Half Yearly Report

Embargoed: 0700hrs, 31 August 2011

Cape plc

("Cape" or the "Group")

INTERIM RESULTS: Six months ended 30 June 2011 (unaudited)

Cape plc, the international provider of essential, non-mechanical support services to the energy and mineral resources sectors, announces its results for the six months ended 30 June 2011.

Continued strong execution in HY2011 and FY 2011 growth targets confirmed

Financial summary

AER - Actual exchange rates; CER - Constant 2010 exchange rates

Throughout this document various non statutory measures are used and referred to as adjusted. These are defined and reconciled to their statutory equivalent in Note 5.

Highlights

·; Solid operational performance with continued strong execution and margin capture

·; Adjusted Profit Before Tax of £34.0m (2010: £35.5m)

·; Adjusted diluted earnings per share of 20.9p (2010: 21.0p)

·; Strong performances in Far East/Pacific Rim and CIS/Mediterranean and North Africa regions offsetting anticipated lower activity levels in Gulf/Middle East region

·; Admission to the London Stock Exchange Main Market in June 2011 with anticipated entry to the FTSE 250 index in September

·; Interim dividend of 4.5p per share (2010: 4.0p)

·; Firm order book at 30 June consistent with prior year levels with over 91% of consensus Full Year 2011 revenues secured (2010: 90%)

·; Investment underway to facilitate growth in H2 and beyond

·; As expected, momentum is building on a number of key areas/projects indicating we are entering a sustained period of demand growth for Cape's services

Commenting on the results, Tim Eggar, Chairman of Cape said:

"Cape has an unique combination of capabilities and competences and an outstanding safety performance. We are therefore ideally positioned to benefit from the upturn in demand for our construction support services which is driven by the forecast increased capital spending in our sector and the global demand for energy. We are on track to deliver full year results in line with the Board's expectations."

Commenting on the results, Martin K May, Chief Executive of Cape said:

"Once again Cape delivered a solid first half performance based on continued superior execution and margin capture. In overall terms revenue was in line with our plan and with our high levels of revenue visibility, we confidently expect a return to revenue growth in-line with our double digit target range in the second half.

With Cape's late cycle positioning we enjoy excellent visibility of contract pipelines and we see momentum building. The increases in industry capex with a raft of major project starts and approvals in our key geographies give me confidence that Cape is very well positioned to achieve our organic growth targets.  We've also completed two bolt-on acquisitions and entered three new territories so far this year and we see an increasing list of opportunities in our key markets."

Analyst meeting

The company will be presenting to a meeting of analysts at 9.30am today. The presentation will be available on the company's website later today at http://www.capeplc.com/cape/pages/investors 

Enquiries:

Forward looking statements

Any forward looking statements made in this document represent the Board's best judgment 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.

About Cape:

Cape plc (www.capeplc.com), which is listed on the main market of the London Stock Exchange, provides a range of non-mechanical industrial services including access systems, insulation, painting, coatings, blasting, industrial cleaning, training and assessment to both industrial plant operators and major international engineering and construction companies.

As a single source provider, Cape is able to provide a range of specialist multi-disciplinary services specifically tailored to meet the needs of the client providing the most intelligent and cost efficient solutions for our customers non-mechanical in-plant maintenance and capital needs.

In the year ended 31 December 2010, Cape reported revenues of £650.1 million. With scale and leading market positions across its international footprint, Cape employs over 18,000 people in 29 countries.

References in this document prior to 17 June 2011 relate to Cape plc (registered England No. 40203) and after that date relate to Cape plc (registered in Jersey No. 108031).

Chairman's statement

It gives me great pleasure to present my first interim report as Chairman of Cape.

During the period I have spent time touring the Group's operations and meeting our staff and customers. I have been impressed with the skill and professionalism of our people and the high regard that our customers have for Cape.

Cape is a world class provider of insulation and access services in the energy sector recognised for its scale and expertise. We have the necessary depth of management and material resources to provide support services to the world's largest and most complex construction projects for major EPC contractors. We also provide comprehensive plant maintenance support services directly to the world's largest energy companies both onshore and offshore. As expected, the first half's trading results have, in overall terms, been comparable to last year with revenues of £335.0m (2010: £331.3m) and profit before other items of £27.1m (2010: £27.3m). Adjusted diluted earnings per share were 20.9p (2010: 21.0p). These results continue to show the benefit of Cape's broad international footprint with certain territories showing strong growth whilst others experienced the anticipated reduced activity levels. Whilst the socio-political unrest in the Middle East earlier this year generated uncertainty, Cape has limited exposure in the countries directly affected by the unrest.

The move from AIM to the Official List of the London Stock Exchange was completed in June 2011. The move is a further sign of the Group's development and reflects its size, maturity and aspirations. The higher profile and greater liquidity resulting from listing and the anticipated inclusion in the FTSE 250 index in September, will benefit the Group's stakeholders over the coming years.

David McManus, who was originally appointed as a Non-executive Director of Cape in 2004, and also served as Chairman from July 2006 to June 2008, has advised the Board of his intention to resign from the Board to focus on other interests. 

Mr McManus has agreed to stand for re-election at the forthcoming Annual General Meeting and will step down once the Board is able to appoint a further Independent Non-executive Director to replace him. The Board is grateful to Mr McManus for his service to Cape during a period of significant growth for the Group and wishes him well in his future projects.

The Board has declared an Interim Dividend of 4.5p per share (2010: 4.0p). The Interim Dividend will be paid on 7 October 2011 to shareholders on the Register at 9 September 2011.

With Cape's downstream and late cycle positioning, we can now be considered to be at the bottom of its construction support services cycle. The timing of work releases on secured contracts will now dictate the growth rate in the second half of 2011 and beyond. We are on track to deliver full year results in line with the Board's expectations.

Cape has an unique combination of capabilities and competence and an outstanding safety performance. We are therefore ideally positioned to benefit from the upturn in demand for the construction support services which is driven by the forecast increase in capital spending in our sector and the global demand for energy.

Tim Eggar

Chairman

31 August 2011

Throughout this document various non statutory measures are used and referred to as adjusted. These are defined and reconciled to their statutory equivalent in Note 5.

Chief Executive's review

We have made a solid start to the year with an operating performance reflecting our continued superior execution and margin capture. Revenues were in line with our plan and consistent with the first half of last year at £335.0m (2010: £331.3m) whilst the adjusted profit before tax was £34.0m (2010: £35.5m).

We successfully achieved one of our corporate objectives of a return to the Main Market of the London Stock Exchange in the second quarter and believe this will be of benefit to shareholders making Cape more attractive to international investors and providing greater liquidity. The costs incurred in achieving the step up have been excluded from adjusted profits and earnings.

Cape's expertise is focused on the delivery of its core range of non-mechanical services in the support of essential maintenance programmes for plant operators and large complex construction projects for major E&C contractors. Some 55% (2010: 54%) of Group revenues in the first half were derived from maintenance support services with 40% (2010: 40%) generated from construction support services.

We provided maintenance and shutdown support services on 244 industrial assets onshore and offshore in the first half of 2011. Major maintenance support clients in the period included BP, Shell, ExxonMobil, EDF, Aramco, Qatargas, SABIC and Alcoa. Major client wins in the first half included E.ON in the UK.

Cape delivered construction support services on 64 major construction projects in H1. Our international reputation for the highest safety standards combined with our ability to deliver major projects in challenging and often remote environments continues to set Cape apart from the competition. Major clients for our Construction Support Services in the period included Foster Wheeler, Wood Group, Shaw Stone & Webster, Amec, CB&I and JGC.

Regional performance review

The Group reviews its financial results from a geographic perspective under four reporting regions.

UK Region 41% of Group Revenue

The UK Region contributed 41% of Group revenue and 30% of Group adjusted EBITA. Adjusted EBITA decreased by 7% to £12.8m (2010: £13.8m). The reduction in EBITA was driven by a 2% fall in revenue to £136.2m (2010: £138.9m) combined with a 0.5% reduction in operating margin to 9.4% (2010: 9.9%).

The UK Region's business continues to be maintenance-focused with 95% of revenues derived from plant maintenance and shutdown activities (2010: 93% of revenues).

Onshore revenues increased by 3% to £80.5m (2010: £78.1m) with stronger sales output in the power generation segment following the recently awarded contracts with E.ON UK at Ratcliffe-on-Soar. Work continued on the capital upgrade and corrosion inspection program for SABIC UK at its Wilton Teesside petrochemicals facility and with ConocoPhillips with its Humber Oil Refinery vessel refurbishment project.

Offshore revenues reduced by 9% to £43.1m (2010: £47.2m) due to aggressive competition in the UKCS bidding arena. First half highlights have been the commencement of work on four new BP assets (awarded last year as part of the BP UKCS Federal contract), on the Total E&P contract in the Dutch sector and on a number of unmanned rigs for BHP in Liverpool Bay.

The Environmental Services unit (Cape DBI) delivered first half revenues of £12.6m (2010: £13.6m). The strong demand for our high margin bespoke Offshore specialist cleaning techniques continued throughout the first half. In February, Shell awarded a three year call off contract for offshore platform separator cleaning in both the UK and Dutch sectors.

Significant contract awards in the UK in H1 included:

·; E.ON - Ratcliffe Power Station

·; National Grid - Southern Region - term contract

·; BP Andrew Area development project - Fabric maintenance - 2 year term contract

·; BAE Systems - Portsmouth Naval base - term contract

·; Perenco seasonal upgrade

·; PX Fellside Power Station - term contract

Gulf/Middle East Region 20% of Group revenue

The Gulf/Middle East region contributed 20% of Group revenue and 38% of Group adjusted EBITA, with operating margins remaining constant on lower revenues.

As anticipated, revenues in the region reduced by 17.5% (CER: -13.5%) to £66.1m (2010: £80.1m) as construction support activities on major projects, particularly in Qatar, completed including works on the desalination plant at RLIC, QII Common Sulphur project, Olefins plant at RLIC, Dopet Refinery project, Qatargas III & IV projects and Q-Chem II.

Some £42.8m or 65% of revenues related to construction support activities down from £58.5m in the first half of 2010. We were active on 42 (2010: 36) major projects in the period including insulation works on the National Chevron Phillips NCP project in Saudi Arabia with JGC and the PDO facility in Mukhaizna in the South of Oman.

Significant construction support contract awards in the first six months include packages at:

·; the GASCO 4th NGL Train in UAE with Sungchang Engineering & Construction and CB&I

·; Habshan 5 with Kharafi National

·; the Jubail Export Refinery Project (SATORP) with various contractors; and

·; QAPCO LDPE expansion project with Tekfen

Maintenance and shutdown revenues in the region remained at similar levels to 2010 at £23.3m (2010: £21.6m). Lower shutdown activity in Qatar was offset by the largest ever shutdown at the BAPCO refinery in Bahrain as well as shutdowns at ADGAS Das Island and the GASCO Ruwais refinery in Abu Dhabi.

We continue to provide maintenance support services at 69 sites (2010: 72) in the Gulf/Middle East and we saw little impact from the political and social unrest in the region earlier in the year as the majority of our clients' operations are at large, secure industrial facilities in remote, low populated areas, predominantly Qatar, UAE and Saudi Arabia. The region's maintenance backlog was assisted by the award of contract extensions with BAPCO and new awards with ADGAS in the UAE.

We continue to expect operating margins to reduce in H2 as the higher margin compression and acceleration works complete in Qatar and the project profile changes to lower margin start-up phases on major projects in the UAE. We did see some pressure in bid margins in H1, but that is abating as some players are exiting / cutting back due to operational reasons in the region.

Far East/Pacific Rim Region 31% of Group revenue

The Far East/Pacific Rim region contributed 31% of Group revenue and 22% of the Group's adjusted EBITA. Adjusted EBITA increased by 24.3% at CER to £9.1m driven mainly by the continued improvement in the margin performance with the operating margin increasing by 100bps to 8.7% (2010: 7.7%).

Revenue increased by 5.6% at CER to £104.4m. Revenues from construction support services grew by 24.3% at CER to £66.3m driven by the Pluto LNG and Singapore Parallel Train projects.

Maintenance and shutdown support revenues reduced by 15.0% at CER to £27.9m largely reflecting the shutdown cycle on our offshore contracts at Bayu-Undan and Malampaya which both underwent major shutdowns last year. Over two thirds of our maintenance revenues in the period were derived from the resources sector with clients including BHP and Alcoa.

Tendering activity both onshore and offshore in the region increased in the first half including several work packages relating to Chevron's Gorgon LNG project in Australia and the Exxon PNG LNG project in Papua New Guinea. We would expect these to progress to contract award stage in the second half of 2011 with mobilisation in 2012.

As anticipated, our Access Solutions business, which is entirely focused on commercial and residential construction markets in Australia, has continued to be impacted by the difficult regional market conditions. Revenues fell by 3% on a headline basis to £10.3m (2010: £10.6m), on a CER basis revenues declined by 13.3%.

CIS, Mediterranean & North Africa Region 8% of Group revenue

Revenues increased by 38.8% at CER in H1 to £28.3m representing 8% of Group revenue generating adjusted EBITA of £4.6m.

Growth was driven by increased construction support activities at the Kashagan Island D offshore hook-up project in Kazakhstan and the commencement of works at the GL3-Z LNG project in Arzew, Algeria. The timing of the major work releases on the Arzew LNG project has been considerably slower than forecast with revenues in H1 less than one third of planned levels. We currently have no operations in Libya but continue to monitor the situation.

We continue to provide services at Kashagan onshore and offshore projects and Odoptu/Chayevo in Sakhalin, Russia.

Construction support projects completing in the first half included the Karachaganak 4th Train Development with Petrofac and the Facilities Construction in Atyrau River Port.

In Azerbaijan, our joint venture with SOCAR registered a small loss of £0.3m (2010: £Nil) following the initial start up phase of the access contract for the West Chirag Platform topsides.

The only maintenance support services contract in the region continues to be at the Sakhalin II LNG Plant for Sakhalin Energy.

Safety is our priority

Cape delivered 25.7million man hours in the first half of 2011 and our safety performance has again been outstanding with an LTI (Loss Time Injury) Frequency Rate of 0.038 per 100,000 man hours. I am pleased with the Group's progress with developing and extending its external accreditation to the international safety standard OSHA 18001. We employ over 400 full time safety personnel and our commitment to site safety continues to be the number one priority in our business and that of our clients.

Corporate growth strategy

Cape is well placed to deliver on our medium term growth plans through a mix of both organic growth and our bolt-on acquisition programme. We anticipate our organic growth will be driven by:

·; our exposure to key growth markets (LNG/Gas in the Far East/Pacific Rim and downstream in the Gulf/Middle East) where demand for Cape's specialist construction support services is expected to grow significantly; and to a lesser extent by

·; the increasing maintenance requirements of ageing infrastructure in mature markets and the increasing focus of plant operators on safety.

Cape's strength in the LNG sector

Cape has extensive experience in the LNG sector having supported the construction of 27 of the world's 47 operating LNG liquefaction plants as well as being involved in 4 of the 5 major LNG projects currently under construction. There are currently several projects either with, or close to obtaining, Final Investment Decision (FID) in the Far East/Pacific Rim Region.

Cape is one of the few specialists in the application of cryogenic insulation systems. To give an indication of the complexity of these systems, a single square metre of finished cryogenic insulation may involve up to ten man hours of work. A typical two train project will involve upwards of 150,000 sq. metres of insulation and 700,000 man hours. 

To achieve a common safety standard and provide an economical access solution, it is now common on LNG projects to appoint a specialist access service provider delivering site-wide scaffolding services on a common user basis to all trades on site. Cape pioneered this role. The volume of scaffold material required for LNG plants is considerable and, for a typical two train project, some 10,000 tonnes of scaffold equipment with a purchase cost of USD$20m-$25m may be required.

Acquisitions and entry into new territories

We have completed two bolt-on acquisitions so far this year. A specialist marine and offshore business in Australia and a refractory lining business based in the UK. We have enhanced our internal corporate planning and development capabilities to support our growth objectives and we expect to complete further acquisitions as and when businesses meet our criteria and valuation objectives.

We successfully established operational bases in three new territories in the first half. Our newly established operations in Papua New Guinea and India have already received contract awards and the Turkmenistan office is actively looking at revenue generating opportunities for 2012.

In Iraq, we continued to undertake small works at BP Rumaila with Worley Parsons/ BP and will look to establish a permanent base in 2012.

Forward Order Book

In overall terms the Group's Forward Order Book at 30 June remained at similar levels to the start of the year at c.£850m with some 91% of consensus revenues for 2011 already secured (2010: 90%).

As a provider of support services, Cape does not enter into the large lump-sum turnkey contracts typical of E&C contractors in the oil services sector or publish a backlog figure. The Group's Forward Order Book comprises:

·; Maintenance Support Services: - The estimated value of our future services to support contractually committed base maintenance programmes for the contractual term period only. Typical contracts are three to five year agreements with extension options. It does not assume any value for optional extension periods not yet confirmed but does include a value for planned shutdowns/outages where a contractual commitment has been received; and

·; Construction Support Services: - The value of services to be provided on current contracts based on client work schedules together with confirmed new orders received. Contracts are typically unit rate or defined scope packages reflecting clients needs to retain flexibility on large and complex projects.

However, given the scale and lead-time of future projects we have good visibility of future sources of revenue and hence currently have a very healthy pipeline of bidding opportunities in the Construction Support Services side of our business.

The Forward Order Book for maintenance support services reduced by 4% to £600m and reflects the current profile of the term contract portfolio. Construction Support Services increased by 5% to £250m with the Gulf/Middle East region growing by some 16% since the start of the year following the awards on the major downstream projects referred to above.

Outlook

These first half results position us well to achieve our full year targets and there is no change to full year guidance.

Full year preview

In the UK the number of planned outages in the power sector is expected to drive higher revenues in H2 and we continue to target a 10% operating margin in the UK. We also anticipate activity levels to increase in the Gulf/Middle East in H2 with full year revenues expected to be similar to 2010. This will be dependent, however, on the timing of releases of work packages won on major projects and, as anticipated, we also expect the operating margin in the Gulf/Middle East to reflect the changing mix towards earlier stage project work. Activity levels in both the Far East/Pacific Rim Region and CIS/Med & North Africa Region in H2 are expected to continue at H1 levels with operating margins remaining stable.

Longer term

I am encouraged by the progress with major project investment decisions in our key geographies and all indications continue to suggest we are entering a sustained period of demand growth for Cape's services.

Martin K May

Chief Executive

31 August 2011

Chief Financial Officer's Review

As expected the Group's first half results showed no overall revenue growth. Group revenues of £335m were unchanged at CER with operating profits before head office costs down -1.8% at CER at £42.6m (2010: £43.9m).

The strong EBITA growth in the Far East/Pacific Rim Region (up 24.3% at CER) and CIS, Med & North Africa (up 42.4% at CER) was negated by the anticipated reduction in the Gulf/Middle East Region (down 14.6% at CER).

Regional operating margins remained within our target ranges although the reduced revenue contribution from the higher margin Gulf/Middle East Region had the effect of reducing the overall composite Group adjusted operating margin to 11.5% compared with the very strong 12.1% achieved last year.

The highlight from an adjusted operating margin perspective is the continued margin progression in the Far East/Pacific Rim Region towards Group norms with a margin of 8.7% being achieved in the period (2010: 7.7%).

Non-operating - Other items

Non-operating other items after tax totalled £4.5m (2010: £2.1m). The total amount has been excluded from the adjusted profits and earnings to show the underlying performance of the business. Other items principally comprise corporate charges of £2.0m incurred in relation to the move from AIM to the LSE's main market and the corporate restructuring together with Net Finance charges of £2.8m comprising:

·; a £2.0m non-cash charge relating to the unwinding of the discount on the long term IDC liability following the booking of the provision in 2009. The policy to unwind the discount on the IDC liability was adopted during the second half of 2010; the results of the Interim 2010 have now been restated to reflect this policy;

·; interest accrued on the IDC Scheme funds in the period of £0.5m; and

·; a £1.3m charge representing the unamortised facility fees arising from the early cancellation of the Group's 2007 syndicated banking facility.

Finance charge

The finance charge (excluding other items) reduced to £4.3m (2010: £4.7m) with interest cover (calculated by dividing adjusted operating profit by the adjusted finance costs) increasing to 9.0 times (2010: 8.5 times) compared to the minimum of 3.0 times required by the covenant in Cape's new unsecured £220m syndicated credit facility announced in January.

Taxation

The tax charge on profit before tax is equivalent to an average tax rate of 21.0% (2010: 23.0%) being the best estimate of the outcome for the full year in 2011. This is in line with the 21.0% achieved for the full year 2010.

Tax paid in the period reduced to £4.0m (2010: £7.9m). Whilst payments on account in relation to current year profits are broadly similar, the significant reduction in cash tax relates to amounts paid for prior year periods. In the UK and Far East/Pacific Rim regions cash payments for 2010 were reduced following the utilisation of agreed tax losses and in the Gulf/Middle East region the lower payments reflect a combination of reduced corporation tax rates in certain jurisdictions and a change in mix of source of profit generation.

Earnings per share

Adjusted diluted earnings per share were 20.9p (2010: 21.0p) and basic earnings per share were 17.9p (2010: 20.3p). The diluted weighted number of shares increased to 122.3 million in the first half of 2011 compared with 120.3 million in the first half of 2010.

Dividend

An interim dividend of 4.5p per share is declared. This dividend, which is 4.6 times covered by adjusted diluted earnings per share (2010: 5.3 times), will be paid on 7 October 2011 to shareholders on the register as at 9 September 2011.

Cash flow and net debt

The first half operating cashflow of £6.4m (2010: £35.5m) reflects the £37.0m working capital outflow (2010: £14.1m outflow). This higher build up of working capital has been driven by the increased level in UK outages, the commencement of several large projects including GL3-Z LNG in Algeria and the ramp up on existing contracts including SPT and Kashagan. In addition, we increased capital expenditure to £11.0m (2010: £3.8m); together these investments will facilitate growth in H2 and beyond.

Other notable cash outflows include the reintroduced dividends to shareholders of £9.4m (2010: £nil) and Corporation Taxes of £4.0m (2010: £7.9m).

The Asset Replacement Ratio (calculated by dividing capex spend by the depreciation charge) of 128% (2010: 49.4%) reflects both the expected higher levels of investment in growth capex this year as well the weighting of the spend to the first half.

The Group's adjusted net debt, reduced year on year by 20.7% to £75.5m (2010: £95.1m) including finance lease obligations of £6.8m (2010: £11.8m) with balance sheet gearing reducing to 19.5% (2010: 31.8%). The ratio of net debt to annualised adjusted EBITDA has fallen to 0.8 times (2010: 1.0 times).

Provision for estimated future asbestos related liabilities and IDC Scheme funds

The discounted post-tax provision held at 30 June 2011 increased to £61.5m (2010: £59.6m) reflecting the unwinding of the discount of £2.0m in the period (restated 2010: £2.0m) and the £0.6m (2010: £0.9m) of cash settlements made in the period.

The ring-fenced IDC Scheme funds reduced by £0.6m to £31.0m in the six months to 30 June 2011 (2010: £0.9m reduction) comprising entirely of cash settlements paid to claimants. Accrued interest income of £0.5m (2010: £0.5m) is shown as finance income other items in the income statement.

Principal risks

Cape operates globally in the energy and natural resources sectors and in varied geographic markets. The principal risks and uncertainties that are or may be faced are disclosed in the 2010 Annual Report, and these are expected to continue to be relevant for the remaining six months of the year.

The risks set out on pages 26 and 27 of the 2010 Annual Report, include external, competitive and operational factors in addition to financial risks including foreign exchange risk.

Currencies in 2011

Nearly all operating costs are matched with corresponding revenues of the same currency. In the first half of 2011, some 28.2% of revenues were negotiated in US Dollar or US Dollar pegged currencies and 21.9% in Australian dollar. The average USD/GBP exchange rate weakened by 4.8% to USD 1.611 (2010: 1.538) whilst the average AUD/GBP exchange rate strengthened by 10.7% to AUD 1.544 (2010: AUD 1.729). The overall exchange impact on these results was negative, reducing profit before tax by £0.5m (2010: benefit of £0.5m).

The Group does not generally seek to manage its translation exposure from the conversion of non-UK subsidiaries profit and loss to GBP for accounts purposes although it does monitor and report the foreign exchange movements against forecasts provided. Analysis of the translation impact in converting profits into our reporting currency (GBP) shows that for each USD $0.01 movement against GBP approximates to an increase or decrease in operating profit of £0.2m and the impact of each AUD $0.01 movement approximates to an increase or decrease in operating profit of £0.1m. The majority of Cape's assets are held overseas and these are hedged in part by foreign currency denominated borrowing.

Shareholders' equity

Shareholders' equity at 30 June 2011 was £386.3m (2010: £297.6m). The reconciliation is set out in the Group statement of changes in equity and reflects the restructuring carried out in the first half with the introduction of the Jersey incorporated ultimate holding company on 17 June 2011.

Richard Bingham

Chief Financial Officer

31 August 2011

Statement of directors' responsibilities

The Interim report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. The Disclosure and Transparency Rules ("DTR") require that the accounting policies and presentation applied to the half-yearly figures must be consistent with those applied in the latest published annual accounts, except where the accounting policies and presentation are to be changed in the subsequent annual accounts, in which case the new accounting policies and presentation should be followed, and the changes and the reasons for the changes should be disclosed in the Interim report, unless the United Kingdom Financial Services Authority agrees otherwise.

The directors confirm that this condensed set of financial statements has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the European Union, and that the interim management report herein includes a fair review of:

• the important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements as required by DTR 4.2.7;

• the principal risks and uncertainties for the remaining six months of the year as required by DTR 4.2.7; and

• related party transactions that have taken place in the first six months of the current financial year and changes in the related party transactions described in the previous annual report that have materially affected the financial position or performance of the group during the first six months of the current financial year as required by DTR 4.2.8.

The directors of Cape plc are listed in the Cape plc Annual Report for the year ended 31 December 2010, and there have been no changes in the membership of the board.

For and on behalf of the Board of Directors:

Richard Bingham

Chief Financial Officer

31 August 2011

Independent review report to Cape plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2011, which comprises the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity Consolidated Cash Flow Statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

PricewaterhouseCoopers LLPChartered Accountants31 August 2011

Uxbridge

Notes:

(a) The maintenance and integrity of the Cape plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

(b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

(a) Relates wholly to expenses incurred as a result of the return to the full list and corporate restructure.

(b) Includes £0.5m (June 2010: £0.5m) of Scheme interest as shown in note 6.

(c)Includes £2.0m (Restated June 2010: £2.0m) unwind of discount in respect of IDC provision and £1.3m (June 2010: £nil) unamortised facility fee as shown in note 6.

(d) The prior interim period has been restated by £2.0m to reflect unwind of discount in respect of IDC provision. Refer to note 2.4 for details.

(d) The prior interim period has been restated by £2.0m to reflect unwind of discount in respect of IDC provision. Refer to note 2.4 for details.

(d) The prior interim period has been restated by £2.0m to reflect unwind of discount in respect of IDC provision. Refer to note 2.4 for details.

(e) IDC refers to the Industrial Disease Claims which are funded using the Scheme funds.

(f) Reclassification of share premium of old Cape due to changes in composition of the entity- refer to note 2.1 for details.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

* The Special Reserve was created in 2007 by court order upon cancellation of the share premium and retained earnings. The Special Reserve is undistributable and restrictions exist over its use.

** Other reserves relates to hedging reserves held in respect of cashflow and net investment hedges.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

FOR THE HALF YEAR ENDED 30 JUNE 2011

* The Special Reserve was created in 2007 by court order upon cancellation of the share premium and retained earnings. The Special Reserve is undistributable and restrictions exist over its use.

** Other reserves relates to hedging reserves held in respect of cashflow and net investment hedges, and the difference arising on consolidation of the new parent undertaking (refer to note 2.1 for details).

*** Refer to note 2.1 for details of changes in composition of the entity.

(d) The prior interim period has been restated by £2.0m to reflect unwind of discount in respect of IDC provision. Refer to note 2.4 for details.

 (e) IDC refers to the Industrial Disease Claims which are funded using the Scheme cash.

Notes to the Financial Statements

1. General information

The financial information included in this interim financial report for the six months ended 30 June 2011 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the Group's annual report and accounts for the year ended 31 December 2010, which were prepared under IFRS as adopted by the EU and expanded to make reference to IFRIC interpretations, have been delivered to the Registrar of Companies and include an auditors' report.

Copies of this interim report will be available from the offices of Cape plc, 47 Esplanade, St Helier, Jersey JE1 0BDand on the Company's website at www.capeplc.com, in addition to the paper version posted to shareholders. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

This condensed consolidated interim financial information was approved for issue on 30 August 2011.

The consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity and consolidated cash flow have been reviewed by the auditors and their report is included in this document.

2. Basis of preparation

This condensed consolidated interim financial information for the six months ended 30 June 2011 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim financial reporting', as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2010.

The interim financial report has been prepared under the historical cost convention; as modified by the accounting for derivative financial instruments at fair value through profit or loss; and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

2.1 Changes in composition of the entity

On 17 June 2011, pursuant to a Scheme of Arrangement under Part 26 of the Companies Act 2006, a new parent company was introduced which is now called Cape plc (the "Company"). The previous parent company has been renamed as Cape Intermediate Holdings plc ("Old Cape").

Immediately after the Scheme of Arrangement became effective the Company had the same business and operations as Old Cape. The consolidated assets and liabilities of the Company immediately after the effective date of the Scheme of Arrangement are the same as the consolidated assets and liabilities of Old Cape immediately before.

The introduction of a new holding company constitutes a group reconstruction and has been accounted for using merger accounting principles. As a result, the financial statements are shown as if the new group had always been in existence. The statement of changes in equity shows that the net impact of the changes to the composition of the entity is that the share premium of old Cape on 17 June 2011 has been reclassified to other reserves. The details of movements in share capital are shown in note 12. The disclosures required by IAS 24 'Related party Transactions' of this transaction are also given in note 12.

The Company is incorporated in Jersey under the Companies (Jersey) Law 1991 and is headquartered in Singapore.

2.2 Going concern basis

After making enquiries, the Directors have reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. The group therefore continues to adopt the going concern basis in preparing its consolidated interim financial statements.

2.3 Accounting policies

The same accounting policies and methods of computation are followed in the interim financial statements as the latest published audited accounts, which are available on the Company's website at www.capeplc.com.

There is no financial impact on this condensed consolidated financial report of the new standards, amendments and interpretations that are in issue and mandatory for the financial year end to 31 December 2011:

- IAS 24 (revised) 'Related party disclosures' (effective 1 January 2011)

- Amendments IAS 32 Financial instruments: Presentation on classification of rights issues. (effective 1 February 2010)

- Amendment to IFRS 1, First time adoption on financial instrument disclosures (effective 1 July 2010)

- Annual improvements 2010 (effective 1 January 2011)

- Amendment to IFRIC 14, 'Pre-payments of a Minimum Funding Requirement' (effective January 2011)

- IFRIC 19, 'Extinguishing financial liabilities with equity instruments' (effective 1 July 2010)

The Group has decided not to early adopt any standards which are not yet effective, but available for early adoption.

2.4 Restatement of prior period 30 June 2010

The prior period to 30 June 2010 has been restated to reflect an unwind of discount charge of £2.0m together with its tax impact for the first half of the year in respect of IDC provision. The unwind charge was recorded in the annual report for the year ended 31 December 2010 due to the accounting policy adoption in the second half of the year. The charge for the year ended 31 December 2010 was £4.0m.

2.5 Estimates

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these consolidated interim financial statements, the significant judgements made by management in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2010.

2.6 Fair value estimation

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2)

- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The following table presents the group's liabilities that are measured at fair value at 30 June 2011:

The following table presents the group's liabilities that are measured at fair value at 30 June 2010:

The following table presents the group's liabilities that are measured at fair value at 31 December 2010:

In 2011 there were no significant changes in the business or economic circumstances that affect the fair value of the group's financial liabilities.

2.7 Foreign exchange

The Group is exposed to foreign currency risk in two key currencies. The movements in exchange rates for these two currencies are detailed below:

3. Segment information

Management has determined the operating segments based on the reports reviewed by the Group Board (Chief Operating Decision Maker) that are used to make strategic decisions. The Board considers the business from a geographic perspective. The profit measure used by the Chief Operating Decision Maker in its review is total operating profit.