker Numis Securities downgraded adjusted EPS forecasts by 7 per cent to 26.4p on lower Middle East margins and the completion of a major project in Kashagan, although this still represents a recovery of 62 per cent on 2012's 16.3p.

CAPE (CIU)

ORD PRICE:262pMARKET VALUE:£317m
TOUCH:261-263p12-MONTH HIGH:480pLOW: 163p
DIVIDEND YIELD:5.3%PE RATIO:na
NET ASSET VALUE:144p*NET DEBT:37%

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200862337.826.9nil
2009655-15.6-3.5nil
201065063.142.612.0
201169861.940.214.0
2012740-140-16714.0
% change+6---

Ex-div: 8 May

Payment: 7 Jun

*Includes intangible assets of £117m, or 97p a share