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Cape - Iffy contract triggers £14m charge

July 2012

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • CIU
  • Price:
  • 266p
After seemingly recovering from a difficult period last year Cape has suffered another setback, this time involving delays to an LNG contract in Algeria, which it now estimates will cause a one-off £14m charge against current year profits in respect of current and future losses. Analysts at Canaccord have reduced their current year eps forecasts by 22% to 37.7p and pretax profit from £74.3m to £60m. They believe that as part of the contract review process Cape will have reviewed all major contracts and found this one to be the only problem. But this is the second blot in its copy-book in successive years and the old adage is that “profit warnings come in threes.†Indeed, the risk now is that incoming chief executive Joe Oatl ...

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