£14m Algerian loss hits Cape profits and shares

By SCOTT REID
Published on 26/05/2012 00:00

Cape, the FTSE-250 industrial services provider, will take a profit hit after unveiling a £14 million charge for losses on a contract in Algeria.

The firm, whose shares dived 37 per cent, said it will take the one-off charge – equivalent to a fifth of its adjusted pre-tax profit last year – after a review of the LNG (liquefied natural gas) project unearthed additional costs that are projected to produce a significant loss.

Cape, which provides insulation, painting, coatings, and industrial cleaning services to plant operators in the energy and mining sectors, said in March that the timing of the work releases on the project had been slower than anticipated.

An operational audit earlier this month by acting chief executive Brendan Connolly identified the additional costs.

Numis Securities’ analyst Sanjeev Bahl said he would cut his 2012 earnings per share estimate to 36.3p a share from 46p.