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					This Prospectus, which comprises a prospectus relating to Cape plc (“New Cape” or the “Company”) and Admission, has
been prepared in accordance with the Prospectus Rules of the Financial Services Authority made under Part VI of the FSMA.
This Prospectus has been filed with and approved by the Financial Services Authority and made available to the public in
accordance with Rule 3.2 of the Prospectus Rules.
This Prospectus includes particulars given in compliance with the Listing Rules and Prospectus Rules of the UK Listing
Authority for the purposes of providing information with regard to the Group. The New Cape Directors and New Cape are
responsible for the information given in this Prospectus. The New Cape Directors and New Cape declare that, having taken
all reasonable care to ensure that such is the case, the information contained in this Prospectus is, to the best of their
knowledge, in accordance with the facts and contains no omission likely to affect its import.
Application will be made to the UK Listing Authority and to the London Stock Exchange respectively for admission of all
of the New Cape Shares to: (i) the premium listing segment of the Official List; and (ii) the London Stock Exchange’s main
market for listed securities. No application has been made or is currently intended to be made for the New Cape Shares
to be admitted to listing or dealt with on any other exchange. It is expected that Admission will become effective and that
dealings on the London Stock Exchange in the New Cape Shares will commence on 17 June 2011 (International Security
Identification Number: JE00B5SJJD95). Simultaneously with Admission, the admission of the Old Cape Shares to trading on
AIM will be cancelled.
This Prospectus has been prepared in connection with a scheme of arrangement of Old Cape pursuant to
Part 26 of the Companies Act to introduce a new Jersey-incorporated holding company, New Cape, to the Group
and has been prepared on the assumption that the Scheme will become effective in accordance with its current
terms. A summary of the Proposals, including details of the Scheme, is set out in Part V of this Prospectus.
The financial information contained in this Prospectus relating to the three years ended 31 December 2010 has been
extracted without material adjustment from the Group’s audited report and accounts for the three years ended
31 December 2010. The financial information for the three years ended 31 December 2010 has been prepared on a
consistent basis in accordance with IFRS. Shareholders should read the whole document and not rely solely on the key or
summarised information.
YOU SHOULD READ THE WHOLE TEXT OF THIS PROSPECTUS. A LIST OF RISK FACTORS RELATING TO NEW CAPE
AND THE NEW CAPE SHARES IS SET OUT IN THE SECTION OF THIS PROSPECTUS HEADED ‘RISK FACTORS’.




                                                  Cape plc
                                       (Incorporated in Jersey with registered number 108031)


                Introduction to the Premium Listing Segment of
               the Official List of the Financial Services Authority
          and to trading on the London Stock Exchange’s Main Market
                                                 Sponsor and Joint Broker
                                            Numis Securities Limited

The New Cape Shares will be issued credited as fully paid and will rank pari passu in all respects with each other and
will rank in full for all dividends and other distributions thereafter declared, made or paid in respect of the New Cape
Shares.
Numis Securities Limited (“Numis”), which is authorised and regulated in the UK by the Financial Services Authority, is
acting exclusively for Old Cape and New Cape and no-one else in connection with the Scheme and will not regard any
other person (whether or not a recipient of this Prospectus) as its client in relation to the Scheme, and will not be
responsible to anyone other than Old Cape and New Cape for providing the protections afforded to clients of Numis or
for providing advice in connection with the Scheme or any transaction or arrangement referred to herein.
No representation or warranty, express or implied, is made by Numis or any other adviser as to the accuracy, completeness
or verification of the information set forth in this Prospectus, and nothing contained in this Prospectus is, or shall be relied
upon as, a promise or representation in this respect, whether as to the past or the future. Save for Numis’ responsibility as
sponsor under the FSMA, Numis and any other advisers assume no responsibility for its accuracy, completeness or verification
and accordingly disclaim, to the fullest extent permitted by applicable law any and all liability whether arising in tort,
contract or otherwise which they might otherwise be found to have in respect of this Prospectus or any such statement.
A copy of this Prospectus has been delivered to the Jersey registrar of companies in accordance with Article 5 of the
Companies (General Provision) (Jersey) Order 2002, and it has given, and has not withdrawn, its consent to its publication.
The Jersey Financial Services Commission has given, and has not withdrawn, its consent under Article 2 of the Control of
Borrowing (Jersey) Order 1958, to the issue of the New Cape Shares by New Cape. It must be clearly understood that, in
giving these consents, neither the Jersey registrar of companies nor the Jersey Financial Services Commission takes any
responsibility for the financial soundness of New Cape or for the correctness of any statements made, or opinions
expressed, with regard to it. The Jersey Financial Services Commission is protected by the Control of Borrowing (Jersey)
Law 1947, as amended, against any liability arising from the discharge of its functions under that law.
Nothing in this Prospectus or anything communicated to the holders or potential holders of New Cape Shares by or on
behalf of New Cape is intended to constitute, or should be construed as, advice on the merits of the subscription for New
Cape Shares or the exercise of any rights attached thereto for the purposes of the Financial Services (Jersey) Law 1998.
No person has been authorised to give any information or make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must not be relied upon as having been so
authorised. The contents of this Prospectus are not to be construed as legal, business or tax advice. Each prospective
investor should consult his own independent legal, financial or tax adviser for legal, financial or tax advice.
The distribution of this Prospectus in jurisdictions other than the United Kingdom and Jersey may be restricted by law
and therefore this Prospectus may not be distributed or published in any jurisdiction except under circumstances which
result in compliance with any applicable laws and regulations. Persons into whose possession this Prospectus comes should
inform themselves about and observe such restrictions. Any failure to comply with these restrictions may constitute a
violation of the securities laws of any such jurisdiction.
NEW CAPE SHARES HAVE NEITHER BEEN MARKETED TO, NOR ARE AVAILABLE FOR PURCHASE OR EXCHANGE,
IN WHOLE OR IN PART, BY THE PUBLIC IN THE UNITED KINGDOM OR ELSEWHERE IN CONNECTION WITH
THE INTRODUCTION OF THE NEW CAPE SHARES TO THE OFFICIAL LIST. THIS PROSPECTUS DOES NOT
CONSTITUTE AN INVITATION OR OFFER TO SELL OR THE SOLICITATION OF AN INVITATION OR OFFER TO BUY
ANY SECURITY. NONE OF THE SECURITIES REFERRED TO IN THIS PROSPECTUS SHALL BE SOLD, ISSUED,
SUBSCRIBED FOR, PURCHASED, EXCHANGED OR TRANSFERRED IN ANY JURISDICTION IN CONTRAVENTION OF
APPLICABLE LAW.
This Prospectus does not constitute or form part of any offer or invitation to sell or issue, or a solicitation of an offer to
purchase or subscribe for, the Shares in any jurisdiction. The New Cape Shares have not been and will not be registered
under the U.S. Securities Act 1933, as amended (the “Securities Act”). The New Cape Shares may not be offered or sold in
the United States or to U.S. purchasers absent registration under the Securities Act or pursuant to an exemption therefrom
or in a transaction not subject to the registration requirements of the Securities Act. The New Cape Shares have not been
approved or disapproved by the U.S. Securities and Exchange Commission (the “SEC”) or any securities regulatory authority
of any state or other jurisdiction of the United States or under the applicable laws of Australia, Canada or Japan. Neither
the SEC nor any regulatory authority of any state or other jurisdiction of the United States has passed upon the accuracy
or adequacy of the information in this Prospectus. Any representation to the contrary is a criminal offence in the United
States.
The relevant clearances have not been, and will not be, obtained from the Securities Commission of any province or
territory of Canada; no prospectus in relation to Admission has been, or will be, lodged with, or registered by The Australian
Securities and Investments Commission; and no registration statement has been, or will be, filed with the Japanese Ministry
of Finance in relation to Admission of the New Cape Shares. Accordingly, subject to certain exceptions, the New Cape
Shares may not, directly or indirectly, be offered or sold within Canada, Australia or Japan or offered or sold to a resident
of Canada, Australia or Japan.




                                                              2
                                                                CONTENTS

Expected timetable of principal events .......................................................................................                        3

Summary .........................................................................................................................................     6

Risk Factors ....................................................................................................................................     14

Directors, Company Secretary, Registered Office and Advisers ..................................................                                        23

Presentation and Sources of Financial and Other Information ..................................................                                        25

Part I:           Information on the Group’s Business .......................................................................                         30

Part II:          Historical Financial Information on the Group ........................................................                              44

Part III:         Operating and Financial Review ................................................................................                    106

Part IV:          Directors, Corporate Governance and Employees ....................................................                                 121

Part V:           The Proposals ..............................................................................................................       129

Part VI:          Taxation .......................................................................................................................   138

Part VII:         2006 Creditor Scheme of Arrangement .....................................................................                          144

Part VIII:        Additional Information ................................................................................................            166

Definitions and Glossary ................................................................................................................             210




                                                                             3
              EXPECTED TIMETABLE OF PRINCIPAL EVENTS

                                                                                            2011
Publication of Scheme Circular                                                     Monday, 9 May
Record date for final dividend on Old Cape Shares in                        Close of business on
respect of the financial year ended 31 December 2010                               Friday, 13 May

Publication of Old Cape’s annual report and accounts for the                      Monday, 16 May
financial year ending 31 December 2010
Voting record time for the Court Meeting and the                    6.00 p.m. on Monday, 23 May
General Meeting(1)
Court Meeting                                                   10.00 a.m. on Wednesday, 25 May
General Meeting(2)                                              10.15 a.m. on Wednesday, 25 May
Payment date for final dividend on Old Cape Shares in
respect of the financial year ended 31 December 2010                                Friday, 3 June
Scheme Record Time                                              6.00 p.m. on Wednesday, 15 June
Court Hearing to sanction the Scheme and to                                     Thursday, 16 June
confirm the associated reduction of capital(3)
Last day of trading on AIM in respect of, and for                               Thursday, 16 June
registration of transfers of, Old Cape Shares
Scheme Effective Date                                                              Friday, 17 June
Cancellation of admission of Old Cape Shares                         8.00 a.m. on Friday, 17 June
to trading on AIM
Admission and listing of New Cape Shares and                         8.00 a.m. on Friday, 17 June
commencement of dealings in New Cape Shares on the
London Stock Exchange
Credit of New Cape Shares in Uncertificated form to                                Friday, 17 June
CREST accounts
Jersey Court Hearing to confirm the New Cape                      2.30 p.m. on Thursday, 30 June
Reduction of Capital
New Cape Reduction of Capital becomes effective                                      Friday, 1 July
Despatch of share certificates in respect of New Cape                            by Friday, 1 July
Shares in Certificated form
New Cape Annual General Meeting                                         Wednesday, 28 September
Unless otherwise stated, all references to times in this Prospectus are to London time. The times
and dates given are based on the Directors’ expectations and may be subject to change. These
times and dates are indicative only and will depend, amongst other things, on the date on which
the High Court sanctions the Scheme (and confirms the Old Cape Reduction of Capital). In
particular, certain Court dates are subject to confirmation by the Court. If the scheduled date of
either or both of the Court Hearings is changed, New Cape will give adequate notice of the
change by issuing an announcement through a RIS. Any changes to other times or dates indicated
above may, in New Cape’s discretion, be notified in the same manner. All Old Cape Shareholders
have the right to attend the Court Hearing.




                                                 4
Notes:
(1) If either the Court Meeting or the General Meeting is adjourned, the voting record time for the adjourned Meeting
    will be 6.00 p.m. on the date falling two days before the adjourned Meeting.
(2) To commence at the time fixed or as soon thereafter as the Court Meeting concludes or is adjourned, whichever is
    the later.
(3) The Court Hearing will be held at The Royal Courts of Justice, The Strand, London, WC2A 2LL. For details of timing
    of the Court Hearing, Shareholders and creditors can consult the Group’s website at www.capeplc.com.




                                                          5
                                           SUMMARY

THE FOLLOWING INFORMATION SHOULD BE READ AS AN INTRODUCTION TO THIS
PROSPECTUS ONLY. ANY DECISION AS TO WHETHER TO INVEST IN NEW CAPE SHARES
SHOULD BE BASED ON CONSIDERATION OF THIS PROSPECTUS AS A WHOLE AND NOT
JUST THIS SUMMARY.
Where a claim relating to the information contained in this Prospectus is brought before a court,
the claimant might, under the national legislation of the European Economic Area member states,
have to bear the costs of translating the Prospectus before the legal proceedings are initiated. Civil
liability attaches to the Directors and New Cape, who are responsible for this summary, but only
if the summary is misleading, inaccurate or inconsistent when read together with the other parts
of this Prospectus.

1.     INTRODUCTION
Old Cape announced its intention to move from AIM to the Official List on 10 March 2010. On
2 March 2011, Old Cape announced its intention to put in place a new parent company for the
Group, New Cape, being a Jersey-incorporated company that will be tax-resident in Singapore. New
Cape will also be tax resident in Jersey, although no tax liability is expected to arise there. Further
details can be found in Part VI of this Prospectus. Application will be made to the UK Listing
Authority for all of the New Cape Shares to be admitted to the premium listing segment of the
Official List and to the London Stock Exchange and for the New Cape Shares to be admitted to
trading on the London Stock Exchange’s main market for listed securities.
Upon implementation of the Scheme to effect the insertion of the new parent company, New Cape
Shareholders will effectively have the same voting rights and the same proportionate interest in
the profits, net assets and dividends of the Group as they currently have as an Old Cape
Shareholder.
Implementation of the Scheme is conditional (amongst other things) upon:
l     Shareholder approval at the Court Meeting and the General Meeting; and
l     sanction by the High Court.
Overseas Shareholders may be affected by the laws of other jurisdictions in relation to the Scheme.

2.      BACKGROUND TO AND REASONS FOR THE PROPOSALS
The Directors believe that a listing of the New Cape Shares on the premium listing segment of
the Official List and trading of the New Cape Shares on the London Stock Exchange’s main market
for listed securities is the most appropriate platform for the continued growth of the Group and
will further raise the Group’s profile. In addition, the Directors believe that due to the higher
number of institutional investors who regularly trade in companies admitted to the Official List and
the higher profile of such companies in comparison to AIM, following Admission the Group will
be better placed to achieve improved liquidity in the New Cape Shares when compared with the
liquidity of the Old Cape Shares on AIM.
Following Admission, New Cape expects to be eligible for inclusion in the FTSE UK index series.
The Board, together with the Group’s advisers, have closely examined the current corporate
structure and concluded that the establishment of a new Group holding company would facilitate
the Group’s international operational structure and would put the Group in the best position to
achieve its growth aspirations to the benefit of Cape and its Shareholders. Furthermore, the
Proposals should provide greater certainty over the Group’s position under the Controlled Foreign
Company tax rules. The Board believes that the most appropriate structure is for the new Group




                                                  6
holding company to be listed on the Official List, incorporated in Jersey and with dual tax
residence in Singapore and Jersey (although no tax liability is expected to arise in Jersey).
Over the past five years, the geographic mix of the Group’s business has become increasingly
international, with 67 per cent. of profits now generated from outside the UK. The Board expects
the growth of the business over the next five years to be driven primarily from operations in
international markets, particularly the Pacific Rim and Far East regions which is the fastest growth
market for the Group’s range of services. This is expected to continue to be so, driven by the high
levels of committed capital investment in several large scale gas/Liquid Natural Gas (LNG) projects
in the region. Opportunities to develop this increasingly critical part of the Group’s operations will
be enhanced by the consequent reduction of time zones and travel obligations on senior
executives who are currently based in the UK.
The Proposals are not expected to have any adverse impact on Old Cape Shareholders as a whole.
New Cape will have the same Board and management as Old Cape on the Scheme Effective Date,
although increased time will be spent in Singapore. The Board will continue to evaluate further
opportunities to strengthen the Board as appropriate, particularly in light of the Group’s growth
and increased presence in the Far East/Pacific Rim. As an AIM quoted company, Old Cape sought
to comply with the main principles of the Combined Code. As a company listed on the premium
listing segment of the Official List, New Cape will be required to comply with UK Corporate
Governance Code (formerly the Combined Code), and will continue to be subject to the UK
Takeover Code. As such, the Proposals will retain the Group’s commitment to high standards of
governance and corporate responsibility. New Cape will have the same business and operations
after the Scheme Effective Date as Old Cape has before the Scheme Effective Date.
The Proposals will not result in any immediate changes in the day-to-day operations of the business
of the Group or its strategy. New Cape will continue to report the Group financial results in
pounds sterling.

3.    LISTING AND ADMISSION
Application will be made to the UK Listing Authority for all of the New Cape Shares to be
admitted to the premium listing segment of the Official List and to the London Stock Exchange
and for the New Cape Shares to be admitted to trading on the London Stock Exchange’s main
market for listed securities.
It is expected that trading of the New Cape Shares on the main market of the London Stock
Exchange will begin at 8.00 a.m. on Friday, 17 June 2011 and the cancellation of the admission of
Old Cape Shares to trading on AIM will take place at 8.00 a.m. on Friday, 17 June 2011.

4.   INFORMATION ON THE GROUP
Business overview
The Group’s operations are monitored and organised on a geographical basis with four regions:
l     UK Region: comprising onshore and offshore (“UK Continental Shelf”).
l     Gulf/Middle East Region: comprising all six Gulf Cooperation Council (“GCC”).
l     CIS, Mediterranean and North African Region: comprising:
      –      the Commonwealth of Independent States (“CIS”) countries including Russia,
             Kazakhstan and Azerbaijan
      –      North Africa, primarily Algeria
l     Far East/Pacific Rim Region: comprising Australia, Singapore, Thailand, Malaysia, Brunei,
      Indonesia and the Philippines




                                                  7
The Group defines its primary activity as the provision of non-mechanical support services during
the life cycle of large, secure industrial assets both onshore and offshore. The Group therefore
addresses two market segments:
l     Maintenance and production support services (56 per cent. of 2010 revenues).
l     Construction support services (38 per cent. of 2010 revenues).

Key strengths
The Directors believe the following are Cape’s key strengths and the leading factors that position
the Group for continued success in its chosen markets:
l     Single source provider of multi-disciplinary services.
l     Longstanding customer relationships.
l     Low risk, cost reimbursable business model.
l     Tight integration with customer operations.
l     High levels of revenue visibility.
l     Multi-year capital projects position Cape for long-term maintenance projects which follow.
l     Safety first culture.
l     Reputation and track record.
l     Depth, quality and flexibility of general management structure.

Strategy
The Group’s growth strategy continues to focus on five strategic objectives.
1.    Build positions of scale in high growth international markets such as Gulf/Middle East and
      Far East/Pacific Rim.
2.    Capture increasing levels of maintenance and capital spending to maintain and extend the
      life of ageing energy infrastructure in the UK.
3.    Capitalise on the increasing industry trend towards sourcing cost effective bundled
      multi-disciplinary services from a single source provider.
4.    Maintain Cape’s uncompromising safety proposition and continuously strive to provide
      injury free project execution.
5.    Build on Cape’s strong reputation and track record for consistent project execution and
      delivery on time and on budget.




                                                 8
5.    KEY FINANCIAL INFORMATION
The following audited financial information on the Group has been extracted from the Historical
Financial Information on the Group set out in Part II of this Prospectus.
                                                     Year ended        Year ended       Year ended
                                                    31 December      31 December      31 December
                                                           2010              2009             2008
                                                             £m               £m               £m
Income statement
Revenue                                                 650.1           655.1            622.7
                                                      5555            5555             5555
Operating profit before other items                       78.2            70.6             65.0
                                                      aaaa            aaaa             aaaa
Amortisation                                                 (2.6)           (2.9)            (2.7)
Industrial disease costs                                     (0.4)          (74.2)            (5.7)
Exceptional costs                                               –               –             (4.1)
Share of post tax profits from joint ventures                (0.1)            1.6              0.5
                                                   5555               5555             5555
Total operating profit/(loss)                          75.1               (4.9)            53.0
                                                   aaaa               aaaa             aaaa
Net finance costs                                    (12.0)             (10.7)           (15.2)
                                                   5555               5555             5555
Profit/(loss) before tax from continuing operations    63.1              (15.6)            37.8
                                                   aaaa               aaaa             aaaa
Tax                                                  (10.8)              14.1             (5.9)
                                                   5555               5555             5555
Profit/(loss) after tax from continuing operations     52.3               (1.5)            31.9
                                                   aaaa               aaaa             aaaa
Earnings per share from continuing operations
  – basic                                                  42.6p             (3.5)p         26.9p
  – diluted                                                41.0p             (3.4)p         26.4p
Balance sheet
Property, plant & equipment                                154.3           142.9            152.3
Net working capital                                         78.6            77.6             68.9
                                                      5555            5555             5555
Managed assets(12)                                      232.9           220.5            221.2
                                                      aaaa            aaaa             aaaa
Intangible assets                                          241.5           210.5            188.0
Industrial disease provision                               (81.7)          (80.2)            (9.7)
Other liabilities and provisions                            (2.6)           (3.3)           (25.3)
                                                      5555            5555             5555
Total operating assets                                  390.1           347.5            374.2
                                                      aaaa            aaaa             aaaa
Funded by:
Net debt(5)                                                 52.9           113.6            165.5
Restricted funds                                           (31.6)          (33.8)           (37.5)
Total equity                                               368.8           267.7            246.2

6.    CURRENT TRADING AND PROSPECTS
The Group announced its unaudited preliminary results for the year ended 31 December 2010 on
2 March 2011 (“2010 Results”) and the Historical Financial Information on the Group on the three
years results to 31 December 2010 is set out in Part B of Part II of this Prospectus. The Group
made the following points within its announcement of preliminary results on 2 March 2011:

Overview of performance in 2010
Cape delivered an excellent operational performance in 2010. Working directly with International
Oil Companies (IOC’s), National Oil Companies (NOC’s), power generators, and resource




                                                9
companies, Cape provided essential maintenance services on 245 industrial assets in 2010. Cape
also assisted in the safe delivery of 58 major construction projects in the year.
Adjusted profit before tax(1) in 2010 increased by 13.8 per cent. to £69.1 million (2009:
£60.7 million) including a £2.5 million reduction in net finance costs, before the IDC, to
£9.0 million (2009: £11.5 million) and a £2.2 million (2009: £8.3 million) benefit from favourable
foreign exchange movements. The EBITA(9) (excluding exchange) therefore increased by £3.7 million
or 5.1 per cent.
Cash generated from Cape’s operations in 2010 was £98.5 million (2009: £84.4 million) with net
debt reducing from £113.6 million to £52.9 million.
Management use a number of performance measures throughout the Prospectus. These are denoted
with a footnote and are defined on page 120.

Trading
Since the beginning of the financial year for the period ending 31 December 2011 to the date of
this Prospectus, overall trading has been in line with the Board’s expectations, with activity levels
and operating margins consistent with the same period in the prior year. Regional/segmental
activity levels were as anticipated, with the CIS/Mediterranean & North Africa region and Far
East/Pacific Rim region both ahead of the same period in 2010, offsetting the continued lower
activity levels in the Gulf/Middle East region.

Corporate expenses
As expected, £3.5 million of non-recurring corporate charges have been incurred in the year to
date comprising £2 million in relation to the Proposals and a £1.5 million charge representing the
unamortised facility fees arising on the early cancellation of the Group’s 2007 syndicated bank
facility (as further described in paragraph 19.3 of Part VIII of this Prospectus).

Outlook and prospects
Looking ahead, as the pause in global exploration and production (E&P) capex seen in 2009/10 gives
way to a return to growth, the Board expects demand for Cape’s construction support services to
commence a sustained period of growth from the second half of 2011. The Group’s order intake in
the first four months supports this with contract wins in the Gulf/Middle East including extensive
packages on the Jubail Export Refinery, Ruwais Refinery 4th NGL train, Habshan 5 and Borouge III
projects all expected to commence in the final quarter of 2011 or early 2012.
Whilst the maintenance (Production Support) market is not      expected to grow as strongly as the
capital funded Engineering and Construction (E&C) projects     market, Cape anticipates growth will
be driven by the commissioning of new plants in growth         markets, the maintenance of ageing
infrastructure in mature markets and the increasing focus of   plant operators on safety.
The Directors believe that Cape is entering a new up-cycle for its construction support services
markets, particularly downstream Gulf/Middle East region and gas/Liquid Natural Gas (LNG) in the
Far East/Pacific Rim region, where several major LNG liquefaction plants projects are moving
forward and the Board anticipates demand for construction support services in the region to
commence a period of strong growth. The opportunities presented currently by the construction
of two of the world’s largest LNG projects in Australia are on Cape’s horizon and Cape has been
pre-qualified to tender for work on both the Gorgon and the Papua New Guinea LNG terminals
due to commence construction in 2012. The lengthy qualification, contract award, revenue cycle
continues to provide us with excellent revenue visibility with over 63 per cent. of consensus 2011
revenues now secured.
The Group’s asset replacement ratio was maintained at c. 70 per cent. in 2010 reflecting the tight
control of capital expenditure. As the Group targets a sustained period of high earnings growth it




                                                 10
is anticipated that the asset replacement ratio will increase to around 100 per cent. to support this
growth.

7.     DIVIDEND AND DIVIDEND POLICY
Old Cape recommenced the payment of a dividend in 2010 having not paid a dividend for a period
of ten years. The Board is committed to a progressive dividend policy in line with earnings growth
and considers a payout ratio of up to one third of distributable profits to be appropriate. It is the
Board’s intention that New Cape will adopt a dividend policy in line with that of Old Cape.
The proposed final dividend of Old Cape for the financial year ended 31 December 2010 will be
8 pence per Old Cape Share (2009: nil) to give a total dividend of 12 pence (2009: nil). Subject
to approval by Shareholders at a general meeting of Old Cape which has been convened for
25 May 2011, the proposed final dividend of 8 pence per Old Cape Share will be paid on 3 June
2011 to Shareholders on the register of Old Cape at the record date of 13 May 2011.

8.    GROUP DIRECTORS AND EMPLOYEES
Directors
The Board of New Cape comprises the Directors set out below. The Board of Old Cape will, at
the Scheme Effective Date, be the same as the Board of New Cape. After the Scheme Effective
Date, Mr May and Mr Bingham will be the only Directors of Old Cape and each of the other Old
Cape Directors will resign from the Board of Old Cape.
Timothy John Crommelin Eggar           Non-Executive Chairman
Martin Keith May                       Chief Executive
Richard Keith Bingham                  Chief Financial Officer
Michael Ralph Merton                   Non-Executive Director
David McManus                          Non-Executive Director and Senior Independent Director

Employees and Subcontractors
                                                         Year ended       Year ended      Year ended
                                                       31 December      31 December     31 December
                                                               2010             2009            2008
Direct employees                                             14,052          13,554           11,004
Indirect employees                                            2,029           2,107            2,561
Subcontractors                                                1,926           1,414            1,012
                                                         5555            5555            5555
Total headcount                                           18,007          17,075          14,577
                                                         aaaa            aaaa            aaaa
9.     ADDITIONAL INFORMATION
Share capital and constitutional documents
On the Scheme becoming effective, the issued ordinary share capital of New Cape is currently
expected to comprise up to 118,300,355 New Cape Shares.
There are a number of differences between the Old Cape Articles and the New Cape Articles.
These differences arise, amongst others, by reason of New Cape being a company incorporated in
Jersey and not in England and Wales. Where considered appropriate and subject to the Jersey
Companies Law, provisions have been incorporated into the New Cape Articles to enshrine as
closely as possible certain rights that are not conferred by the Jersey Companies Law but which
shareholders in a company listed on the main market of the London Stock Exchange would
normally expect. There can be no guarantee however that those provisions will replicate English
law exactly, and inevitably differences between English law and Jersey law will remain.
On the Scheme becoming effective, New Cape Shareholders will enjoy substantially the same rights
in relation to New Cape as Old Cape Shareholders previously enjoyed in relation to Old Cape.




                                                 11
Costs and expenses of the Proposals
The total costs and expenses of, or incidental to, the Proposals are estimated to be approximately
£2 million (exclusive of amounts in respect of VAT).

Display documents
Copies of this Prospectus and certain other important documents referred to herein will be
available free of charge on the Group’s website at www.capeplc.com, will be available on the
National Storage Mechanism and will be on display at the London offices of Lawrence Graham LLP,
4 More London Riverside, London SE1 2AU and at the head office of Old Cape at 9 The Square,
Stockley Park, Uxbridge, Middlesex, UB11 1FW, United Kingdom until the close of business on the
Scheme Effective Date (or until 30 September 2011 if the Proposals are not implemented).

10. RISK FACTORS
You should consider carefully the risks and uncertainties listed below. They are not the only ones
facing the Group. If they occur, the New Cape share price could be negatively impacted. The
material risk factors relating to the Group fall into a number of areas:

Risks relating to external factors that are largely outside the control of the business
l     Cape is a global business and certain regions in which it operates have experienced armed
      conflict, terrorism and natural disasters which may significantly and adversely affect Cape’s
      business, financial condition and operating results.
l     Cape operates in certain markets where legal systems are still developing. Some of the legal
      systems Cape relies on to conduct its business do not offer the certainty or predictability
      of legal systems in mature markets and, as a result, Cape may not be able to protect its
      rights adequately and its business may suffer.

Risks relating to the competitive environments and industries in which Cape operates
l     Losing certain customers would materially and adversely affect Cape’s revenue.
l     The majority of Cape’s customers are either in, or are dependent upon, the energy and
      natural resources sectors.
l     The markets in which Cape operates experience seasonal fluctuations in demand.

Risks relating to operational factors
l     Cape conducts its business within an increasingly strict environmental and health and safety
      regime and may be exposed to potential liabilities and increased compliance costs.
l     Cape operates within regions where it relies on the assistance of key partners.
l     Cape operates in highly competitive industries and could lose market share or key clients
      to competitors if it does not compete effectively.
l     A skilled labour shortage, or increase in the cost of labour, could materially affect Cape’s
      financial performance.
l     The loss of key senior management or employees, may adversely affect Cape’s business.
l     Cape’s workforce contains unionised employees as well as third country nationals.
l     Cape’s customer contracts do not guarantee revenue levels.

Risks relating to financial factors
l     Cape’s customer sites and operations involve hazards that can result in illness, personal
      injury or death, work stoppage or serious damage to equipment or the property of Cape’s




                                                12
      customers. An increase in accidents could materially increase the cost and availability of
      insurance, and could hinder ability to compete for and retain customers.

Risks relating to Cape’s funding structure and leverage
l     Rising interest rates will increase interest expense under Cape’s variable rate debt and will
      adversely affect the Group’s cash flows.

Risks relating to the 2006 Creditor Scheme and other asbestos related matters
l     Cape is exposed to the inherent uncertainties in actuarial estimates of future asbestos-related
      claims.
l     Cape’s obligations to fund the 2006 Creditor Scheme may constrain future capital spending
      and/or available working capital.

Risks relating to the Proposals
l     There are risks that the Proposals will not be implemented on a timely basis or at all.
l     The implementation of the Proposals cannot be assured, and if effected, the Proposals may
      not be successful in achieving the growth aspirations for the Group in the future.

Risks relating to the New Cape Shares
l     Differences between Jersey law and English law.
l     Fluctuation of share price.
l     Sales of New Cape Shares could adversely affect the New Cape Share price.
l     Suitability of New Cape Shares as an investment.




                                                 13
                                       RISK FACTORS

New Cape Shares are subject to a number of risks. Accordingly, Old Cape Shareholders and any
prospective New Cape Shareholders should consider carefully all of the information set out in this
Prospectus including, in particular, the risks described below, prior to making any decision relating
to the New Cape Shares. Additional risks and uncertainties not presently known to New Cape or
the Directors, or that New Cape or the Directors currently consider to be immaterial, may also
have an adverse effect on the Group.
THE FOLLOWING FACTORS DO NOT PURPORT TO BE AN EXHAUSTIVE LIST OR
EXPLANATION OF ALL THE RISK FACTORS INVOLVED IN INVESTING IN NEW CAPE. IN
PARTICULAR, NEW CAPE’S PERFORMANCE MIGHT BE AFFECTED BY CHANGES IN
MARKET AND/OR ECONOMIC CONDITIONS AND IN LEGAL, REGULATORY AND TAX
REQUIREMENTS. ADDITIONALLY, THERE MAY BE RISKS OF WHICH THE BOARD IS NOT
AWARE OR BELIEVES TO BE IMMATERIAL WHICH MAY, IN THE FUTURE, ADVERSELY
AFFECT THE GROUP’S BUSINESS AND THE MARKET PRICE OF THE NEW CAPE SHARES.
IN SUCH CASES, THE MARKET PRICE OF THE NEW CAPE SHARES MAY DECLINE AND
HOLDERS OF NEW CAPE SHARES MAY LOSE ALL OR PART OF THEIR INVESTMENT.

1.    RISKS RELATING TO EXTERNAL FACTORS THAT ARE LARGELY OUTSIDE THE
      CONTROL OF THE BUSINESS
Operating activities may be affected by events outside Cape’s control. These include climatic
conditions, unusual or unexpected geological occurrences, environmental hazards, industrial
conditions, technical failures, labour disputes, government actions or inactions, delays in
construction, availability of materials or parts and shipping, import or customs delays.

Cape is a global business and certain regions in which it operates have experienced
armed conflict, terrorism and natural disasters which may significantly and adversely
affect Cape’s business, financial condition and operating results
Cape operates in the Middle East and North Africa, which is a region of historic and continuing
political conflict and unrest. Cape’s assets in this region are situated on large, secure industrial
facilities in remote, unpopulated locations, however, should the existing unrest spread beyond its
current location it may affect Cape’s business through interruption of operations or damage to assets,
which could have a material adverse effect on Cape’s financial condition and operating results.
Cape also operates in South East Asia. Whilst the recent tsunami in Japan has not impacted Cape’s
operations, this is an area that is prone to natural disasters, and should such an event take place
there can be no assurance that this will not have a material adverse effect on Cape’s business,
financial condition and operating results.
Cape maintains a broad geographic footprint and has mainly sought to operate in safe and
politically stable countries. Risk is addressed by a strong senior management presence in each
region and particularly where such risks are identified, the relevant regions operate in close
communication with central management.

Cape operates in certain markets where legal systems are still developing. Some of the
legal systems Cape relies on to conduct its business do not offer the certainty or
predictability of legal systems in mature markets and, as a result, Cape may not be able
to protect its rights adequately and its business may suffer
The legal systems in certain markets are developing and have undergone significant changes in
recent years. The interpretation of, and procedural safeguards relating to, these legal and regulatory
systems are still developing, creating the risk of inconsistency in their application and therefore




                                                 14
uncertainty concerning actions that are necessary to guarantee compliance with those laws. Cape
may not be able to obtain the legal remedies provided for under these laws and regulations in a
reasonably timely manner and may not be able to enforce its rights (which therefore may not be
adequately protected). A lack of legal certainty in operating Cape’s business, or its inability to
obtain predictable legal remedies in a timely manner or at all, may have a material adverse effect
on Cape’s business, results of operations and financial performance. Local legal counsel are
regularly engaged to ensure compliance with local legislation and to update and advise managers
on actual or potential changes in legal or regulatory framework.

2.    RISKS RELATING TO THE COMPETITIVE ENVIRONMENTS AND INDUSTRIES IN
      WHICH CAPE OPERATES
Losing certain customers would materially and adversely affect Cape’s revenue
Cape’s ten largest customers accounted for 35 per cent. of combined 2010 revenues. Cape also
has one customer which accounted for between 8 per cent. and 9 per cent. of revenues for each
of the past three years. The Group has a broad customer base and seeks to maintain a balanced
customer profile. Most contracts cover a multi-year engagement and are for work of a long-term
nature. Contracts with any large customer are at many locations, often in a variety of countries and
at many levels. However, the loss of any of Cape’s large customers could have a material adverse
effect on the Group’s financial performance, operating results and cash flows.

The majority of Cape’s customers are either in, or are dependent upon, the energy and
natural resources sectors
Cape’s earnings therefore depend on long-term energy demand particularly for oil, gas and
electricity. In particular:
l     a substantial decline in world economic demand may reduce the demand for maintenance
      or capacity-expanding capital projects in the energy and natural resources industries.
      Notwithstanding that, many of Cape’s customers make long term investment decisions that
      are not based on short term economic cycles;
l     energy policies or geopolitical developments that lead to a shift away from nuclear or
      coal-fired power generation to cleaner renewable technologies could reduce the demand for
      maintenance work in the utility industry. However, demand for energy is increasingly driven
      by emerging nations’ requirements, so this is not considered to be a significant risk in such
      geographies;
l     weakening or non-enforcement of power generator’s emissions regulations could reduce the
      demand for capital expenditure required for environmental compliance in the utility, refining
      and petrochemical industries;
l     during periods of high demand for their products, refineries and power plants often
      temporarily delay projects that require Cape’s specialty multi-disciplinary services in order
      to operate at full capacity; and
l     significant project delays or a reduction in demand for Cape’s services may have a material
      adverse effect on Cape’s financial position and results of operations.

The markets in which Cape operates experience seasonal fluctuations in demand
The market for specialty multi-discipline services experiences seasonal fluctuations in demand. In
particular, because of high demand for power during the winter months, most power stations elect
to perform shutdowns and planned outages during the summer months.
The effects of seasonal fluctuations in demands for services may lead to:
l     low utilisation of work access equipment during periods of low demand;




                                                15
l     an inability to service customers during periods of high demand;
l     competitive pricing pressure during periods of low demand;
l     increased working capital requirements in specific jurisdictions, which may lead to additional
      interest charges as the required funds are drawn down from the relevant banking facility;
      and/or
l     quarter-to-quarter volatility in operating results.
Cape has operated in this cyclical market for many years and is well experienced in managing
peaks and troughs in demand, by such strategies as:
l     contractual terms that allow labour and materials to be flexed with demand;
l     maintaining a core of experienced supervisory staff that work in periods of low demand and
      act as supervisors during periods of high demand;
l     cross hiring a percentage of scaffold and other equipment to meet demands in peak season;
      and
l     setting budgets and forecasts that recognise seasonal volatilities in revenues, profits and
      cashflows.
Whilst this trend is most apparent in the UK market and therefore the increasing global
diversification of the business helps mitigate the impact of this on the Group, any pronounced
seasonal variation could impact Cape’s financial positions and results of operations.

3.    RISKS RELATING TO OPERATIONAL FACTORS
Cape conducts its business within an increasingly strict environmental and health and
safety regime and may be exposed to potential liabilities and increased compliance costs
The Group is subject to health and safety and environmental laws and regulations which are
subject to change, and may become more stringent over time. This includes, inter alia, laws and
regulations governing the use, generation, storage, handling, transportation and disposal of
hazardous substances, the emission and discharge of hazardous substances into the ground, air and
water and workplace health and safety. Cape is also required to obtain environmental permits from
governmental authorities for certain operations, including painting, specialist coatings and abrasive
blasting operations. These laws, regulations and permits are continually changing and are different
in every jurisdiction. The Group regularly engages local legal counsel to ensure compliance with
local legislation and to update and advise managers on actual or potential changes in legal or
regulatory framework.
The Directors believe that there are adequate procedures in place to ensure compliance. To aid
the Group in its assurance of these matters the operating regions of Cape have gained, or are in
the process of gaining, independently verified accreditation in the respective international
standards for Health and Safety and the environment OSHAS 18001 and ISO 14001.
The Directors believe that Cape is compliant with applicable environmental and health and safety
laws where failure to comply would materially and adversely affect the Group. However, there can
be no assurance that breaches of these laws have not occurred or will not occur in future or be
identified or that such laws will not change in the future in a manner that could materially and
adversely affect the Group.
Environmental and health and safety laws and regulations may impose obligations to investigate
and remediate, or pay for the investigation and remediation of, environmental pollution or
contamination, or pay compensation to public and private parties for related damages. If an
environmental issue arises in relation to a property and it is not remedied, or is not capable of




                                                   16
being remedied, this may result in the property becoming unusable. Whilst the Directors are not
aware of pollution or contamination at sites occupied by members of the Group that would be
likely to result in material remediation costs or third party claims, there can be no assurance that
remediation will not be required or that third party claims in respect of pollution or contamination
will not arise in future which could have a material adverse effect on Cape’s business, results of
operations or financial condition.
The Directors can also give no assurance that Cape will not incur environmental or health and
safety related obligations or liabilities in connection with its activities and operations, or facilities
it owns, leases, occupies or operates, to an extent that could materially and adversely affect the
Group.
Cape operates within regions where it relies on the assistance of key partners
Restrictions on foreign ownership, particularly within the Middle East region, necessitate a holding
structure whereby certain Cape entities in the region are majority owned by local partners with
agreements in place entitling Cape to materially all the economics. Whilst these partners are not
essential in the day to day operations of the business and do not have control over Cape assets,
their cooperation is required to facilitate various business functions that require shareholder
consent, including the payment of dividends by the local entities.
If Cape is unable to rely on these partners or, if the legal structure underpinning their relationship
with Cape is made unlawful for any reason, or if the local partner in a region was to challenge
or renege on the agreements currently in place, business activities in the relevant country could
be constrained and the Group could, for example, experience delays in the repatriation of funds
from the relevant local entity to the parent. This could adversely affect the Group’s financial
position and results of operations.
Cape operates in highly competitive industries and could lose market share or key
clients to competitors if it does not compete effectively
Cape operates in highly competitive industries; competition in the specialty multi-disciplinary
services industry is based on a number of factors, including reputation, customer service, safety,
price, speed, quality, efficiency and reliability. Because new contracts are generally awarded through
a competitive bid process in which price plays a key role, Cape may need to accept lower
contract margins in order to compete against competitors that bid for contracts at lower prices or
have a pre-existing relationship with the potential client. Failure to compete effectively may result
in the loss of market share or key clients to competitors.

A skilled labour shortage, or increases in the cost of labour, could materially affect
Cape’s financial performance
Cape’s business is labour intensive and as a result, the availability and cost of qualified personnel
affects financial performance. The availability of labour can vary depending on market conditions.
If sufficient skilled employees are not available in the locations where Cape operates, or the cost
of labour rises, Cape may not be able to meet the demands of its customers or the Group’s
operating costs may increase substantially.

The loss of key senior management or employees, may adversely affect Cape’s business
The ability to successfully operate and grow the business is largely dependent on the efforts,
abilities and services of senior management and other key employees. Cape’s future success will
also depend on, among other factors, its ability to attract and retain qualified personnel, either
through internal training and promotion, direct hiring or the acquisition of other businesses
employing such professionals. As Cape develops and acquires new services and equipment it will
need to hire additional skilled employees. An inability to attract and retain well-qualified personnel
could materially adversely impact on Cape’s business, operating results or financial condition.




                                                   17
Cape’s workforce contains unionised employees as well as third country nationals
As at 31 December 2010, Cape employed 18,000 people (including subcontractors), approximately
25 per cent. of whom are covered by a variety of collective bargaining agreements with a number
of trades unions, mainly in the UK and Australia. It is possible that Cape could experience a
withdrawal of a portion of its labour force due to industrial action in these countries. Cape
complies with industry and union agreements and fosters positive relations with trades unions and
the workforce, however, events such as individual site disputes or national or industry wide
demands from trades unions which could lead to significant and prolonged disruption due to
withdrawal of labour in pursuit of such demands which could have a material adverse effect on
Cape’s business and operating results.
Cape’s workforce and management in the GCC States comprise mainly third country nationals.
Therefore, the Company is dependent upon the authorities issuing sufficient work visas to meet
resource requirements. Cape undertakes detailed project resource planning and compliance with
local regulations that stipulate the employment of a minimum number of local employees within
Cape’s businesses, and to maintain effective relationships with local sponsors who assist in the visa
application process. However, it cannot be guaranteed that visa laws will not change, nor that Cape
will always be successful in procuring the number of visas it requires to meet existing and future
workloads. Failure to procure sufficient visas impact Cape’s capability to fulfil its contracts, which
could have a material adverse effect on its business and operating results.

Cape’s customer contracts do not guarantee revenue levels
Certain contracts, mainly those that are of maintenance in nature, which Cape enters into with
customers do not guarantee minimum revenues. Instead, the contracts generally provide that if the
customer undertakes specified activities to maintain or expand their facilities, Cape will provide
services for these projects, at agreed rates. As such, if the customers elect to delay or forego the
maintenance or capital work specified in the contracts, Cape’s services will not be required. If this
were to occur with a significant number of customers, or a small number of large customers,
Cape’s business, operating results and financial condition could be materially adversely affected.

4.    RISKS RELATING TO FINANCIAL FACTORS
Cape’s customer sites and operations involve hazards that can result in illness, personal
injury or death, work stoppage or serious damage to equipment or the property of our
customers. An increase in accidents could materially increase the cost and availability of
insurance, and could hinder ability to compete for and retain customers
Cape operates in locations such as mines, oil refineries, petrochemical plants, power stations, oil
rigs, shipyards, paint shops and other industrial facilities which involve inherent risks of hazards
such as explosions, fires, releases of toxic gases and exposure to hazardous materials. The hazards
involved in our operations can result in illness, personal injury or death, work stoppage or serious
damage to our equipment or the property of our customers.
To protect against certain casualty and liability risks, the Group maintains insurance with third
parties.
Prior to the payment of any claims, the insurance coverage requires Cape to pay an excess of up
to £50,000 per occurrence for public/products liability. The Group’s insurance covers liability in
excess of these levels up to a cap of £50 million under an excess umbrella policy.
If there was a significant increased incidence of claims this could impact the Group’s ability to
obtain insurance at competitive rates, or at all, and could therefore hinder the ability to compete
for and retain customers.

It should be noted that financial risks are considered separately in Part II of this
document.




                                                 18
5.    RISKS RELATED TO CAPE’S FUNDING STRUCTURE AND LEVERAGE
Rising interest rates will increase interest expense under Cape’s variable rate debt and
will adversely affect the Group’s cash flows
The Group has a number of interest rate hedges in place that swap a floating rate for a fixed rate.
This offers some protection for the total amount of interest expense payable. However, some of
the debt has variable rates of interest, which exposes Cape to the risk of increasing interest rates.
Interest under the variable rate debt accrues at fluctuating rates. Rising interest rates will increase
interest expense and could affect the Group’s ability to make dividend payments or fund future
investments.

6.    RISKS RELATING TO THE 2006 CREDITOR SCHEME AND OTHER ASBESTOS
      RELATED MATTERS
Cape is exposed to the inherent uncertainties in actuarial estimates of future
asbestos-related claims
For the purpose of the 2006 Creditor Scheme and, in particular, to determine the amount required
to be available to fund payments under the 2006 Creditor Scheme, Cape commissions an
independent actuary to review and provide an estimate of all of the Group’s unpaid UK
asbestos-related claims every three years. The assessment includes future claims, other than claims
that the Group expects to make recovery of, or are settled, under certain third-party indemnities.
Unpaid claims do not represent an exact calculation, but rather are estimates of the expected
future costs of the ultimate settlement of claims. As such, estimates of asbestos-related unpaid
claims are inherently uncertain. The most recent actuarial review was carried out as at
31 December 2010. In providing its estimate the actuary has relied, without audit or independent
verification, on both historical, financial and non-financial data and other quantitative and
qualitative information provided by the Group. The actuary has also used disease emergent studies
conducted in the UK by the Health and Safety Executive (HSE) as well as several academic studies
of mesothelioma specific to the UK. Due to the historical nature of the information provided by
the Group there are variances in its completeness. This further increases the inherent uncertainty
in the actuary’s estimates, although this uncertainty should decrease over time as the information
is further expanded and updated.
In accordance with the terms of the 2006 Creditor Scheme, Cape commissioned independent
actuaries to review and provide estimates of the Group’s unpaid and uninsured asbestos related
claims as at 31 December 2010.
The actuaries provided a reasonable range of estimates which resulted in a range of £60 million
(2009: £60 million) to £100 million (2009: £100 million) with a consistent central estimate of
£81.7 million (2009: £79.0 million).
The actuaries’ estimates are the aggregate of the projected, discounted value, net of insurance
recoveries, of the unpaid UK asbestos related claims.
There has been an overall increase in the 2010 central estimate, in           comparison to what was
anticipated during the last full actuarial review in 2007. Whilst there has   been better than expected
claims experience overall between full reviews, this has been more            than offset by an overall
strengthening of assumptions. The main assumptions in question are as         follows:
(a)   Future population mortality – these assumptions have been updated to the latest population
      projections from the Office for National Statistics: “English Males, Principal assumption” to
      reflect the latest views on longevity trends. This has contributed to an increase of estimates
      over all disease types.




                                                  19
(b)     Average claim size – this has increased for mesothelioma claims as a result of analysis of
        historical data which shows an approximate increase of around 10 per cent. in average
        indemnity over the base period.
Overall claims experience within Cape has been favourable for the high value claims such as
mesothelioma and lung cancer, although slightly worse than expected for asbestosis and pleural
thickening.
The assumptions made in assessing the appropriate level of provision include:
(i)     Future claim numbers – the latest disease emergence studies conducted in the UK by the
        HSE were used along with several academic studies. These were overlaid with Cape specific
        exposure data and the latest population mortality projections from the Office for National
        Statistics.
(ii)    Future average claim sizes.
(iii)   Allocation of gross claims to exposure year for the purposes of insurance.
(iv)    Future UK earnings and judicial inflation.
(v)     Claims payment pattern for known claims and future reported disease claims.
Due to the nature of this provision there remains uncertainty over the number, nature, timing and
validity of future claims which could occur over a period of more than 40 years and the provision
will be updated should any material change occur. However, the Directors anticipate that the
Group will be able to ensure that: (i) its subsidiary, Cape Claims Services Limited, will be
sufficiently funded to satisfy all 2006 Creditor Scheme Claims; and (ii) the Group will be
sufficiently funded to satisfy any UK asbestos-related claims falling outside of the 2006 Creditor
Scheme.
In accordance with the 2006 Funding Agreement, Cape Claims Services has produced the Funding
Statement for 2010 showing that no top up is required. A factual findings report was received from
CCS’s auditors to support the schedule on 12 May 2011.
The next actuarial review will take place as at 31 December 2013 where the Scheme assets will
again be reviewed to ascertain whether a top up is required. The terms of the 2006 Creditor
Scheme do not require any increase in the agreed level of funding between triennial reviews.

Cape’s obligations to fund the 2006 Creditor Scheme may constrain future capital
spending and/or available working capital
If there were a material deterioration in the Group’s trading performance or if there were:
l       a significant increase in either the number of 2006 Creditor Scheme Claims or the quantum
        of damages awarded for 2006 Creditor Scheme Claims;
l       an adverse change in the legal or regulatory environment surrounding asbestos-related
        diseases; and/or
l       a significant new class or type of claimant or type of claims,
the annual top-up payments required to be made by the Group to CCS may be significantly below
the Scheme Funding Requirement. Whilst the 2006 Creditor Scheme provides protection for Group
companies against insolvency arising in these circumstances the extent of such under-funding in
CCS and the ongoing funding obligations may be constrained. However, as set out in the Scheme
documents, Cape’s obligation to provide funding is limited to the lesser of the top up instalment
(as calculated in accordance with the funding statement) and an amount equal to 70 per cent. of
the Group’s Consolidated Adjusted Operational Cashflow, after adding back, inter alia, capital




                                                     20
expenditure exceeding 125 per cent. of depreciation (as further described in paragraph 4.2 of
Part VII). In addition to this, Cape has recently completed the 2010 triennial review which resulted
in no top up being required. The next triennial review will be as at 31 December 2013 which will
be the earliest date that a top up can be required.

7.    RISKS RELATING TO THE PROPOSALS
There are risks that the Proposals will not be implemented on a timely basis or at all
Implementation of the Proposals is conditional upon, among other things, approval of the Scheme at
the Court Meeting, approval of the Scheme at the General Meeting and sanction of the Scheme by
the High Court. There are risks that the conditions of the Proposals will not be satisfied on a timely
basis or at all. If such conditions are not satisfied, or, where applicable, waived, the Proposals will
not be implemented and the benefits expected to result from the Proposals will not be achieved.

The implementation of the Proposals cannot be assured, and if effected, the Proposals
may not be successful in achieving the growth aspirations for the Group in the future
The effectiveness of the new corporate structure is dependent on; (i) the current laws in the UK,
Jersey, Singapore and other jurisdictions and management’s ability to operate the new corporate
structure within those laws; and (ii) the implementation of the Proposals. In particular, there can
be no certainty that the New Cape Reduction of Capital will be implemented successfully or that
the Proposals and the new corporate structure will allow the full achievement of the benefits
expected to result from them.

8.    RISKS RELATING TO THE NEW CAPE SHARES
Differences between Jersey law and English law
The rights afforded to New Cape Shareholders are governed by Jersey law. Not all rights available
to shareholders under English law will be available to New Cape Shareholders.
The rights afforded to New Cape Shareholders will be governed by Jersey law and by New Cape’s
constitutional documents, and these rights differ in certain respects from the rights of shareholders
in typical English companies. However, where it was thought appropriate to confer similar rights
on and protections to holders of New Cape Shares, and where permitted under the Jersey
Companies Law, provisions to enshrine (as closely as possible) rights that are not conferred by the
Jersey Companies Law but which shareholders in a company listed on the London Stock Exchange
would normally expect have been incorporated into the New Cape Articles. There can however be
no guarantee that those provisions will replicate English law exactly, and inevitably differences
between English law and Jersey law will remain.

Fluctuation of Share price
New Cape Shares may be subject to market price volatility, and their market price may decline, in
response to developments that are unrelated to the Group’s operating performance.
Share prices may fluctuate from time to time for various reasons. As well as being affected by New
Cape’s actual or forecast operating results, the market price of the New Cape Shares may fluctuate
significantly as a result of factors beyond the Group’s control, including among others:
l     changes in research analysts’ recommendations or any failure by the Group to meet the
      expectations of research analysts;
l     changes in the performance of the oil equipment and services sector as a whole and of any
      of the Group’s competitors;
l     fluctuations in share prices and volumes, and general market volatility; and/or
l     involvement of the Group in any litigation.




                                                  21
Sales of New Cape Shares could adversely affect the New Cape Share price
The sale of a significant amount of New Cape Shares in the public market, or the perception that
such sales may occur, by any Director, member of the senior management or Shareholder, could
create negative sentiment and may have a materially adverse effect on the market price of the
New Cape Shares.

Suitability of New Cape Shares as an investment
The New Cape Shares may not be a suitable investment for all people receiving this Prospectus.
Before making any investment, potential investors should consult an investment adviser, authorised
by the FSA, who specialises in advising on the acquisition of listed securities. The value of the New
Cape Shares and the income received from them can go down as well as up and investors may
get back less than their original investment.




                                                 22
     DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE
                      AND ADVISERS

Directors                      Timothy John Crommelin Eggar (Non-Executive Chairman)
                               Martin Keith May (Chief Executive)
                               Richard Keith Bingham (Chief Financial Officer)
                               David McManus (Non-Executive Director and Senior
                               Independent Director)
                               Michael Ralph Merton (Non-Executive Director)
                               All of the registered office
Company Secretary              Jeremy Philip Gorman
Registered office of New Cape   47 Esplanade
                               St Helier
                               Jersey
                               JE1 0BD
                               Channel Islands
Head office of Old Cape         9 The Square
                               Stockley Park
                               Uxbridge
                               Middlesex
                               UB11 1FW
Sponsor and Joint Broker       Numis Securities Limited
                               The London Stock Exchange Building
                               10 Paternoster Square
                               London
                               EC4M 7LT
Joint Corporate Broker         J.P. Morgan Securities Ltd.
                               125 London Wall
                               London
                               EC2Y 5AJ
Solicitors to Old Cape and     Lawrence Graham LLP
New Cape                       4 More London Riverside
(as to English law)            London
                               SE1 2AU
Solicitors to Old Cape and     Carey Olsen
New Cape                       47 Esplanade
(as to Jersey law)             St Helier
                               Jersey
                               JE1 0BD
                               Channel Islands
Solicitors to Numis            Travers Smith LLP
                               10 Snow Hill
                               London
                               EC1A 2AL




                                         23
Auditors and Reporting          PricewaterhouseCoopers LLP
Accountants                     The Atrium
                                1 Harefield Road
                                Uxbridge
                                Middlesex
                                UB8 1EX
Financial Public Relations      M: Communications
                                34th Floor
                                1 Ropemaker Street
                                London
                                EC2Y 9AW
Jersey Registrars to New Cape   Capita Registrars (Jersey) Limited
                                12 Castle Street
                                St Helier
                                Jersey
                                JE2 3RT
                                Channel Islands
Administrator to New Cape       Dominion Corporate Services Limited
                                47 Esplanade
                                St Helier
                                Jersey
                                JE1 0BD
                                Channel Islands




                                          24
     PRESENTATION AND SOURCES OF FINANCIAL AND OTHER
                       INFORMATION

INTRODUCTION
No person has been authorised to give any information or make any representations other than
those contained in this Prospectus and, if given or made, such information or representations must
not be relied on as having been so authorised by New Cape, Old Cape, the Directors, Numis, or
any other person. Without prejudice to any obligation of New Cape to publish a supplementary
prospectus pursuant to section 87G of the FSMA or Rule 3.4 of the Prospectus Rules, neither the
delivery of this Prospectus nor any subscription or sale made under the Scheme will, under any
circumstances, create any implication that there has been no change in the affairs of the Group
since the date of this Prospectus or that the information in it is correct as of any subsequent time
to the date of this Prospectus.

MARKET AND INDUSTRY INFORMATION
This Prospectus includes market data and certain industry forecasts that were obtained by the
Group from internal surveys, reports and studies, where appropriate, as well as market research,
publicly available information and industry publications. Third party information has been
accurately reproduced and, so far as the Directors are aware and are able to ascertain from
information published by that third party, no facts have been omitted which would render the
reproduced information inaccurate or misleading. Where third-party information has been used in
this Prospectus, the source of such information has been identified. Certain market share
information and other statements in this Prospectus regarding the industry in which the Group
operates and the Group’s position relative to its competitors are not based on published statistical
data or information obtained from independent third parties. Rather, such information and
statements reflect the Directors’ best estimates based upon information obtained from trade and
business organisations and associations and other contacts within the industry in which it
competes, as well as information published by its competitors. The industry forecasts are forward
looking statements. See ‘Cautionary note regarding forward looking statements’ below.

COMPETITIVE STATEMENTS
The table below describes the basis of the competitive statements in respect of the Group
included in this Prospectus. The market data supporting the competitive statements was obtained
from internal surveys, reports and studies, where appropriate, as well as market research, publicly
available information and industry publications. New Cape has not relied on single sources but has
instead sought to ensure that each competitive statement is balanced and reasonable, based on
various available sources and New Cape’s knowledge of the markets in which the Group operates.
Statement                                                Basis
Cape is a leading international provider of              Using public and private sources of information,
speciality multi-disciplinary services to the            the Cape management estimates its position
downstream energy infrastructure market in               in the markets it addresses relative to its
several key geographic markets.                          competitors.
Cape holds market leading positions in the oil           As above.
and gas power generation sectors, together with
a strong position in the mining and mineral
processing sector in Australia.
The Group is a leading international provider of         As above.
industrial support services to the energy sector.




                                                    25
CURRENCIES
All references in this Prospectus:
l     to “pound(s) sterling”, “pound(s)”, “sterling”, “GBP”, “£”, “p” or “pence” are to the lawful
      currency of the United Kingdom;
l     to “US dollar(s)”, “US$”, and “US cent(s)” are to the lawful currency of the United States of
      America;
l     to “Australian dollar(s)”, “AUD$” and “AUD cent(s)” are to be the lawful currency of
      Australia.

NO INCORPORATION OF WEBSITE INFORMATION
Except to the extent expressly set out above, neither the content of the Group’s website (or any
other website) nor the content of any website accessible from hyperlinks on the Group’s website
(or any other website) is incorporated into, or forms part of, this Prospectus.

PRESENTATION OF FINANCIAL INFORMATION
Unless otherwise indicated, financial information presented in this Prospectus relating to the Group
as at and for the 12 months ended 31 December 2008, 31 December 2009 and 31 December
2010, is presented in sterling and has been extracted from the Historical Financial Information of
the Group set out in Part B of Part II of this Prospectus. The Historical Financial Information in
Part B of Part II of this Prospectus consists of financial information prepared in accordance with
IFRS for the 12 months ended 31 December 2008, 31 December 2009 and 31 December 2010.
Capitalisation and indebtedness information for the Group in this Prospectus has been extracted
from the Historical Financial Information and updated to 28 February 2011.
An emphasis of matter paragraph was included in the auditor’s report for the 2008 Financial
Information in relation to the uncertainty surrounding the potential future claims for industrial
disease compensation. In 2009, Cape engaged independent actuaries to further review the potential
future liability and to quantify a reasonable range of estimates. This new information significantly
reduced the level of uncertainty associated with recognising the liability and the Directors
considered it appropriate to recognise an additional provision of £70.5 million in the Group’s
financial information for the period ending 31 December 2009. As a result an emphasis of matter
paragraph was not required in the audit opinions for the 2009 Financial Information and the 2010
Financial Information.
Further, an emphasis of matter, similar to the one included in the 2008 auditor’s report, has not
been included in the auditor’s report in Part A of Part II on the Historical Financial Information
in Part B of Part II of this Prospectus, since then the uncertainty surrounding potential future
claims has been reduced and provided for.
The Historical Financial Information of the Group for the three years ended 31 December 2010 is
set out in Part B of Part II of this Prospectus.

IMPACT OF PROPOSALS AND EFFECT ON EARNINGS
Had the Proposals taken place at the date of the Group’s latest balance sheet, being 31 December
2010, the effect on the balance sheet would have been a decrease in profit, cash and retained
earnings equal to the costs and expenses of the Proposals save to the extent already provided for
in such balance sheet.
Had the Proposals taken place at the beginning of the 2010 financial year, the effect on the
Group’s reported earnings would have been a decrease equal to the costs and expenses of the
Proposals.




                                                26
PERFORMANCE MEASURES
The Group uses certain performance measures in the analysis of its business, financial condition
and results of operations. Such performance measures, included in this Prospectus, are: (i) adjusted
operating profit margin; (ii) return on managed assets; (iii) operating cash conversion; and (iv) Lost
Time Incidents (LTIs) (together, the “Performance Measures”).
Adjusted operating profit margin(16) is a performance measure that is defined by the Group as
operating profit before other items expressed as a percentage of revenue. The Group believes that
adjusted operating profit margin provides valuable information for users of its financial information
in assessing the Group’s performance. The Group uses adjusted operating profit margin, and certain
key performance indicators calculated by reference to trading profit, for planning, budgeting and
reporting purposes and for its internal assessment of the operating performance of individual
businesses within the Group.
Return on managed assets (ROMA)(11) is defined as operating profit before other items expressed
as a percentage of managed assets(12). Managed assets consist of property, plant and equipment,
inventories, trade and other receivables and trade and other payables. ROMA is a valuable
performance indicator that is used by Cape to measure how efficiently the individual regions, as
well as the Group, are using the assets to generate earnings.
Operating cash conversion(4) is defined as cash generated from operations divided by adjusted
EBITDA(7). This is a measure used by Cape, at both regional and Group level, to demonstrate how
efficiently earnings are converted into cash.
LTIs are the number of incidents per 100,000 man hours worked and is the primary international
benchmark used to measure safety performance. Cape considers safety as a key part of the Group
strategy and it is therefore appropriate that this is a key performance measure for the Group.
The Performance Measures are financial measures that are not recognised under IFRS or any other
internationally recognised generally accepted accounting principles. The Performance Measures may
not be comparable to other similarly titled measures as reported by other companies, as other
companies may calculate these measures differently from the Group. None of the Performance
Measures should be considered in isolation, or as a substitute for analysis of the Group’s operating
results, including its income statements and cash flow statements, as reported under IFRS.
The footnotes contained in this section refer to the accompanying notes to the Operating and
Financial Review in Part III of this Prospectus on page 120.

EXCHANGE RATES
The Group’s results set out in the Historical Financial Information of the Group in Part B of Part II
of this Prospectus include results of its non-UK subsidiaries in the Gulf/Middle East, Far East/Pacific
Rim and the Commonwealth of Independent States, the Mediterranean and North Africa, which
generate revenue and incur expenses in currencies other than pounds sterling, principally the
US dollar and Australian dollar. The results of these non-UK subsidiaries were translated at the
average exchange rate for the period in respect of the income statement, and at the relevant
period end rate in respect of the balance sheet, in the Historical Financial Information.
Details of average exchange rates used in the translation of overseas earnings, and of period end
exchange rates used in the translation of overseas balance sheets, for the principal currencies used
by the Group (during its ownership of relevant businesses) is as follows:




                                                  27
                                                                          Years ended 31 December
                                                                 2010             2009           2008
US dollar
Income statement                                               1.5526           1.5514           1.8518
Balance sheet                                                  1.5657           1.6149           1.4378
Australian dollar
Income statement                                               1.6901           1.9828           2.1963
Balance sheet                                                  1.5274           1.7956           2.0622
Certain information in this Prospectus and in the Historical Financial Information is presented on
a constant currency basis, which removes the translation effect of foreign exchange movements, or
in the currency of the subsidiary, to enable a better understanding of the underlying performance
of each business in the context of the Group.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes statements that are, or may be deemed to be, “forward-looking
statements”. These forward-looking statements can be identified by the use of forward-looking
terminology, including the terms “aims”, “anticipates” “believes”, “estimates”, “expects”, “forecasts”
or “intends”, “plans”, “annualised”, “goal”, “target”, “aim”, “may”, “will”, “would”, “could” or “should”
or, in each case, their negative or other variations or comparable terminology. These
forward-looking statements include all matters that are not historical facts. They appear in a
number of places throughout this Prospectus and they include statements regarding the intentions,
beliefs or current expectations of the Directors, New Cape or the Group concerning, amongst
other things, the results of operations, expectations in respect of the Proposals, financial condition,
prospects, growth, strategies and dividend policy of the Group and the industries and markets in
which it operates.
By their nature, forward-looking statements involve risk and uncertainty because they relate to
future events and circumstances. Forward-looking statements are not guarantees of future
performance and the actual results of the Group’s operations, financial position and the
development of the markets and the industry in which the Group operates may differ materially
from those described in, or suggested by, the forward-looking statements contained in this
Prospectus. In addition, even if the results of operations, financial position and the development of
the markets and the industry in which the Group operates, are consistent with the forward-looking
statements contained in this Prospectus, those results or developments may not be indicative of
results or developments in subsequent periods. A number of factors could cause results and
developments to differ materially from those expressed or implied by the forward-looking
statements including, without limitation, general economic and business conditions, industry trends,
competition, commodity prices, changes in regulation, currency fluctuations, changes in its business
strategy, political and economic uncertainty and other factors discussed in the section. Due to
such uncertainties and risks, prospective investors should not place undue reliance on such
forward-looking statements, which speak only as at the date of this Prospectus.
Forward-looking statements may, and often do, differ materially from actual results. Any
forward-looking statements in this Prospectus reflect the Group’s current view with respect to
future events and are subject to risks relating to future events and other risks, uncertainties and
assumptions relating to the Group’s operations, results of operations, growth strategy and liquidity.
Investors should specifically consider the factors identified in this Prospectus which could cause
actual results to differ before making an investment decision. Except as required by the Listing
Rules, the Disclosure and Transparency Rules, the Prospectus Rules, the London Stock Exchange or
otherwise required by law or regulation, New Cape expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in New Cape’s expectations with regard thereto or any
change in events, conditions or circumstances on which any such statement is based.




                                                   28
You are advised to read this Prospectus in its entirety, and, in particular, the sections titled
“Summary” and “Risk Factors”, Part I (“Information on the Group’s Business”) and Part III
(“Operating and Financial Review”) for a further discussion of the factors that could affect the
Group’s future performance and the industries and markets in which it operates. In light of these
risks, uncertainties and assumptions, the events described in the forward-looking statements in this
Prospectus may not occur. Investors should note that the contents of these paragraphs relating to
forward looking statements are not intended to qualify the statements made as to sufficiency of
working capital in this Prospectus.

ROUNDING
Some financial and other numerical information in this Prospectus has been rounded and, as a
result, the numerical figures shown as totals in this Prospectus may vary slightly from the exact
arithmetic aggregation of the figures that precede them.

NO PROFIT FORECAST
No statement in this Prospectus is intended as a profit forecast or a profit estimate and no
statement in this Prospectus should be interpreted to mean that earnings per New Cape Share for
the current or future financial years would necessarily match or exceed the historical published
earnings per Old Cape Share.




                                                29
                                             PART I

                 INFORMATION ON THE GROUP’S BUSINESS

1.    INTRODUCTION
Old Cape announced its intention to move from AIM to the Official List on 10 March 2010. On
2 March 2011, Old Cape announced its intention to put in place a new parent company for the
Group, New Cape, being a Jersey-incorporated company that will be dual tax-resident in Singapore
and Jersey (although no tax liability is expected to arise in Jersey). It is intended that this new
corporate structure will be implemented by means of a scheme of arrangement under Part 26 of
the Companies Act. Application will be made to the UK Listing Authority for all of the New Cape
Shares to be admitted to the premium listing segment of the Official List and to the London Stock
Exchange and for the New Cape Shares to be admitted to trading on the London Stock Exchange’s
main market for listed securities. A summary of the terms of the Proposals is contained below in
paragraph 4 of this Part I.

2.    BACKGROUND AND GENERAL INFORMATION
(a)   Introduction
      Cape is a leading international provider of specialty multi-disciplinary services to the
      downstream energy infrastructure market. With a workforce of over 18,000, Cape has a
      presence in 29 countries around the world. The Group operates a substantial network of
      more than 83 principal locations. In 2010, approximately 80 per cent. of the Group’s revenue
      was generated from capital and maintenance expenditures by customers in the oil & gas and
      power generation sectors.
      The Group has grown strongly over the last five years driven by buoyant conditions in its
      existing markets delivering strong organic growth, together with six acquisitions. Revenues
      have grown from £229.8 million in 2005 to £650.1 million in 2010.

(b)   Business overview
      Over half of the Group’s revenues come from bundled services which cover a combination
      of two or more of Cape’s range of services and largely comprise maintenance (SIP)
      contracts. Single service disciplines largely represent revenues from engineering and
      construction support (E&C project) activities.
      The Group’s operations are monitored and organised on a geographical basis with four regions:
      l     UK Region: comprising onshore and offshore (‘UK Continental Shelf’)
      l     Gulf/Middle East Region: comprising all six Gulf Cooperation Council (‘GCC’)
            states with strongest presence in UAE, Qatar and Saudi Arabia
      l     CIS, Mediterranean and North African Region: comprising:
            –      the Commonwealth of Independent States (‘CIS’) countries including Russia,
                   Kazakhstan and Azerbaijan
            –      North Africa, primarily Algeria
      l     Far East/Pacific Rim Region: comprising Australia, Singapore, Thailand, Malaysia,
            Brunei, Indonesia and the Philippines
      The Group defines its primary activity as the provision of non-mechanical support services
      during the life cycle of large, secure industrial assets both onshore and offshore. The Group
      therefore addresses two market segments:




                                                 30
l   Maintenance and production support services – (56 per cent. of 2010 revenues)
    This market segment comprises of support services to plant operators in the oil and
    gas, petrochemical, power generation, mining and mineral resources sectors, for a
    variety of companies including BP, British Energy, ExxonMobil, Saudi Aramco, Sabic,
    Alcoa and BHP. Cape provided maintenance support services at 245 client sites in
    2010.
    These services often form a critical part of ongoing maintenance of our customers’
    facilities and represent a core operating expense. The successful execution of
    recurring maintenance helps the Group’s customers avoid unplanned down-time and
    ultimately optimises the efficiency of their facilities. Cape holds market leading
    positions in the UK oil and gas and power generation sectors, together with a strong
    position in the mining and mineral processing sector in Australia.
    Services are typically provided under frame work contracts with multi year terms and
    cost-plus, reimbursable structures. Services largely relate to the provision of scaffold,
    insulation and painting (‘SIP’) together with specialist cleaning and offshore services.

l   Construction support services – (38 per cent. of 2010 revenues)
    This market segment provides a similar range of support services to major E&C
    contractors including Bechtel, Fluor, Foster Wheeler, JGC, Chiyoda and Saipem during
    the construction and commissioning of major industrial assets such as petrochemical,
    gas processing and LNG Liquefaction plants.
    Cape provided construction support services on 58 major E&C project sites in 2010.
    The Group now has positions of scale in two of the three big E&C markets; the
    downstream oil and gas market in the Middle East and the gas/LNG market in the Far
    East/Pacific Rim together with smaller positions in the CIS and North Africa.
    Contracts are typically defined work scope packages based on a schedule of unit
    rates, combined with undefined works scope elements which are reimbursed on an
    actual basis for time and materials.
    Cape’s speciality multi-disciplinary services are required on an ongoing basis
    throughout the lifecycle of large industrial infrastructure assets including:
    l     the construction and commissioning of new facilities;
    l     ongoing maintenance, inspection and turnaround;
    l     plant expansion and rejuvenation projects; and
    l     decommissioning and abandonment of retired facilities.
    Involvement in capital projects typically places Cape in a position to secure the
    attractive long term maintenance contracts that follow, as it is able to provide customers
    with an integrated solution for their non-mechanical in-plant maintenance needs.
    The Directors believe that the Group’s clients choose Cape for its proven ability to:
    l     provide a multi-discipline ‘bundled services’ solution with a single point of
          contact and management responsibility for an increasing array of complementary
          multi-disciplinary services;
    l     deliver the highest standards of safety performance in industrial environments; and
    l     execute large and complex projects requiring the supply and supervision of
          large numbers of skilled operatives and volumes of equipment.




                                         31
(c)   Range of Services
      The Group provides a comprehensive range of non-mechanical support services described
      below. These services are common to all of the Group’s operations and are evidence of the
      ability of the Group to be a bundled service provider to its global clients.

      l     Scaffolding and work access
            Typically the Group’s customers require access to tall, often irregularly shaped, structures
            at their facilities to perform ongoing maintenance, inspection, periodic scheduled
            shutdowns, capital improvements and emergency repairs. The vast majority of its work
            access services are performed on large, complex industrial sites and pipe networks.
            For a typical project the Group provides front-end application design, skilled labour
            for the erection and dismantling of highly-engineered scaffolding systems and full-cycle
            project management. Considerable technical expertise is required to facilitate access.
            The Group’s design process is carried out by qualified and experienced Cape design
            engineers, using AutoCAD 2008 software, and can thus be transmitted electronically
            worldwide. With safety being the priority, design schemes are executed to the highest
            technical standards and completed in compliance with ISO 9001 procedures. They
            incorporate design risk assessment to satisfy the CDM Regulations requirements
            within the UK.
            Work access providers are typically the first and last to perform services on a given
            project as customers require access during the entire project lifecycle. Typically the
            Group will provide and manage a common user scaffold service available to all onsite
            trades, ensuring consistently high safety standards and cost-effective utilisation. In
            addition to traditional scaffolding services, the Group provides other specialist work
            access solutions such as rope access.
            Much of the Group’s equipment is located at customer sites and it is often erected
            and dismantled repeatedly as a part of the ongoing maintenance of a customer’s
            facility. A large power station, refinery or gas reprocessing facility will have a substantial
            amount of work access equipment on site and most of the equipment will be in use
            at any one time. For example, on 31 December 2010, the Group had equipment at:
            l     Scotland’s largest power station with a replacement cost of approximately
                  £0.7 million within the fence of the plant and 100 per cent. of the equipment
                  was in use. The Group has had equipment on this site since 1994 and currently
                  provides work access, thermal insulation, asbestos removal, industrial coating
                  and industrial cleaning services; and
            l     a major gas repossessing facility with a replacement cost of approximately
                  £1.7 million within the fence of the plant and 90 per cent. of the equipment
                  was in the air. The Group has had equipment on this site since 1993 and
                  currently provides work access (including rope access), thermal insulation,
                  industrial coatings, asbestos removal, and industrial cleaning services there.
            The Group uses two types of scaffolding:
            l      system scaffolding (sometimes known as modular scaffolding); and
            l      tube-and-fitting scaffolding.
            The Group owns and maintains a large stock of both types. The Group uses both
            Cuplock and Kwikstage system scaffolding, which consists of interlocking horizontal,
            vertical and platform pieces and provides significant productivity benefits for
            customers with regular shaped applications where scaffolding can be erected




                                                   32
    bottom-up from a solid base. It does not require loose fittings and thus shortens
    erection and dismantling time and saves labour costs. The Group’s tube-and-fitting
    equipment, which is the predecessor to system scaffolding, is used in conjunction with
    system work access solutions on irregular, complex structures.

l   Insulation installation and removal
    The Group specialises in the installation and removal of thermal insulation protection
    systems, of any composition, on either hot or cold systems, for corrosion prevention,
    process heat conservation, noise reduction, waterproofing and personnel protection, to
    assist customers to achieve desired results for corrosion prevention, process heat
    conservation, noise reduction, waterproofing and personnel protection.
    Insulation installation and maintenance is a critical element in reliability, operational
    integrity, energy efficiency, process optimisation and safety of an industrial processing
    plant. The majority of the installation work performed for customers is recurring in
    nature, as the insulation materials are often damaged or require replacement. The work
    is therefore often performed as part of other maintenance and repair activities.
    Cape also installs insulation in new facilities or in connection with capital
    improvements to existing facilities. The Group has provided insulation services to over
    half of the LNG Liquefaction plants built since 1990.
    A further driver of spending on insulation projects is to counteract the effects of
    Corrosion Under Insulation (‘CUI’). CUI refers to external corrosion of piping and
    vessels that occurs underneath externally-clad or jacketed insulation which could be
    caused as a result of the penetration of water, which can decrease the integrity of
    process equipment. CUI is a common problem shared by the refining, petrochemical,
    oil and gas and power industries and tends to remain undetected until leaks occur or
    the insulation and cladding or jacketing is removed to allow inspection. A CUI
    treatment program involves the removal of existing insulation, inspection of the
    underlying equipment for corrosion, treatment of the equipment and any corrosion
    with speciality coatings and replacement of the insulation.

l   Passive fire protection
    The Group offers customers a variety of fire-proofing services, including the
    installation of fireproofing material and cladding to steel structures in client facilities.
    These materials, which include removable jet-fire tested mattresses and thermal mats,
    are designed to enhance the steel structure’s ability to withstand extremely high
    temperatures which may result from explosions or fires.
    In addition, the Group offers a comprehensive asbestos handling service including
    asbestos management and removal.

l   Speciality painting, coating and abrasive blasting
    The Group provides services for the inspection, removal and application of various
    coating materials which protect equipment and facilities from corrosion and abrasion
    and prolong the useful life of industrial assets.
    Painting and coating work is recurring in nature, as customers regularly inspect,
    evaluate and replace the protective paints and coatings on their facilities. Cape
    provides multi-year asset management programs to customers to support assessment
    of the state of coatings and to develop long-term maintenance plans. A typical coating
    and painting project requires that surface preparation is undertaken to existing
    surfaces prior to new coatings applied. Cape’s surface preparation offering includes
    conventional, automated and recycled abrasive blasting. The Group’s wide-ranging




                                         33
    experience includes applying coatings to exact standards in the following specialist
    environments and conditions:
    l     Sterile/clean rooms
    l     Offshore oil and gas facilities
    l     LNG plants
    l     Power generation plants on industrial floors, tanks and on other plant and
          equipment
    As well as working on existing plants, Cape undertakes work on new build projects,
    which typically involves both on and off-site work with elements such as:
    l     Shop painting of pipe spools and prefabricated components
    l     Field painting
    l     Touch up

l   Refractory
    For over half a century, Cape has provided refractory lining contract work and
    refractory materials, supported in 1993 by the acquisition of the RB Hilton group.
    The Group’s refractory lining offering provides customers with the installation of
    refractory materials to provide insulation for the interior of very high temperature
    (above 1100°C) and high pressure environments, including furnaces, boilers and
    vessels in refineries and power plants (such as delayed cokers, hydrotreaters and
    fluidised cat cracker units). The installation work is typically carried out on-site with
    customers requiring work access and speciality painting or coating services, project
    management and site supervision.
    In addition to refractory design, installation and maintenance services, the Group also
    undertakes the material supply aspect on behalf of many customers. Refractory
    materials must be chemically and physically stable at high temperatures. Depending
    on the operating environment the material may also need to be resistant to thermal
    expansion, be chemically inert, and/or have specified values of thermal conductivity.
    Due to the extreme operating conditions which prevail within the industrial asset.
    This replacement work must be done when the equipment is shut down and this
    generally occurs during a scheduled comprehensive turnaround of a facility.

l   Offshore services
    The Group’s extensive experience as a contractor to the oil and gas industry has
    enabled it to develop an extensive range of offshore support services. The Group
    currently provides approximately 60 services including deck handling services.

l   Industrial cleaning
    Since the 1980s, the Group has provided a comprehensive range of standard and
    innovative cleaning services to the downstream energy, pharmaceutical and
    manufacturing industries. Cape’s industrial cleaning services meet the highest
    standards including those set by the American FDA for Clean Room cleaning. The
    Group provides specialist ‘heavy-end’ industrial cleaning in both the onshore and
    offshore markets.
    In 2006 Cape acquired DBI Group Limited and its subsidiaries, which specialised in
    the heavy end industrial cleaning field, involving cleaning of contaminated tanks,
    vessels, pipes, drains, heat exchangers and surfaces as well as waste handling and site
    support services.




                                        34
      l     Equipment and material sales and equipment hire
            Sales of material and equipment and (dry) hire of equipment represent a low
            percentage of Cape’s total revenues. For the year ended 31 December 2010 these
            activities, on a combined basis, represented approximately 4 per cent. of the Group’s
            total revenue.
            The Group has been supplying insulation and refractory materials and associated
            equipment for over thirty years to the power, oil and gas, petrochemical and process
            industries. With its worldwide knowledge and supplier base, the Group is able to
            procure materials competitively and quickly. The service also relieves customers of the
            necessary administration of shipping and export documentation. Customers can
            therefore separate engineering and supply from installation, if required, with the
            Group often providing professional advice and support to customers in order that
            they can select the most appropriate specification or design.
            The Group also supplies, on either a hire or sale basis, a range of equipment to the
            civil engineering, construction and ship building industries as well as plant owners
            and public event organisers. The range includes access equipment, non-mechanical
            plant, temporary fencing, traffic barriers and personal protection equipment.

      l     Customers
            The Group believes that it has a strong, longstanding relationship with its largest
            customers. The ten largest customers by revenue accounted for 35 per cent. of 2010
            revenues with the largest customer accounting for 9 per cent.
            At 31 December 2010, a good proportion of the Group’s contracts were multi-year
            term agreements, although, in a number of cases they may be terminated by
            customers at any time upon notice. The Group has historically enjoyed high contract
            renewal rates due in large part to the embedded nature of the services.

(d)   Key business strengths
      The Directors believe the following are Cape’s key strengths and the leading factors that
      position the Group for continued success in its chosen markets:

      l     Single source provider of multi-disciplinary services
            The Group is a leading provider of speciality multi-disciplinary services in the
            downstream energy infrastructure sector in several key geographic markets. The
            Group’s customers increasingly seek to obtain their maintenance and capital services
            from a smaller number of larger service providers that are able to meet all of their
            service and safety needs. The Group’s scale, geographic footprint, breadth of services
            and capital base allows the business to benefit from this trend. The Group’s single
            source business model allows customers to achieve a number of benefits, including
            reduced costs, shorter project timeframes, higher quality maintenance and improved
            safety performance.

      l     Longstanding customer relationships
            The Group enjoys long-term relationships with large multi-national customers due, in
            large part, to its broad service offering, safety record and experience in efficiently
            managing challenges, and complex projects in often difficult environments. The
            Directors believe that the Group’s customer relationships will continue to strengthen
            as the business expands the range of services provided and expands its geographical
            footprint to match that of key clients.




                                               35
l   Low risk, cost reimbursable business model
    The majority of Cape’s work is carried out under cost-plus, reimbursable contracts
    where it commits only to working to a pre-agreed schedule of rates and where the
    customer would usually take on the risk of cost over-runs.

l   Tight integration with customer operations
    The complex and critical nature of the services provided requires the Group’s close
    and ongoing involvement with customers in their planning process, including
    scheduling, budgeting and solution design. Early involvement in project planning is
    required so that appropriately skilled labour and equipment can be sourced cost
    effectively to ensure efficient project execution. The close integration of the Group’s
    equipment at customers’ facilities creates an incumbent position with high switching
    costs for customers. The Group has numerous long-term contracts (typically three to
    seven years in length) under which it is the exclusive provider of specified
    maintenance support services and has historically achieved a high contract renewal
    rate.

l   High levels of revenue visibility
    The multi-year frame contracts typical in the maintenance support services market
    provide Cape with excellent revenue visibility. In addition, the often extended cycle
    of qualification, tender and award of contract prior to revenue generation in the
    construction services market also provides high levels of revenue visibility.

l   Multi-year capital projects position Cape for long-term maintenance projects
    that follow
    Cape’s services extend throughout the lifecycle of its clients’ assets. Effective working
    relationships are developed during the initial build phase, which frequently lead to
    Cape’s engagement for planned maintenance support. In due course, Cape’s teams
    assist clients to extend the useful life of ageing assets through rejuvenation
    programmes. Eventually, a broad range of safe, reliable and environmentally aware
    services are available to support decommissioning and asset abandonment activities.

l   Safety first culture
    Cape has a clear safety focus and continuously strives to provide injury-free project
    execution. For example on the Sakhalin 2 construction project the Group provided
    over 7 million man hours without a single loss time injury. Cape’s multinational
    customers, including Shell, Dow Chemical, ConocoPhillips, ExxonMobil and Sabic
    consistently have recognised Cape’s commitment to safety with numerous prestigious
    safety awards. In addition, Cape has also received the prestigious sword of merit
    award, most recently in 2009. Cape’s safety track record and dedication to safe,
    reliable and efficient project execution enhances its ability to win new business, retain
    existing maintenance contracts, contain cost and retain key employees. Safety is a
    critical element in the industry sectors in which Cape operates and Cape’s track
    record significantly enhances its ability to retain employees and enhance long-term
    relationships with customers.

l   Reputation and track record
    Cape has a track record which demonstrates that it consistently executes and delivers
    construction support projects safely, on time and on budget. This track record and
    reputation is recognised by clients when selecting contractors. It has taken a
    significant length of time of consistently high performance to develop and
    differentiates Cape from its competitors.




                                        36
      l     Depth, quality of flexibility of general management structure
            The Group is organised into geographic regions with high calibre operational
            management teams. Cape has also put in place regional finance, safety, HR and
            commercial management to provide a balance of experience and technical expertise
            across the business. This structure empowers the regional teams to develop the
            business locally in their respective regions whilst Cape philosophy and values provide
            the strategic direction, support and resources and international reputation consistent
            with an international business of Cape’s scale.
            The depth created by this management structure enables succession planning within
            the organisation, the flexibility to move technical expertise across the business to meet
            customer needs and excellent career development opportunities for Cape’s people.

(e)   Growth Strategy
      Since 2006, Cape has pursued a strategy of value creation through growth. This strategy has
      been based upon:
      l     Capturing increasing levels of maintenance and capital spending to maintain and
            extend the life of ageing energy infrastructure in the UK.
      l     Building strong positions of scale in higher growth international markets such as the
            Gulf/Middle East and Far East/Pacific Rim.
      l     Capitalising on the increasing trend, on the part of the Group’s major customers, to
            outsource non-core services and to look for cost effective bundled service proposals.
            These customers increasingly seek to outsource multi- disciplinary services for
            maintenance and capital projects to a smaller number of professional suppliers with
            larger scale operations that can provide a single source solution for their maintenance
            and capital needs.
      l     Maintaining an uncompromising safety proposition with an ambition to provide injury
            free execution. Customers are increasingly focused on the safety track record of the
            service providers with whom they contract as a result of the high costs of unplanned
            downtime. There is an increasing demand on the part of blue chip clients to work
            with safe suppliers who have a proven track record and access to local workforces
            and with the ability to train them to exacting standards.
      l     Building on Cape’s strong reputation and track record for consistent project execution
            and delivery on time and on budget
      Cape built the foundations for its growth strategy in 2006 and 2007 through a combination
      of both organic and acquisition-led growth to build a business with the reputation, scale and
      capability to compete for large fleet maintenance contracts as well as large-scale new
      construction projects.
      This transformational period was completed in 2007 with three strategic acquisitions in
      Australia. These acquisitions were supplemented by the targeted bolt-on acquisitions of
      specialist industrial cleaning businesses.
      Over the following three years, the focus has been on delivering a consistent and
      outstanding service to customers whilst, at the same time, driving down the costs of running
      the business. With the delivery of the margin expansion and de-gearing of the past three
      years, the emphasis is now on achieving controlled value enhancing growth.
      The successful delivery of this strategy to date has created an international industrial
      services group, focused on the energy and mining services sectors with a strong brand
      based on track record and reputation for uncompromising standards.




                                                37
3.    FINANCIAL INFORMATION
The following audited financial information on the Group has been extracted from the Historical
Financial Information on the Group set out in Part B of Part II of this document.
                                                       Year ended        Year ended       Year ended
                                                      31 December      31 December      31 December
                                                             2010              2009             2008
                                                               £m               £m               £m
Income statement
Revenue                                                  650.1            655.1            622.7
                                                       5555             5555             5555
Operating profit before other items                        78.2             70.6             65.0
                                                       aaaa             aaaa             aaaa
Amortisation                                                   (2.6)           (2.9)            (2.7)
Industrial disease costs                                       (0.4)          (74.2)            (5.7)
Exceptional costs                                                 –               –             (4.1)
Share of post tax profits from Joint Ventures                  (0.1)            1.6              0.5
                                                       5555             5555             5555
Total operating profit/(loss)                              75.1             (4.9)            53.0
                                                       aaaa             aaaa             aaaa
Net finance costs                                        (12.0)           (10.7)           (15.2)
                                                       5555             5555             5555
Profit/(loss) before tax from continuing
  operations                                         63.1                 (15.6)           37.8
                                                  aaaa                  aaaa             aaaa
Tax                                                 (10.8)                 14.1             (5.9)
                                                  5555                  5555             5555
Profit/(loss) after tax from continuing operations    52.3                  (1.5)           31.9
                                                  aaaa                  aaaa             aaaa
Earnings per share from continuing operations
  – basic                                                    42.6p             (3.5)p         26.9p
  – diluted                                                  41.0p             (3.4)p         26.4p
Balance sheet
Property, plant & equipment                                  154.3           142.9            152.3
Net working capital                                           78.6            77.6             68.9
                                                       5555             5555             5555
Managed assets                                           232.9            220.5            221.2
                                                       aaaa             aaaa             aaaa
Intangible assets                                            241.5           210.5            188.0
Industrial disease provision                                 (81.7)          (80.2)            (9.7)
Other liabilities and provisions                              (2.6)           (3.3)           (25.3)
                                                       5555             5555             5555
Total operating assets                                   390.1            347.5            374.2
                                                       aaaa             aaaa             aaaa
Funded by:
Net debt/(cash)                                               52.9           113.6            165.5
Restricted funds                                             (31.6)          (33.8)           (37.5)
Total equity                                                 368.8           267.7            246.2
4.    SUMMARY OF THE TERMS OF THE PROPOSALS
The Scheme
The Board, together with the Group’s advisers, have closely examined the current corporate
structure and concluded that the establishment of a new Group holding company would facilitate
the Group’s international operational structure and place the Group in the best position to achieve
its growth aspirations to the benefit of Cape and its Shareholders. Furthermore, the Proposals
should provide greater certainty over the Group’s position under the Controlled Foreign Company
tax rules. The Board believes that the most appropriate structure is for the new Group holding
company to be listed on the Official List, incorporated in Jersey and with tax residence in




                                                38
Singapore. New Cape will also be tax resident in Jersey, although no tax liability is expected to
arise there. Over the past five years, the geographic mix of the Group’s business has become
increasingly international, with 67 per cent. of profits now generated from outside the UK. The
Board expects the growth of the business over the next five years to be driven primarily from
operations in international markets particularly the Pacific Rim and Far East regions. The fastest
growth market for the Group’s range of services is the Far East/Pacific Rim. This is expected to
continue to be driven by the high levels of committed capital investment in several large scale
gas/LNG projects in the region. With the expected growth in the Far East/Pacific Rim region, the
Group has received strong support from the government of Singapore, including the Singapore
Economic Development Board. The Board has therefore concluded that Cape and its Shareholders
would be better served through an international holding company structure that supports the
Group’s operational and financial management.
The Proposals are not expected to have any adverse impact on Old Cape Shareholders as a whole.
New Cape will have the same Board and management team as the current Group, although
increased time will be spent in Singapore. The Board will continue to evaluate further opportunities
to strengthen the Board as appropriate, particularly in light of the Group’s growth and increased
presence in the Far East/Pacific Rim. As an AIM quoted company, Old Cape sought to comply with
the main principles of the Combined Code. As a company listed on the premium listing segment
of the Official List, New Cape will be required to comply with the UK Corporate Governance Code
or explain any departures therefrom and will continue to be subject to the UK Takeover Code. As
such, this change will not cause any substantive changes to corporate governance or investor
protection measures. New Cape will have its primary listing on the premium listing segment of the
Official List and be admitted to trading on the main market for listed securities and it is expected
that New Cape will be eligible for inclusion in FTSE’s UK Index Series.
The Group will have the same business and operations after the Scheme Effective Date as it had
before the Scheme Effective Date. The Proposals will not result in any immediate changes in the
day-to-day operations of the business of the Group or its strategy. New Cape will continue to
report the Group financial results in pounds sterling.
The Scheme will require the approval of Old Cape Shareholders at the Court Meeting and the
passing of resolutions at the General Meeting of Old Cape Shareholders. In addition, Old Cape
Shareholders will be asked to approve the adoption by New Cape of the New Cape 2011
Performance Share Plan, and the approval of the final dividend of Old Cape for the year ended
31 December 2010.
Application will be made to the UK Listing Authority for all of the New Cape Shares to be
admitted to the premium listing segment of the Official List and to the London Stock Exchange
for the New Cape Shares to be admitted to trading on the London Stock Exchange’s main market
for listed securities. It is expected that trading in the New Cape Shares on the main market of the
London Stock Exchange will commence at 8.00 a.m. on 17 June 2011. It is expected that the
cancellation of the admission of Old Cape Shares to trading on AIM will take place at 8.00 a.m.
on 17 June 2011.
Under the Scheme, Old Cape Shareholders at the Scheme Record Time will receive, in exchange
for their Old Cape Shares, New Cape Shares on the following basis:
               for every one Old Cape Share            one New Cape Share
The New Cape Shares to be issued pursuant to the Scheme will have a nominal value of 25 pence
each but will be recorded at fair value, which will create a substantial share premium account in
New Cape.
New Cape is proposing to undertake the New Cape Reduction of Capital shortly after the Scheme
Effective Date which will involve the transfer of the whole of the amount of the share premium




                                                39
account in New Cape to create a reserve of profit in the accounts of New Cape. Distributions paid
out of this reserve should then be regarded as a dividend on receipt by UK shareholders. Please
see Part VI (‘Taxation’) for further details. The Board does not intend to make any distribution from
this reserve other than in accordance with the dividend policy set out in paragraph 11 below.

Admission to the Official List
Old Cape announced its intention to move from AIM to the Official List on 10 March 2010. The
Directors believe that a listing of the New Cape Shares on the premium listing segment of the
Official List and trading of the New Cape Shares on the London Stock Exchange’s main market for
listed securities is the most appropriate platform for the continued growth of the Group and will
further raise the Group’s profile. In addition, the Directors believe that due to the higher number
of institutional investors who regularly trade in companies admitted to the Official List and the
higher profile of such companies in comparison to AIM, following Admission the Group will be
better placed to achieve improved liquidity in the New Cape Shares when compared with the Old
Cape Shares on AIM.
Following Admission, New Cape expects to be eligible for inclusion in the FTSE UK index series.

5.    ORGANISATIONAL STRUCTURE AND PRINCIPAL SUBSIDIARIES
The Group’s operations are organised on a geographical basis with four regions comprising of
11 business units. The following table sets forth the principal operating subsidiaries of each of the
Group’s reporting segments and the jurisdictions in which they principally operate.
                                                                                        Proportion of
                                                                                   interest ultimately
                                          Date of                Country of                    held by
Subsidiary undertakings                   incorporation          incorporation          the Company
Cape Industrial Services Limited          20/03/1997             England                        100%
DBI Industrial Services Limited           15/04/1996             England                        100%
DBI Offshore Services Limited             11/11/1999             England                        100%
Cape East Limited LLC                     03/06/1979             Abu Dhabi                       49%
RB Hilton Saudi Arabia Limited            07/09/1981             Saudi Arabia                   100%
Cape East WLL                             28/01/1995             Qatar                           49%
Cape East Pte Limited                     10/05/1990             Singapore                      100%
Concept Hire Limited                      25/09/1991             Australia                      100%
PCH Group Limited                         24/01/1985             Australia                      100%
Total Corrosion Control Pty Limited       31/08/1981             Australia                      100%
Further information in respect of the Group’s significant subsidiaries is set out in paragraph 16 of
Part VIII (‘Additional Information – Corporate structure and subsidiaries’).

6.     CURRENT TRADING AND PROSPECTS
The Group announced its unaudited preliminary results for the year ended 31 December 2010 on
2 March 2011 (‘2010 Results’) and the Historical Financial Information on the Group on the three
years’ results to 31 December 2010 is set out in Section B of Part II of this Prospectus. The Group
made the following points within its announcement of preliminary results on 2 March 2011:

Overview of performance in 2010
Cape delivered an excellent operational performance in 2010. Working directly with International
Oil Companies (IOC’s), National Oil Companies (NOC’s), power generators, and resource
companies, Cape provided essential maintenance services on 245 industrial assets in 2010. Cape
also assisted in the safe delivery of 58 major construction projects in the year.
Adjusted profit before tax(1) increased by 13.8 per cent. to £69.1 million (2009: £60.7 million)
including a £2.5 million reduction in net finance costs, before the Industrial Disease Claims (IDC),




                                                 40
to £9.0 million (2009: £11.5 million) and a £2.2 million (2009: £8.3 million) benefit from favourable
foreign exchange movements. The EBITA(7) (excluding exchange) therefore increased by £3.7 million
or 5.1 per cent.
Cash generated from Cape’s operations was £98.5 million (2009: £84.4 million) with net debt(5)
reducing from £113.6 million to £52.9 million.

Trading
Since the beginning of the financial year for the period ending 31 December 2011 to the date of
this Prospectus, overall trading has been in line with the Board’s expectations, with activity levels
and operating margins consistent with the same period in the prior year. Regional/segmental
activity levels were as anticipated, with the CIS/Mediterranean & North Africa region and Far
East/Pacific Rim region both ahead of the same period in 2010, offsetting the continued lower
activity levels in the Gulf/Middle East region.

Corporate expenses
As expected, £3.5 million of non-recurring corporate charges have been incurred in the year to
date comprising £2 million in relation to the Proposals and a £1.5 million charge representing the
unamortised facility fees arising on the early cancellation of the Group’s 2007 syndicated bank
facility (as further described in paragraph 19.3 of Part VIII of this Prospectus).

Outlook and prospects
Looking ahead, as the pause in global exploration and production (E&P) capex seen in 2009/10
gives way to a return to growth, Cape expects demand for its construction support services to
commence a sustained period of growth from the second half of 2011. The Group’s order intake
in the first four months supports this with contract wins in the Gulf/Middle East including extensive
packages on the Jubail Export Refinery, Ruwais Refinery 4th NGL train, Habshan 5 and Borouge III
projects all expected to commence in the final quarter of 2011 or early 2012.
Whilst the maintenance (Production Support) market is not      expected to grow as strongly as the
capital funded engineering and construction (E&C) projects     market, Cape anticipates growth will
be driven by the commissioning of new plants in growth         markets, the maintenance of ageing
infrastructure in mature markets and the increasing focus of   plant operators on safety.
The Directors believe that Cape is entering a new up-cycle for its construction support services
markets, particularly downstream Gulf/Middle East region and gas/liquid natural gas (LNG) in the Far
East/Pacific Rim region, where several major LNG liquefaction plants projects are moving forward and
the Board anticipates demand for construction support services in the region to commence a period
of strong growth. The opportunities presented currently by the construction of two of the world’s
largest LNG projects in Australia are on Cape’s horizon and Cape has been pre-qualified to tender
for work on both the Gorgon and the Papua New Guinea LNG terminals due to commence
construction in 2012. The lengthy qualification, contract award, revenue cycle continues to provide
Cape with excellent revenue visibility with over 63 per cent. of consensus 2011 revenues now
secured.
The Group’s asset replacement ratio was maintained at c. 70 per cent. in 2010, reflecting the tight
control of capital expenditure. As the Group targets a sustained period of high earnings growth it
is anticipated that the asset replacement ratio will increase to around 100 per cent. to support this
growth.

7.    2006 CREDITOR SCHEME
In the past, a number of the Group’s subsidiaries’ industrial activities in the UK often involved the
use of asbestos and there is a history of industrial disease claims being lodged against the Group.
In order to provide for the long-term financing of a great majority of all future asbestos-related
claims likely to be made successfully against the Group, Old Cape put in place the 2006 Creditor




                                                 41
Scheme which became effective in relation to Old Cape and 12 of its wholly-owned subsidiaries
on 14 June 2006.
In order to protect the interests of the 2006 Scheme Creditors, the 2006 Creditor Scheme Shares
were created and issued to the 2006 Creditor Scheme Shareholder. Further additional provisions
and obligations were set out in a number of ancillary agreements between Old Cape and certain
of its subsidiaries including in relation to Old Cape’s funding obligations and CCS’s obligations to
settle Scheme Claims. A detailed explanation of the background to and the key features of the 2006
Creditor Scheme is set out in Part VII of this document.
During 2010 the provision for future asbestos related claims under the 2006 Creditor Scheme
increased to £81.7 million (2009 £80.2 million). This increase comprised of a £2.5 million provision
utilisation largely reflecting amounts paid to claimants in the year, and a £4.0 million unwind of
the discount on the provision to reflect the time value of money. The triennial independent
actuarial assessment of the Group’s unpaid and uninsured UK asbestos related claims was carried
out by independent scheme actuaries and completed in January 2011. This was the third such
review the 2006 Creditor Scheme actuaries have undertaken with previous assessments being
undertaken in both 2004 and 2007. The provision held continues to reflect the central estimate of
the total future discounted liabilities to 2080.
It is intended that the 2006 Creditor Scheme will continue unamended following implementation
of the Proposals. As such, the ancillary contracts will remain in place without amendment and the
2006 Creditor Scheme Shares in CCS and Old Cape will continue to be held by the Creditor
Shareholder. However, in order to secure the consent of the 2006 Creditor Scheme Shareholder to
the Proposals in light of its duties to the Scheme Creditors, the New Cape Creditor Scheme Share
in New Cape will, upon the Proposals becoming effective, be issued to the 2006 Creditor Scheme
Shareholder having similar rights to the existing Old Cape Creditor Scheme Share and which will
afford the Old Cape Creditor Scheme Shareholder substantially the same protections to those
provided by the Old Cape Creditor Scheme Share. In addition, New Cape has agreed to certain
guarantee and funding commitments to ensure that there is no net reduction in the Group’s
funding obligations in respect of the 2006 Creditor Scheme as a result of the Proposals. In relation
to this, Old Cape, New Cape and CCS have entered into a guarantee and funding agreement
pursuant to which, inter alia, New Cape has agreed to make certain additional funding available
to Old Cape (as further summarised at paragraph 7.2 of Part VII of this Prospectus).

8.       CORPORATE SOCIAL RESPONSIBILITY
The Group aims to operate in an environmentally and socially responsible manner. Cape believes
fulfilling these wider responsibilities, alongside providing the highest quality technical skills and
disciplines and in addition to the health, safety and environment initiatives which the Group
employs (as summarised in paragraph 9 below), is key to the long-term success of the business
and wherever possible the Group aims to provide benefits to the local communities it operates in,
not only through employment for the local workforce, but also through activities that provide
wider social benefits.

9.       HEALTH, SAFETY AND ENVIRONMENT
The Group is committed to providing a safe working environment for all its employees and has
in place initiatives designed to help the Group maintain a safe environment. Such initiatives include
continued review of the level of the Group’s Lost Time Incidents (‘LTI’), the primary international
benchmark to measure the Group’s safety performance and of its health and safety management
systems, and the use of external UKAS accreditors. Recognition of the Group’s high standards of
health, safety and environmental performance was evident through a number of awards, prizes and
certifications granted to it in 2010.
Cape continues to offer our clients asbestos removal services. In order to provide these services,
the Group requires licences from legislative enforcement bodies in the areas it operates and during




                                                 42
the financial year ended 31 December 2010, all existing licences were either renewed or new
licences awarded, including 4 new separate licences in different states in Australia.

10. LICENCES
The Group has in place certain licences which are required in order for it to conduct its core
business activities including (but not limited to) asbestos operations licences, abrasive blasting
licences (for cleaning equipment or structures on a commercial basis using dry pressure system),
coating licences and lead working licences.

11. DIVIDEND AND DIVIDEND POLICY
Old Cape recommenced the payment of dividends last      year having not paid a dividend for a period
of ten years. The Old Cape Board is committed to        a progressive dividend policy in line with
earnings growth and considers a payout ratio of up       to one third of distributable profits to be
appropriate. It is the intention that New Cape will      adopt a dividend policy in line with the
dividend policy of Old Cape.
The proposed final dividend of Old Cape for the financial year ended 31 December 2010 is 8 pence
per Old Cape Share (2009: nil) to give a total dividend of 12 pence (2009: nil). Subject to approval
by Shareholders at a general meeting of Old Cape which has been convened for 25 May 2011, the
final dividend of 8 pence per Old Cape Share will be paid on 3 June 2011 to Shareholders on the
register of Old Cape at the close of business on the record date of 13 May 2011.

12. PUBLIC TAKEOVERS AND OFFERS
There have been no public takeover offers by third parties in respect of Old Cape Shares during
Old Cape’s last and current financial year. New Cape has not been the subject of any such offers.

13. THE CITY CODE ON TAKEOVERS AND MERGERS
Old Cape is a public limited company incorporated and centrally managed and controlled in the
UK and is therefore subject to the Takeover Code and in particular the mandatory takeover
provisions in Rule 9 of the Takeover Code. In the event of a takeover, the squeeze out provisions
in section 979 of the 2006 Act would be applicable, subject to the offeror acquiring the requisite
percentage of the share capital to which the offer relates. The provisions of the Takeover Code will
continue to apply to New Cape following the Scheme Effective Date as it is a public limited
company incorporated in Jersey the shares of which will be admitted to trading on a regulated
market in the United Kingdom.

14. CREST
CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by
a certificate and transferred otherwise than by a written instrument. The New Cape Articles permit
the holding of New Cape Shares under the CREST system. The Old Cape Shares were admitted to
CREST on 27 January 2003, the date that the Old Cape Shares were first admitted to trading on
AIM. Settlement of transactions in New Cape Shares following Admission may continue to take
place within CREST if any Shareholder so wishes. However, CREST is a voluntary system and
holders of New Cape Shares who wish to receive and retain share certificates will be able to
do so.

15. TAXATION
Potential investors are referred to Part VI of this Prospectus for details of the taxation of New Cape
and of New Cape Shareholders in the UK, Singapore and Jersey.
SHAREHOLDERS WHO ARE IN ANY DOUBT AS TO THEIR TAX POSITION OR WHO ARE
SUBJECT TO TAX IN JURISDICTIONS OTHER THAN THE UK ARE STRONGLY ADVISED TO
CONSULT THEIR OWN PROFESSIONAL ADVISERS IMMEDIATELY.




                                                 43
                                             PART II

       HISTORICAL FINANCIAL INFORMATION ON THE GROUP

The Group’s Historical Financial Information for the years ended 31 December 2008, 31 December
2009 and 31 December 2010 is set out in Part B of this Part II.
PricewaterhouseCoopers LLP, whose address is The Atrium, 1 Harefield Road, Uxbridge, Middlesex,
United Kingdom, are the auditors of Old Cape and New Cape and have audited the financial
information of Old Cape for the years ended 31 December 2008, 31 December 2009 and
31 December 2010. PricewaterhouseCoopers LLP is a member of the Institute of Chartered
Accountants in England and Wales.
An emphasis of matter paragraph was included in the auditor’s report for the 2008 Financial
Information in relation to the uncertainty surrounding the potential future claims for industrial
disease compensation. In 2009 Cape engaged independent actuaries to further review the potential
future liability and to quantify a reasonable range of estimates. This new information significantly
reduced the level of uncertainty associated with recognising the liability and the Directors
considered it appropriate to recognise an additional provision of £70.5 million in the Group’s
financial information for the period ending 31 December 2009. As a result an emphasis of matter
paragraph was not required in the audit opinions 2009 Financial Information and the 2010
Financial Information.
Further, an emphasis of matter, similar to the one included in the 2008 auditor’s report, has not
been included in the auditor’s report in Part A of Part II on the Historical Financial Information
in Part B of Part II of this Prospectus. Since then the uncertainty surrounding potential future
claims has been reduced and provided for.
The Historical Financial Information should not be viewed as a likely indicator of future financial
performance. See the section of this Prospectus titled ‘Risk Factors’ and Part III (‘Operating and
Financial Review’).
References in this Part II and in Part III to the “Company” shall refer to Cape plc (“Old
Cape”), a company incorporated in England and Wales with registered number 40203.




                                                44
             PART A – REPORT OF PRICEWATERHOUSECOOPERS LLP




The Directors                                                              Numis Securities Limited
Cape plc (“New Cape”)                                                      10 Paternoster Square
47 Esplanade                                                               London
St Helier                                                                  EC4M 7LT
Jersey
JE1 0BD
Channel Islands                                                                        16 May 2011


Dear Sirs

                                               Old Cape
We report on the financial information set out in Part B below (the “Historical Financial
Information” which consists of financial information of Old Cape (the “Company”) and its
subsidiaries (together the “Group”), for the 12 months ended 31 December 2008, 31 December
2009 and 31 December 2010). The Financial Information has been prepared for inclusion in the
prospectus dated 16 May 2011 (the “Prospectus”) of New Cape on the basis of the accounting
policies set out in Note 1. This report is required by item 20.1 of Annex I to the PD Regulation and
is given for the purpose of complying with that item and for no other purpose.

Responsibilities
The Directors of the Company are responsible for preparing the Historical Financial Information
in accordance with International Financial Reporting Standards as adopted by the European Union.
It is our responsibility to form an opinion as to whether the Historical Financial Information gives
a true and fair view, for the purposes of the Prospectus and to report our opinion to you.
Save for any responsibility which we may have to those persons to whom this report is expressly
addressed and for any responsibility arising under item 5.5.3R(2)(f) of the Prospectus Rules to any
person as and to the extent there provided, to the fullest extent permitted by law we do not
assume any responsibility and will not accept any liability to any other person for any loss suffered
by any such other person as a result of, arising out of, or in connection with this report or our
statement, required by and given solely for the purposes of complying with item 23.1 of Annex I
to the PD Regulation, consenting to its inclusion in the Prospectus.

Basis of opinion
We conducted our work in accordance with the Standards for Investment Reporting issued by the
Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence
relevant to the amounts and disclosures in the financial information. It also included an assessment
of significant estimates and judgments made by those responsible for the preparation of the
financial information and whether the accounting policies are appropriate to the Company’s
circumstances, consistently applied and adequately disclosed.
We planned and performed our work so as to obtain all the information and explanations which
we considered necessary in order to provide us with sufficient evidence to give reasonable




                                                 45
assurance that the financial information is free from material misstatement whether caused by
fraud or other irregularity or error.

Opinion
In our opinion, the Historical Financial Information gives, for the purposes of the Prospectus, a true
and fair view of the state of affairs of the Group as at the dates stated and of its profits/losses,
cash flows and changes in equity for the periods then ended in accordance with International
Financial Reporting Standards as adopted by the European Union.

Declaration
For the purposes of Prospectus Rule 5.5.3R(2)(f) we are responsible for this report as part of the
Prospectus and declare that we have taken all reasonable care to ensure that the information
contained in this report is, to the best of our knowledge, in accordance with the facts and contains
no omission likely to affect its import. This declaration is included in the Prospectus in compliance
with item 1.2 of Annex I to the PD Regulation.


Yours faithfully


PricewaterhouseCoopers LLP
Chartered Accountants




                                                 46
        PART B – HISTORICAL FINANCIAL INFORMATION ON THE GROUP

CONSOLIDATED INCOME STATEMENT
                                                                                   2010            2009         2008
                                                                  Notes             £m              £m           £m
Continuing operations Revenue                                                650.1            655.1           622.7
                                                                          55555            55555           55555
Operating profit before other items                                   5       78.2             70.6            65.0
Amortisation of intangible assets                                             (2.6)            (2.9)           (2.7)
Industrial disease costs                                              5       (0.4)           (74.2)           (5.7)
Exceptional items                                                     4          –                –            (4.1)
                                                                          55555            55555           55555
Operating profit/(loss)                                                        75.2             (6.5)           52.5
                                                                          aaaaa            aaaaa           aaaaa
Share of post tax (losses)/profits from joint ventures                        (0.1)             1.6             0.5
                                                                          55555            55555           55555
Total operating profit/(loss)                                                  75.1             (4.9)           53.0
                                                                          aaaaa            aaaaa           aaaaa
Finance income(a)                                                    10        1.1              1.6             2.8
Finance costs(b)                                                     10      (13.1)           (12.3)          (18.0)
                                                                          55555            55555           55555
Profit/(loss) before tax                                                       63.1            (15.6)           37.8
Income tax (expense)/credit                                          11      (10.8)            14.1            (5.9)
                                                                          55555            55555           55555
Profit/(loss) from continuing operations                                       52.3             (1.5)           31.9
                                                                          aaaaa            aaaaa           aaaaa
Discontinued operations
Profit/(loss) attributable to discontinued operations                12       0.3     –  (0.2)
                                                                          55555 55555 55555
Profit/(loss) for the year                                                    52.6  (1.5) 31.7
                                                                          aaaaa aaaaa aaaaa
Attributable to:
Owners of Cape plc                                                           49.5  (4.1) 30.6
Non controlling interest                                                      3.1   2.6   1.1
                                                                          55555 55555 55555
                                                                             52.6  (1.5) 31.7
                                                                          aaaaa aaaaa aaaaa
Earnings/(loss) per share for profit attributable
  to the owners of Cape plc
From continuing and discontinued operations
– Basic                                                              13        42.6               (3.5)p      26.7p
– Diluted                                                            13        41.0               (3.4)p      26.3p
                                                                             5555               5555        5555
From continuing operations
– Basic                                                              13        42.3               (3.5)p      26.9p
– Diluted                                                            13        40.7               (3.4)p      26.4p
                                                                             5555               5555        5555
(a) Includes £1.0 million (2009: £0.8m, 2008: £2.0 million) of 2006 Creditor Scheme interest.
(b) Includes £4.0 million (2009: nil, 2008: nil) unwind of discount in respect of IDC provision.

The accompanying notes to the Historical Financial Information on pages 52 to 105 form an
integral part of the Historical Financial Information.




                                                           47
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                                                 2010   2009    2008
                                                      Notes       £m     £m      £m
Profit/(loss) for the year                                        52.6   (1.5)   31.7
Other comprehensive income:
Currency translation differences                                 50.7   17.9    42.6
Actuarial gain recognised in the pension scheme         17        1.7    0.2    (3.3)
Movement in restriction of retirement benefit asset
  in accordance with IAS 19                             17       (2.5) (0.7)  2.6
Cash flow hedges – fair value gains                               0.3   2.1  (6.5)
Net investment hedges – fair value (losses)/gains                (0.6)  2.3  (5.5)
Deferred tax on hedges/options                                    0.9  (1.2)  3.3
                                                              55555 55555 55555
Other comprehensive income for the year,
  net of tax                                                      50.5 20.6  33.2
                                                              55555 55555 55555
Total comprehensive income                                       103.1 19.1  64.9
                                                              aaaaa aaaaa aaaaa
Attributable to:
Owners of Cape plc                                               100.2 16.6  63.8
Non controlling interest                                           2.9  2.5   1.1
                                                              55555 55555 55555
                                                                 103.1 19.1  64.9
                                                              aaaaa aaaaa aaaaa




                                               48
CONSOLIDATED BALANCE SHEET
                                                                               2010   2009    2008
                                                               Notes            £m     £m      £m
Non current assets
Intangible assets                                                 14          241.5   210.5   188.0
Property, plant and equipment                                     15          154.3   142.9   152.3
Investments accounted for using equity
  method                                                          16        0.1   0.1   0.6
Retirement benefit asset                                          17        0.1   0.1   0.1
Deferred tax asset                                                18       43.2  35.7  11.9
                                                                       55555 55555 55555
                                                                          439.2 389.3 352.9
                                                                       aaaaa aaaaa aaaaa
Current assets
Inventories                                                       19        8.8  17.3  17.2
Trade and other receivables                                       20      170.1 156.0 184.7
Cash – IDC(c) Scheme funds (restricted)                           21       31.6  33.8  37.5
Cash and cash equivalents(d)                                      22       95.8  66.7  46.1
                                                                       55555 55555 55555
                                                                          306.3 273.8 285.5
                                                                       aaaaa aaaaa aaaaa
Liabilities
Current liabilities
Borrowings                                                        23      (34.4)  (45.4)  (51.7)
Derivative financial instruments                                  24       (4.1)   (4.4)   (6.9)
Trade and other payables                                          25     (100.3)  (95.7) (133.0)
Current tax liabilities                                           26      (13.1)  (11.3)   (9.4)
                                                                       55555 55555 55555
                                                                         (151.9) (156.8) (201.0)
                                                                       55555 55555 55555
Net current assets                                                        154.4   117.0    84.5
                                                                       aaaaa aaaaa aaaaa
Non current liabilities
Borrowings                                                        23     (114.3) (134.9) (159.9)
Retirement benefit obligations                                    17       (6.7)   (5.6)   (5.2)
Deferred tax liabilities                                          18      (16.8)  (12.5)  (11.7)
IDC(c) provision                                                  27      (81.7)  (80.2)   (9.7)
Other provisions                                                  27       (5.3)   (5.4)   (4.7)
                                                                       55555 55555 55555
                                                                         (224.8) (238.6) (191.2)
                                                                       55555 55555 55555
Net assets                                                                368.8   267.7   246.2
                                                                       aaaaa aaaaa aaaaa
Equity attributable to owners of Cape plc
Called up share capital                                           29       29.2   33.3   33.1
Share premium account                                                      10.8    9.2    8.4
Special reserve                                                             1.0    1.0    1.0
Other reserves                                                             (3.0)  (3.6)  (6.8)
Translation reserve                                                       115.1   64.2   46.2
Retained earnings                                                         211.1  160.6  163.6
                                                                       55555 55555 55555
Total equity attributable to the owners of
  Cape plc                                                                364.2 264.7 245.5
                                                                       55555 55555 55555
Non controlling interests                                                   4.6   3.0   0.7
                                                                       55555 55555 55555
Total equity                                                              368.8 267.7 246.2
                                                                       aaaaa aaaaa aaaaa
(c) IDC refers to the Industrial Disease Claims which are funded using Scheme cash.




                                                         49
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                        Share                                                                Non
                                                    Capital &     Special   Retained Translation     Other             controlling
                                                    premium      Reserve*   Earnings     reserve   reserves    Total      interest    Total
                                                          £m          £m         £m          £m         £m      £m             £m      £m
At 1 January 2008                                       40.3         1.0     132.9          3.6        1.9    179.7           1.0    180.7
Profit for the year                                        –           –      30.6            –          –     30.6           1.1     31.7
Other comprehensive income:
Currency translation differences                            –          –          –        42.6          –     42.6             –     42.6
Cash flow hedges – fair value losses in year                –          –          –           –       (6.5)    (6.5)            –     (6.5)
Net investment hedges – fair value losses in year           –          –          –           –       (5.5)    (5.5)            –     (5.5)
Deferred tax on hedges                                      –          –          –           –        3.3      3.3             –      3.3
Actuarial loss recognised in the pension scheme             –          –       (3.3)          –          –     (3.3)            –     (3.3)
Movement in restriction of retirement
  benefit asset in accordance with IAS 19              55–        55–         2.6
                                                                             55          55–       55–         2.6
                                                                                                              55          55–         2.6
                                                                                                                                     55
Total comprehensive (expense)/income for
  the year ended 31 December 2008                      55–        55–         29.9
                                                                             55           42.6
                                                                                         55         (8.7)
                                                                                                   55          63.8
                                                                                                              55           1.1
                                                                                                                          55          64.9
                                                                                                                                     55
Transactions with owners:
Acquisition of non controlling interest                     –          –          –           –          –        –          (1.0)    (1.0)
Reduction in non controlling interest                       –          –          –           –          –        –          (0.4)    (0.4)
Share options
– proceeds from shares issued                           1.2         –            –         –         –          1.2         –          1.2
– value of employee services                              –         –          1.2         –         –          1.2         –          1.2
– deferred tax on share options                        55 –       55–         (0.4)
                                                                             55          55–       55–         (0.4)
                                                                                                              55          55–         (0.4)
                                                                                                                                     55
At 31 December 2008                                     41.5
                                                       aa          1.0
                                                                  aa         163.6
                                                                             aa           46.2
                                                                                         aa         (6.8)
                                                                                                   aa         245.5
                                                                                                              aa           0.7
                                                                                                                          aa         246.2
                                                                                                                                     aa
At 1 January 2009                                       41.5         1.0     163.6         46.2       (6.8)   245.5           0.7    246.2
(Loss)/profit for the year                                 –           –      (4.1)           –          –     (4.1)          2.6     (1.5)
Other comprehensive income:
Currency translation differences                            –          –          –        18.0          –     18.0          (0.1)    17.9
Cash flow hedges – fair value gains in year                 –          –          –           –        2.1      2.1             –      2.1
Net investment hedges – fair value gains in year            –          –          –           –        2.3      2.3             –      2.3
Deferred tax on hedges                                      –          –          –           –       (1.2)    (1.2)            –     (1.2)
Actuarial gain recognised in the pension scheme             –          –        0.2           –          –      0.2             –      0.2
Movement in restriction of retirement
  benefit asset in accordance with IAS 19              55–        55–         (0.7)
                                                                             55          55–       55–         (0.7)
                                                                                                              55          55–         (0.7)
                                                                                                                                     55
Total comprehensive (expense)/income for
  the year ended 31 December 2009                      55–        55–         (4.6)
                                                                             55           18.0
                                                                                         55         3.2
                                                                                                   55          16.6
                                                                                                              55           2.5
                                                                                                                          55          19.1
                                                                                                                                     55
Transactions with owners:
Reduction in non controlling interest                       –          –          –           –          –        –          (0.2)    (0.2)
Share options
– proceeds from shares issued                             1.0          –          –           –          –      1.0             –      1.0
– value of employee services                           55  –      55 –       551.6       55  –     55  –      551.6       55 –       551.6
At 31 December 2009                                     42.5
                                                       aa          1.0
                                                                  aa         160.6
                                                                             aa           64.2
                                                                                         aa         (3.6)
                                                                                                   aa         264.7
                                                                                                              aa           3.0
                                                                                                                          aa         267.7
                                                                                                                                     aa
At 1 January 2010                                       42.5         1.0     160.6         64.2       (3.6)   264.7           3.0    267.7
Profit for the year                                        –           –      49.5            –          –     49.5           3.1     52.6
Other comprehensive income:
Currency translation differences                            –          –          –        50.9          –     50.9          (0.2)    50.7
Cash flow hedges – fair value gains in year                 –          –          –           –        0.3      0.3             –      0.3
Net investment hedges – fair value losses in year           –          –          –           –       (0.6)    (0.6)            –     (0.6)
Deferred tax on hedges                                      –          –          –           –        0.9      0.9             –      0.9
Actuarial gain recognised in the pension scheme             –          –        1.7           –          –      1.7             –      1.7
Movement in restriction of retirement benefit
  asset in accordance with IAS 19                      55–        55–         (2.5)
                                                                             55          55–       55–         (2.5)
                                                                                                              55          55–         (2.5)
                                                                                                                                     55
Total comprehensive income/(expense) for
  the year ended 31 December 2010                      55–        55–         48.7
                                                                             55           50.9
                                                                                         55         0.6
                                                                                                   55         100.2
                                                                                                              55           2.9
                                                                                                                          55         103.1
                                                                                                                                     55
Transactions with owners:
Cancellation of deferred shares                          (4.3)         –        4.3           –          –        –             –        –
Dividends                                                   –          –       (4.7)          –          –     (4.7)            –     (4.7)
Reduction in non controlling interest                       –          –          –           –          –        –          (1.3)    (1.3)
Share options
– proceeds from shares issued                             1.8          –          –           –          –      1.8             –      1.8
– value of employee services                           55  –      55 –       552.2       55  –     55  –      552.2       55 –       552.2
At 31 December 2010                                     40.0
                                                       aa          1.0
                                                                  aa         211.1
                                                                             aa          115.1
                                                                                         aa         (3.0)
                                                                                                   aa         364.2
                                                                                                              aa           4.6
                                                                                                                          aa         368.8
                                                                                                                                     aa
*TheSpecial Reserve was created in 2007 by court order by cancellation of the share premium and retained deficit. The Special Reserve is
undistributable and restrictions exist over its use.




                                                                  50
CONSOLIDATED CASH FLOW STATEMENT                                               2010            2009            2008
                                                               Notes            £m              £m              £m
Cash flows from operating activities
Cash generated from operating activities                          31       98.5   84.4   70.9
 Interest received                                                          0.1    1.2    2.6
 Interest received on restricted funds                                        –   (0.5)  (2.0)
                                                                       55555 55555 55555
 Net interest received                                                      0.1    0.7    0.6
Interest paid                                                              (8.3) (11.4) (17.0)
Issue costs of new bank loans                                                 –      –   (1.5)
Tax paid                                                                  (11.5)  (7.6)  (4.8)
                                                                       55555 55555 55555
Net cash inflow from operating activities                                  78.8   66.1   48.2
                                                                       aaaaa aaaaa aaaaa
Cash flows from investing activities
Purchase of businesses net of cash acquired                                 –      –   (3.6)
Purchase of businesses deferred consideration paid                          –      –   (0.9)
Proceeds from sale of property, plant and equipment               31      0.3    1.1    2.7
Purchase of property, plant and equipment                               (11.9) (10.0) (19.9)
Purchase of intangible assets                                               –   (0.3)     –
                                                                     55555 55555 55555
Net cash used in investing activities                                   (11.6)  (9.2) (21.7)
                                                                     aaaaa aaaaa aaaaa
Cash flows from financing activities
Net proceeds from issue of ordinary shares                                1.8    1.0    1.2
Proceeds from borrowings                                                  3.6      –    8.6
Finance lease principal payments                                         (6.1)  (9.0)  (6.1)
Dividends paid to Company shareholders                                   (4.7)     –      –
Repayment of borrowings                                           32    (34.3) (20.4) (20.0)
Settlement of loan notes                                                    –   (3.7)     –
Dividend paid to non controlling interest                                (1.3)  (0.2)  (0.4)
                                                                     55555 55555 55555
Net cash used in financing activities                                   (41.0) (32.3) (16.7)
                                                                     aaaaa aaaaa aaaaa
Exchange gains/(losses) on cash, cash equivalents
  and bank overdrafts                                                      3.3  (2.2)  5.5
                                                                       aaaaa aaaaa aaaaa
Net increase in cash, cash equivalents and
  bank overdrafts                                                               29.5            22.4            15.3
Cash, cash equivalents and bank overdrafts at
  beginning of year(d)                                                    66.3  43.9  28.6
                                                                       55555 55555 55555
Cash, cash equivalents and bank overdrafts at
  end of year                                                     22      95.8  66.3  43.9
                                                                       aaaaa aaaaa aaaaa
Reconciliation of net cash flow to movement
  in net debt (excluding IDC Scheme funds)(e)
Net increase in cash and cash equivalents                                  29.5    22.4    15.3
Repayment of borrowings                                           32       34.3    20.4    20.0
Settlement of loan notes                                                      –     3.7       –
Movement in obligations under finance leases                                5.5     7.4    (0.2)
Proceeds from borrowings                                                   (3.6)      –    (8.6)
Other movements in net debt during the year                                (5.0)   (2.0)   (2.8)
                                                                       55555 55555 55555
Movements in net debt during the year                                      60.7    51.9    23.7
                                                                       55555 55555 55555
Net debt(e) (excluding IDC Scheme funds) – opening                       (113.6) (165.5) (189.2)
Net debt(e) (excluding IDC Scheme funds) – closing                        (52.9) (113.6) (165.5)
                                                                       aaaaa aaaaa aaaaa
(e) Net debt (excluding IDC Scheme funds) is calculated by deducting current and non current borrowings from cash and
    cash equivalents.




                                                         51
NOTES TO THE FINANCIAL INFORMATION

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of the consolidated financial
information is set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.

1.1   Basis of preparation
      The consolidated financial information has been prepared in accordance with the Listing
      Rules, International Financial Reporting Standards (IFRS) as adopted by the European Union
      (IFRSs as adopted by the EU), IFRIC interpretations and the Companies Act 2006 applicable
      to companies reporting under IFRS. The consolidated financial information has been
      prepared under the historical cost convention as modified by derivatives at fair value
      through profit or loss.
      The preparation of financial information in conformity with IFRS requires the use of certain
      critical accounting estimates. It also requires management to exercise its judgement in the
      process of applying the group’s accounting policies. The areas involving a higher degree of
      judgement or complexity, or areas where assumptions and estimates are significant to the
      consolidated financial information are disclosed in note 2.

1.2   Going concern
      After making enquiries, the directors have a 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 financial
      information.

1.3   Changes in accounting policies and disclosures
      (a)  New and amended standards adopted by the Group
           The following new standards and amendments to standards are mandatory for the first
           time for the financial year beginning 1 January 2010:
            – IFRS 3 (revised), ‘Business combinations’, and consequential amendments to IAS 27,
              ‘Consolidated and separate financial statements’, IAS 28, ‘Investments in associates’,
              and IAS 31, ‘Interests in joint ventures’, are effective prospectively to business
              combinations for which the acquisition date is on or after the beginning of the first
              annual reporting period beginning on or after 1 July 2009.
            – The revised standard continues to apply the acquisition method to business
              combinations but with some significant changes compared with IFRS 3. For example,
              all payments to purchase a business are recorded at fair value at the acquisition date,
              with contingent payments classified as debt subsequently re-measured through the
              income statement. There is a choice on an acquisition-by-acquisition basis to measure
              the non-controlling interest in the acquiree either at fair value or at the
              non-controlling interest’s proportionate share of the acquiree’s net assets. All
              acquisition-related costs are expensed. This revision has not had a material impact on
              the Financial Information of the Group.
            – IAS 27 (revised) (effective 1 July 2009) requires the effects of all transactions with
              non-controlling interests to be recorded in equity if there is no change in control
              and these transactions will no longer result in goodwill or gains and losses. The
              standard also specifies the accounting when control is lost. Any remaining interest
              in the entity is re-measured to fair value, and a gain or loss is recognised in profit




                                                52
              or loss. IAS 27 (revised) has had no impact on the current period, as none of the
              non-controlling interests have a deficit balance; there have been no transactions
              whereby an interest in an entity is retained after the loss of control of that entity.
              The dividend paid during the year of £1.3 million has been treated as a reduction
              in non controlling interest and in accordance with the revised standard.
            – IFRS 1 (revised) ‘First time adoption’ is not applicable to the group.
      (b)   New and amended standards, and interpretations mandatory for the first time for the
            financial year beginning 1 January 2010 but not currently relevant to the group
            (although they may affect the accounting for future transactions and events):
            – IFRIC 12, ‘Service concession arrangements’ effective 30 March 2009.
            – IFRIC 15, ‘Arrangements for construction of real estates’ effective 1 January 2009
              but EU endorsed for 1 January 2010
            – IFRIC 16, ‘Hedges of a net investment in a foreign operation’ effective 1 July 2009.
            – IFRIC 17, ‘Distributions of non cash assets to owners’ effective 1 July 2009
            – IFRIC 18, ‘Transfers of assets from customers’, effective for transfer of assets
              received on or after 1 July 2009.
            – IAS 39 (amendment), ‘Financial instruments: Recognition and measurement’, on
              eligible hedged items effective 1 July 2009 (EU endorsed on 1 October 2009).
            – IFRS 2 (amendment), ‘Group cash-settled share-based payment transactions’, effective
              from 1 January 2010.
            – IFRS 5 (amendment), ‘Non-current assets held for sale and discontinued operations’.
              The amendment clarifies that IFRS 5 specifies the disclosures required in respect of
              non-current assets (or disposal groups) classified as held for sale or discontinued
              operations. It also clarifies that the general requirement of IAS 1 still apply, in
              particular paragraph 15 (to achieve a fair presentation) and paragraph 125 (sources
              of estimation uncertainty) of IAS 1.
      (c)   New standards, amendments and interpretations issued but not effective for the
            financial year beginning 1 January 2010 and not early adopted:
            – IFRS 9, ‘Financial instruments’ issued in November 2009 and amended in October
              2010. This standard is part of the process to replace IAS 39, ‘Financial instruments:
              recognition and measurement’.
            – Revised IAS 24 (revised), ‘Related party disclosures’, issued in November 2009.
            – ‘Classification of rights issues’ (amendment to IAS 32), issued in October 2009.
            – IFRIC 19, ‘Extinguishing financial liabilities with equity instruments’, effective 1 July
              2010.
            – ‘Prepayments of a minimum funding requirement’ (amendments to IFRIC 14). The
              amendments correct an unintended consequence of IFRIC 14, ‘IAS 19 – The limit
              on a defined benefit asset, minimum funding requirements and their interaction’.

2.     ACCOUNTING POLICIES
The Group’s key accounting policies are set out below. These policies have been prepared on a
historic cost basis and under recognition and measurement requirements of IFRS standards in
effect that apply to accounting periods beginning on or after 1 January 2010.




                                                 53
Basis of consolidation
(a)   A business combination is recognised where separate legal entities or businesses have been
      brought together within the Group.
      Subsidiaries are all entities (including special purpose entities) over which the group has the
      power to govern the financial and operating policies generally accompanying a shareholding
      of more than one half of the voting rights. The existence and effect of potential voting rights
      that are currently exercisable or convertible are considered when assessing whether the
      group controls another entity. Subsidiaries are fully consolidated from the date on which
      control is transferred to the group. They are de-consolidated from the date that control
      ceases.
      The Group uses the acquisition method of accounting to account for business combinations.
      The consideration transferred for the acquisition of a subsidiary is the fair value of the assets
      transferred, the liabilities incurred and the equity interests issued by the group. The
      consideration transferred includes the fair value of any asset or liability resulting from a
      contingent consideration arrangement. Acquisition-related costs are expensed as incurred.
      Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
      combination are measured initially at their fair values at the acquisition date. On an
      acquisition by- acquisition basis, the group recognises any non-controlling interest in the
      acquiree either at fair value or at the non-controlling interest’s proportionate share of the
      acquiree’s net assets.
      Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to
      reflect changes in consideration arising from contingent consideration amendments. Cost
      also includes direct attributable costs of investment.
      The excess of the consideration transferred, the amount of any non-controlling interest in
      the acquiree and the acquisition-date fair value of any previous equity interest in the
      acquiree over the fair value of the group’s share of the identifiable net assets acquired is
      recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary
      acquired in the case of a bargain purchase, the difference is recognised directly in the
      statement of comprehensive income.

(b)   Transactions with non-controlling interests
      The group treats transactions with non-controlling interests as transactions with equity
      owners of the group. For purchases from non-controlling interests, the difference between
      any consideration paid and the relevant share acquired of the carrying value of net assets
      of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling
      interests are also recorded in equity. When the group ceases to have control or significant
      influence, any retained interest in the entity is remeasured to its fair value, with the change
      in carrying amount recognised in profit or loss.
      The fair value is the initial carrying amount for the purposes of subsequently accounting for
      the retained interest as an associate, joint venture or financial asset. In addition, any amounts
      previously recognised in other comprehensive income in respect of that entity are
      accounted for as if the group had directly disposed of the related assets or liabilities. This
      may mean that amounts previously recognised in other comprehensive income are
      reclassified to profit or loss.

(c)   Joint ventures
      Joint ventures are accounted for using the equity method of accounting and are initially
      recognised at cost. The group’s investment in the joint venture includes goodwill identified
      on acquisition, net of any accumulated impairment loss.




                                                  54
      The Group’s share of the joint venture’s post-acquisition profits or losses is recognised in
      the income statement, and its share of post-acquisition movements in other comprehensive
      income is recognised in other comprehensive income. The cumulative post-acquisition
      movements are adjusted against the carrying amount of the investment. When the group’s
      share of losses in a joint venture equals or exceeds its interest in the joint venture, including
      any other unsecured receivables, the group does not recognise further losses, unless it has
      incurred obligations or made payments on behalf of the joint venture.
      If the ownership interest in a joint venture is reduced but significant influence is retained,
      only a proportionate share of the amounts previously recognised in other comprehensive
      income are reclassified to profit or loss where appropriate.
      Unrealised gains on transactions between the Group and the joint ventures are eliminated to
      the extent of the Group’s interest in the joint venture. Unrealised losses are also eliminated
      unless the transaction provides evidence of an impairment of the asset transferred.
      Dilution gains and losses arising in joint ventures are recognised in the income statement.
(d)   Inter-company transactions, balances and unrealised gains on transactions between Group
      companies are eliminated. Unrealised losses are also eliminated. Accounting policies of
      subsidiaries have been changed where necessary to ensure consistency with the policies
      adopted by the Group.
(e)   All subsidiary undertakings have year end dates of 31 December except Cape Industrial
      Services Group Limited which prepares accounts to 31 March and last prepared annual
      accounts to 31 March 2010.

Foreign currencies
(a)   Functional and presentational currency
      Items included in the financial information of each of the Group’s entities are measured
      using the currency of the primary economic environment in which the entity operates
      (‘functional currency’). The consolidated financial information is presented in GB pounds,
      which is the Group’s functional and presentational currency.
(b)   Transactions and balances
      Foreign currency transactions are translated into the functional currency using exchange
      rates prevailing at the date of the transactions. Foreign exchange gains and losses resulting
      from the settlement of such transactions and from the translation at period end exchange
      rates of monetary assets and liabilities denominated in foreign currencies are recognised in
      the income statement, except when deferred in equity as qualifying cash flow hedges and
      qualifying net investment hedges.

(c)   Group companies
      The results and financial position of all Group entities that have a functional currency
      different from the presentation currency are translated into the presentation currency as
      follows:
      – assets and liabilities for each balance sheet presented are translated at the closing
        exchange rate at the date of the balance sheet;
      – income and expenses for each income statement are translated at average exchange rates
        (unless this average is not a reasonable approximation of the cumulative effect of the rates
        prevailing on the transaction dates, in which case the income and expenses are translated
        at the rate on the dates of the transaction); and
      – all resulting exchange differences are recognised as a separate component of equity.




                                                  55
      On consolidation, exchange differences arising from the translation of the net investment in
      foreign operations, and of borrowings and other currency instruments designated as hedges
      of such investments, are taken to other comprehensive income. When a foreign operation is
      partially disposed of or sold, exchange differences that were recognised in equity are
      recognised in the income statement as part of the gain or loss on sale.
      Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated
      as assets and liabilities of the foreign entity and translated at the closing exchange rate.

Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s
share of the identifiable net assets acquired. Goodwill is tested annually for impairment and carried
at cost less accumulated impairment losses. Goodwill is allocated to the appropriate cash
generating unit for the purpose of impairment testing. Any impairment is recognised immediately
through the income statement and is not subsequently reversed.

Intangible assets
Intangible assets are recognised if it is probable that there will be future economic benefits
attributable to the asset, the cost of the asset can be measured reliably, the asset is separately
identifiable and there is control over the use of the asset. The assets are amortised on a straight
line basis over the period over which the Group expects to benefit from these assets, ranging from
three to five years.

Property, plant and equipment
Property, plant and equipment is stated at cost net of accumulated depreciation and any provision
for impairment. Cost comprises purchase cost together with any incidental costs of acquisition.
Certain land and buildings are held at previous revalued amounts less accumulated depreciation as
these amounts have been taken as their deemed cost at the date of transition to IFRS in
accordance with the exemption under IFRS 1 ‘First-time Adoption of IFRS’.
Depreciation is provided to write off the cost less the estimated residual value of tangible fixed
assets by equal instalments over their estimated useful economic lives with the exception that no
depreciation is provided on freehold land. The asset’s residual values and useful economic lives are
reviewed, and adjusted as appropriate, at each balance sheet date. The following depreciation
periods are applied:
– freehold buildings – 50 years;
– leasehold land and buildings – the shorter of 50 years and the period of the lease; and
– plant, machinery and fixtures and fittings – 1-7 years.
Investment properties are stated at cost less any provision for impairment.

Impairment of assets (excluding goodwill)
The entity assesses at each reporting date whether an asset may be impaired. If any such indication
exists, the Group makes an estimate of the assets recoverable amount. An asset’s recoverable
amount is the higher of an asset’s fair value less costs to sell and its value in use. In assessing
value in use, the estimated future cash flows attributable to the asset are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset.
Where the recoverable amount is estimated to be less than its carrying amount, the carrying
amount is reduced to its recoverable amount. An impairment loss is recognised immediately in the
income statement.




                                                 56
Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost.

Trade and other receivables
Trade receivables are recognised and carried at fair value and subsequently measured at amortised
cost, less any provision for impairment. The amount of the provision is the difference between the
asset’s carrying amount and the present value of estimated future cash flows.

Leases
(a)   Finance leases
      Where assets are financed by leasing agreements that give rights approximating to ownership,
      the amount representing the outright purchase price is capitalised and the corresponding
      leasing commitments are shown as obligations to the lessor. The relevant assets are depreciated
      in accordance with the Group’s depreciation policy or over the lease term if shorter. Net
      finance charges, calculated on the reducing balance method, are included in finance costs.

(b)   Operating leases
      Payments made under operating leases, net of any incentives received from the lessor, are
      charged to the income statement on a straight line basis over the period of the lease.

Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s
financial information in the period in which the dividends are approved by the Company’s
shareholders.

Critical accounting estimates and judgements
The preparation of the financial information requires management to make judgements and
estimates that affect the reported amounts of assets and liabilities at the date of the financial
information and the reported amounts of revenue during the reporting period. Actual results could
differ from these estimates. Information about such judgements and estimations are contained in
individual accounting policies.
The key judgements and sources of estimation uncertainty that could cause an adjustment to be
required to the carrying amount of asset or liabilities within the next accounting period are
outlined below:

(a)   Carrying amount of certain assets and goodwill
      In reviewing the carrying value of certain assets and goodwill, estimates of future financial
      performance of the assets and businesses concerned are taken into account. The estimates
      inherently include assumptions about internal and external factors that, whilst considered
      reasonable at the date of these accounts, may change in the future from those levels
      currently expected. The carrying value of goodwill has been considered fully in note 14.

(b)   Revenue recognition and assessment of construction contract performance
      Revenue and profit on long-term construction contracts are usually recognised according to
      the stage of completion of the contract, which is calculated by reference to the estimated
      contract revenues and expected costs including provisions. The judgements made in this
      process are considered to be appropriate; however, a change in these estimates would have
      an impact on the amount of revenue, costs and profits recognised.

(c)   Industrial disease claims
      Provision is made for compensation for industrial disease claims where it is possible to
      estimate the liability with sufficient reliability. The key critical accounting estimates and
      assumptions in respect of the provisions for industrial disease are detailed in note 27.




                                                 57
(d)   Deferred tax assets
      Deferred tax has only been recognised where it is assumed that the deferred tax asset is
      recoverable. The accumulated losses reported by the Group for tax purposes in various tax
      jurisdictions have not been recognised as deferred tax assets where the Directors hold the
      view that it is unlikely that the Group will be able to utilise them in the future. Further
      information on the assumptions used is disclosed in note 18.

(e)   Pensions and other post retirement costs
      The liability in respect of the Group’s retirement benefit obligations is dependent on a
      number of estimates including those relating to mortality, inflation, salary increases and the
      rate at which liabilities are discounted. Any change in these assumptions would impact the
      retirement benefit obligation recognised. Further information on the assumptions used is
      disclosed in note 17.

Compensation for industrial disease
Provision is made for compensation for industrial disease where it is possible to estimate the
liability with sufficient reliability. This is in respect of both claims lodged and outstanding at the
period end and future potential claims. Benefit is recognised for insurance recoveries for claims
provided when they are anticipated with virtual certainty.

Provisions
Provisions for liabilities are made where the timing or amount of settlement is uncertain. A
provision is recognised when: the Group has a present legal or constructive obligation as a result
of past events; it is probable that an outflow of resources will be required to settle the obligation
and the amount has been reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle
the obligation using a pre-tax rate that reflects current market assessments of the time value of
money and risks specific to the obligation. The charge incurred in respect of the unwind of the
discount is recognised in finance costs in the income statement.

Inventories
Inventories which include raw materials and work in progress are stated at the lower of cost and
net realisable value. Raw materials are valued based on first in first out method.
Net realisable value is the estimated selling price in the ordinary course of business less selling
expenses. Allowance is made for obsolete and slow moving items based on annual usage.

Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods
and services in the ordinary course of the Group’s activities. Revenue is shown net of value added
tax, returns, rebates and discounts and after eliminating sales within the Group. Revenue
recognition in relation to construction contracts is described in the accounting policy for
construction contracts. Revenue is recognised in relation to non-construction contracts when the
service is rendered.

Construction contracts
Contracts are undertaken for customers either on a short or long-term basis. For short-term
contracts, work done is substantially billed as performed and for long-term contracts, work is
carried out on a substantially fixed or limited-price basis. For short-term contracts, revenue and
profit are recognised according to work executed. Amounts taken to revenue in respect of work
done but not billed are included within amounts recoverable on contracts. Costs incurred,
including an appropriate allocation of overheads and attributable profits, in respect of long-term
contracts are included in work in progress net of progress payments received and provisions for




                                                 58
foreseeable losses. Provision is made in full for any losses as soon as they can be foreseen. Any
payments on account or provisions for foreseeable losses in excess of contract balances are
included in trade and other payables. Revenue and attributable profit on long-term contracts is
recognised according to the percentage of estimated total contract value completed or the
achievement of contractual milestones provided that the outcome of the contract can be assessed
with reasonable certainty.

Taxation
Current tax, including UK corporation tax and foreign tax is provided at amounts expected to be
paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted
by the balance sheet date.
Deferred income tax is recognised, using the full liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amount in the consolidated
financial information. Deferred income tax is determined using tax rates (and laws) that have been
enacted, or substantially enacted, by the balance sheet date and are expected to apply when the
related deferred tax asset is realised or deferred tax liability is settled.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profits
will be available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries
and associates, except where the timing of the reversal of the temporary difference is controlled
by the Group and it is probable that the temporary difference will not be reversed in the
foreseeable future.

Exceptional items
Exceptional items represent income and expenses relating to non-recurring transactions that are
significant, by virtue of their size or nature, and therefore relevant to understanding the Group’s
financial performance and are shown separately to provide a better indication of the underlying
results of the business.

Employee benefits
The Group operates both defined benefit and defined contribution schemes.
A defined contribution scheme is a pension scheme under which the Group pays fixed
contributions into a separate entity. The Group has no legal or constructive obligation to pay
further contributions if the fund does not hold sufficient assets to pay all employees the benefits
relating to employment in the current or prior periods. The pension expense for defined
contribution schemes represents contributions payable in the year.
A defined benefit scheme is a pension scheme that is not a defined contribution scheme. The asset
recognised in the balance sheet in respect of the defined benefit scheme is the present value of
the defined benefit obligation at the balance sheet date less the fair value of the plan assets. The
defined benefit obligation is calculated tri-annually by independent actuaries using the projected
unit method and this valuation is updated at each balance sheet date. The present value of the
defined benefit obligation is determined by discounting the estimated future cash outflows using
interest rates of high quality corporate bonds that are denominated in the currency in which the
benefits will be paid and that have terms to maturity approximating to the terms of the related
pension liability.
Current and past service costs, finance costs and expected returns on assets are charged to
operating profit. Actuarial gains and losses arising from new valuations and from updating the latest
actuarial valuation to reflect conditions at the balance sheet date are recognised in full in the
statement of recognised income and expense.




                                                 59
The pension schemes’ deficits or surpluses, (to the extent that any surpluses are considered
recoverable), are recognised in full and presented on the face of the balance sheet.
Under IFRIC 14 the recoverability of a surplus must be assessed against the minimum funding
requirements of the pension scheme.
The Group operates gratuity schemes in certain overseas countries. These are accounted for in
accordance with IAS 19 and accounting follows the same principles as for a defined benefit
scheme.

Accounting for derivative financial instruments and hedging activities
The Group uses derivative financial instruments such as forward currency contracts and interest
rate swaps to hedge its risks associated with foreign currency and interest rate fluctuations.
Derivatives are initially recognised at fair value on the date the contract is entered into and are
subsequently remeasured at their fair value.
The fair value of forward currency contracts is calculated by reference to current forward
exchange rates for contracts with similar maturity profiles. The fair value of interest rate swaps is
determined by reference to market values of similar instruments.
For the purpose of hedge accounting, hedges are classified as:
– net investment hedges when hedging the exposure to changes in the value of the Group’s
  interests in the net assets of foreign operations; and
– cash flow hedges when hedging exposure to variability in cash flows that is either attributable
  to a particular risk associated with a recognised asset or liability or a highly probable forecast
  transaction.
The Group formally designates and documents the relationship between the hedging instrument
and the hedged item at the inception of the transaction, as well as its risk management objectives
and strategy for undertaking various hedge transactions. The documentation also includes
identification of the hedging instrument, the hedged item or transaction, the nature of the risk
being hedged and how the Group will assess the effectiveness of the hedging instruments in
offsetting the exposure to changes in the fair value of the hedge or the cash flows attributable to
the hedged risk. The Group also documents its assessment, both at inception and on an ongoing
basis, of whether the derivatives that are used in the hedging transactions are highly effective in
offsetting changes in fair values or cash flows of the hedged items.
Any gains or losses arising from changes in the fair value of derivatives that do not qualify for
hedge accounting are taken to the income statement. The treatment of gains and losses arising
from revaluing derivatives designated as hedging instruments depends on the nature of the
hedging relationship, as follows:

(a)   Net investment hedges
      For net investment hedges, the gain or loss on the hedging instrument relating to the
      effective portion of the hedge is recognised directly in equity. The gain or loss relating to
      the ineffective portion is recognised immediately in the income statement.
      Gains and losses accumulated in equity are included in the income statement when the
      foreign operation is partially disposed of or sold.

(b)   Cash flow hedges
      For cash flow hedges, the effective portion of the gain or loss on the hedging instrument
      is recognised directly in equity, while the ineffective portion is recognised in the income
      statement. Amounts taken to equity are transferred to the income statement when the
      hedged transaction affects the income statement.




                                                 60
      If the hedging instrument expires or is sold, terminated or exercised without replacement
      or rollover, or if its designation as a hedge is revoked, any cumulative gain or loss existing
      in equity at that time remains in equity and is recognised when the forecast transaction is
      ultimately recognised in the income statement. When a forecast transaction is no longer
      expected to occur, the cumulative gain or loss that was reported in equity is immediately
      transferred to the income statement.

Borrowings
Borrowings are recognised initially at the amount of the consideration received after deduction of
issue costs. Issue costs together with finance costs are charged to the income statement over the
term of the borrowings and represent a constant proportion of the balance of capital repayments
outstanding.
Cumulative preference shares are classified as liabilities. The dividends on these preference shares
are recognised in the income statement as interest expense.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the balance sheet date.

Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on call with banks, other short-term
highly liquid investments with original maturities of three months or less, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.
Restricted cash relating to the Scheme of Arrangement (see note 35) is excluded from cash and
cash equivalents for the purpose of the Group statement of cash flows.

Share capital
Ordinary shares and deferred shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity
as a deduction, net of tax, from the proceeds.

Share based payments
The Group issues equity settled share based payments to certain employees which must be
measured at fair value and recognised as an expense in the income statement with a
corresponding increase in equity. The fair values of these payments are measured at the dates of
grant using option pricing models, taking into account the terms and conditions upon which the
awards are granted. The fair value is recognised over the period during which employees become
unconditionally entitled to the awards subject to the Group’s estimate of the number of awards
which will lapse, either due to employees leaving the Group prior to vesting or due to non-market
based performance conditions not being met.
Proceeds received on the exercise of share options are credited to share capital and share
premium.
The social security contributions payable in connection with the grant of the share options is
considered an integral part of the grant itself, and the charge will be treated as a cash-settled
transaction.

Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to
the Chief Operating Decision Maker (CODM). The CODM, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the Group
Board.




                                                 61
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk,
cash flow interest rate risk and fair value interest rate risk), credit risk and liquidity risk. The
Group’s overall risk management programme focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the Group’s financial performance. The Group
uses derivative financial instruments to hedge certain risk exposures.
Risk management is carried out by the Group treasury department under policies approved by the
Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close
co-operation with the Group’s operating units. The Board provides written principles for overall
risk management, as well as written policies covering specific areas, such as foreign exchange risk,
interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial
instruments, and investment of excess liquidity. A summary of the Group’s financial risk factors is
contained on page 89-90 of this Prospectus.

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 of profit used by the Chief Operating Decision Maker in its review is total
operating profit.




                                                  62
The segment information for the year ended 31 December 2010 is as follows:
                                                                         Far
                                                  Gulf/      CIS,      East/
                                      United     Middle      Med      Pacific    Central
                                    Kingdom        East     & NA        Rim        Costs     Group
2010                                     £m         £m        £m         £m         £m         £m
Continuing operations
Revenue                               273.4      137.7      51.0      188.0        –         650.1
                                    5555       5555       5555      5555        5555       5555
Operating profit/(loss) before
  other items                         28.0  35.4             7.8      14.8  (7.8) 78.2
Amortisation of intangible assets     (0.3)    –               –      (2.3)    –  (2.6)
IDC costs                                –     –               –         –  (0.4) (0.4)
                                    5555 5555             5555      5555 5555 5555
Operating profit/(loss)               27.7  35.4             7.8      12.5  (8.2) 75.2
Share of post tax loss of joint
  ventures                               –          –       (0.1)    –               –     (0.1)
                                    5555       5555       5555 5555             5555 5555
Total operating profit/(loss)         27.7       35.4        7.7  12.5            (8.2)    75.1
Finance income                                                                              1.1
Finance costs                                                                             (13.1)
                                                                                        5555
Profit before tax                                                                          63.1
Taxation                                                                                  (10.8)
                                                                                        5555
Profit from continuing operations                                                          52.3
Discontinued operations
Profit attributable to
  discontinued operations                                                                     0.3
                                                                                           5555
Attributable to:
Owners of Cape plc                                                                           49.5
Non controlling interests                                                                     3.1
                                                                                           5555
                                                                                             52.6
                                                                                           aaaa
There are no significant inter-segment sales.




                                                  63
The segment information for the year ended 31 December 2009 is as follows:
                                                                        Far
                                                 Gulf/      CIS,      East/
                                    United      Middle      Med      Pacific    Central
                                  Kingdom         East     & NA        Rim        Costs     Group
2009                                   £m          £m        £m         £m         £m         £m
Continuing operations
Revenue                           304.7        170.7       48.4      131.3        –         655.1
                                5555         5555        5555      5555        5555       5555
Operating profit/(loss) before
  other items                      25.4  38.6               6.1       7.9   (7.4)  70.6
Amortisation of intangible assets  (0.5)    –                 –      (2.4)     –   (2.9)
IDC costs                             –     –                 –         –  (74.2) (74.2)
                                 5555 5555               5555      5555 5555 5555
Operating profit/(loss)            24.9  38.6               6.1       5.5  (81.6)  (6.5)
Share of post tax profits of
  joint ventures                      –     –               1.6         –            –      1.6
                                 5555 5555               5555      5555        5555 5555
Total operating profit/(loss)      24.9  38.6               7.7       5.5        (81.6)    (4.9)
Finance income                                                                              1.6
Finance costs                                                                             (12.3)
                                                                                        5555
Loss before tax                                                                           (15.6)
Taxation                                                                                   14.1
                                                                                        5555
Loss from continuing operations                                                            (1.5)
Discontinued operations
Loss attributable to
  discontinued operations                                                                    –
                                                                                          5555
Attributable to:
Owners of Cape plc                                                                          (4.1)
Non controlling interests                                                                    2.6
                                                                                          5555
                                                                                            (1.5)
                                                                                          aaaa
There are no significant inter-segment sales.




                                                 64
The segment information for the year ended 31 December 2008 is as follows:
                                                                                                  Far
                                                               Gulf/             CIS,           East/
                                              United          Middle             Med           Pacific         Central
                                            Kingdom             East            & NA             Rim             Costs          Group
2008                                             £m              £m               £m              £m              £m              £m
Continuing operations
Revenue                                       309.0         112.0           54.4            147.3            –                 622.7
                                            5555          5555            5555            5555            5555               5555
Operating profit/(loss) before
  other items                      27.0  23.1                                5.8            16.1   (7.0) 65.0
Amortisation of intangible assets  (0.5)    –                                  –            (2.2)     –  (2.7)
IDC costs                             –     –                                  –               –   (5.7) (5.7)
Exceptional items                     –     –                                  –            (2.7)  (1.4) (4.1)
                                 5555 5555                                5555            5555 5555 5555
Operating profit/(loss)            26.5  23.1                                5.8            11.2  (14.1) 52.5
Share of post tax profits of
  joint ventures                      –     –                                0.5               –                –      0.5
                                 5555 5555                                5555            5555            5555 5555
Total operating profit/(loss)      26.5  23.1                                6.3            11.2            (14.1)    53.0
Finance income                                                                                                         2.8
Finance costs                                                                                                        (18.0)
                                                                                                                   5555
Profit before tax                                                                                                     37.8
Taxation                                                                                                              (5.9)
                                                                                                                   5555
Profit from continuing operations                                                                                     31.9
Discontinued operations
Loss attributable to
  discontinued operations                                                                                                      (0.2)
                                                                                                                             5555
Attributable to:
Owners of Cape plc                                                                                                             30.6
Non controlling interests                                                                                                       1.1
                                                                                                                             5555
                                                                                                                               31.7
                                                                                                                             aaaa
There are no significant inter-segment sales.
Other segment items included in the income statement are as follows:
                                2010                                     2009                                    2008
                                             Exceptional                             Exceptional                              Exceptional
                Depreciation Amortisation          Items Depreciation Amortisation         Items Depreciation Amortisation          Items
                         £m           £m              £m          £m           £m             £m          £m           £m              £m
United
  Kingdom              3.8          0.3              –          4.1          0.5             –           4.4         0.5               –
Gulf/Middle
  East                 5.1             –             –          4.8             –            –           3.6             –             –
CIS, Med &
  NA                   2.0             –             –          1.4             –            –           1.7             –             –
Far East/
  Pacific Rim       6.5          2.3            –            5.5          2.4           –            5.6          2.2            2.7
Central Costs         –            –            –              –            –           –              –            –            1.4
                  555          555            555          555          555           555          555          555            555
Group              17.4          2.6             –          15.8          2.9            –          15.3          2.7            4.1
                  aaa          aaa            aaa          aaa          aaa           aaa          aaa          aaa            aaa




                                                                 65
The Group operates in the following geographic areas:
                                                                          Revenue (based on location
                                                                                of the entity)
                                                                       2010          2009         2008
                                                                        £m            £m           £m
Continuing operations:
United Kingdom                                                         273.4         304.7         309
Gulf/Middle East                                                       137.7         170.7         112
CIS, Med & NA                                                           51.0          48.4         54.4
  Australia                                                            134.3          96.9         122
  Other Far East/Pacific Rim                                            53.7          34.4         25.3
Total Far East/Pacific Rim                                             188.0         131.3        147.3
Central                                                                    –             –            –
                                                              5555 5555 5555
Total                                                           650.1 655.1 622.7
                                                              aaaa aaaa aaaa
Segment assets consist primarily of property, plant and equipment, investments, intangible assets,
inventories and trade and other receivables. Unallocated assets comprise deferred taxation and
cash.
Segment liabilities comprise operating liabilities. Unallocated liabilities comprise items such as
taxation and borrowings including related hedging transactions.
The segment assets and liabilities at 31 December 2010 and capital expenditure for the year then
ended are as follows:
                             United      Gulf/   CIS, Med  Far East/       Central
                           Kingdom Middle East      & NA Pacific Rim         Costs Unallocated    Group
                                £m         £m         £m          £m          £m           £m       £m
Assets – continuing         78.2        129.9     33.4       317.0         46.0        139.0      743.5
Assets – discontinued        2.0            –        –           –            –            –        2.0
                           555         555       555        555           555         555        555
Total assets                80.2        129.9     33.4       317.0         46.0        139.0      745.5
                           aaa         aaa       aaa        aaa           aaa         aaa        aaa
Non current assets
  included within total
  assets are as follows:
Continuing                  25.7        72.8      16.5       266.8         12.2         43.2      437.2
Discontinued                 2.0           –         –           –            –            –        2.0
                           555         555       555        555           555         555        555
Total non current assets    27.7        72.8      16.5       266.8         12.2         43.2      439.2
                           555         555       555        555           555         555        555
Liabilities – continuing    27.7        34.4      10.5        30.8         89.5        182.7      375.6
Liabilities – discontinued   1.1           –         –           –            –            –        1.3
                           555         555       555        555           555         555        555
Total liabilities           28.8        34.4      10.5        30.8         89.5        182.7      376.7
                           aaa         aaa       aaa        aaa           aaa         aaa        aaa
Capital expenditure –
   property, plant &
   equipment                 1.6         4.3       2.0        4.5           –            –        12.4
                           555         555       555        555           555         555        555
Capital expenditure –
   intangible assets           –          –         –          –             –           –         –
                           aaa         aaa       aaa        aaa           aaa         aaa        aaa




                                                 66
Segment assets and liabilities are reconciled to the Group assets and liabilities as follows:
                                                                                     Assets   Liabilities
                                                                                       £m            £m
Segment assets/liabilities                                                          606.5         194.0
Unallocated:
– Deferred tax                                                                       43.2         16.8
– Current tax                                                                           –         13.1
– Cash                                                                               95.8            –
– Current borrowings                                                                    –         34.4
– Non current borrowings                                                                –        114.3
– Derivatives                                                                           –          4.1
                                                                                   555          555
Total assets/liabilities                                                            745.5        376.7
                                                                                   aaa          aaa
The segment assets and liabilities at 31 December 2009 and capital expenditure for the year then
ended are as follows:
                             United      Gulf/   CIS, Med  Far East/    Central
                           Kingdom Middle East      & NA Pacific Rim      Costs Unallocated       Group
                                £m         £m         £m          £m       £m           £m          £m
Assets – continuing           85.0      84.9      24.0       310.2       54.5       102.4        661.0
Assets – discontinued          2.1         –         –           –          –           –          2.1
                             555       555       555        555         555        555          555
Total assets                  87.1      84.9      24.0       310.2       54.5       102.4        663.1
                             aaa       aaa       aaa        aaa         aaa        aaa          aaa
Non current assets
  included within total
  assets are as follows:
Continuing                  28.5        23.7       9.4       276.0       13.8        35.9        387.3
Discontinued                 2.0           –         –           –          –           –          2.0
                           555         555       555        555         555        555          555
Total non current assets    30.5        23.7       9.4       276.0       13.8        35.9        389.3
                           555         555       555        555         555        555          555
Liabilities – continuing    34.6        37.1       4.0        21.3       88.6       208.5        394.1
Liabilities – discontinued   1.3           –         –           –          –           –          1.3
                           555         555       555        555         555        555          555
Total liabilities           35.9        37.1       4.0        21.3       88.6       208.5        395.4
                           aaa         aaa       aaa        aaa         aaa        aaa          aaa
Capital expenditure –
   property, plant &
   equipment                 2.7         3.0       1.4        4.5          –          –          11.6
                           555         555       555        555         555        555          555
Capital expenditure –
   intangible assets         0.3         –          –          –           –          –           0.3
                           aaa         aaa       aaa        aaa         aaa        aaa          aaa




                                                 67
Segment assets and liabilities are reconciled to the Group assets and liabilities as follows:
                                                                                     Assets   Liabilities
                                                                                       £m            £m
Segment assets/liabilities                                                          560.7         186.9
Unallocated:
– Deferred tax                                                                       35.7         12.5
– Current tax                                                                           –         11.3
– Cash                                                                               66.7            –
– Current borrowings                                                                    –         45.4
– Non current borrowings                                                                –        134.9
– Derivatives                                                                           –          4.4
                                                                                   555          555
Total assets/liabilities                                                            663.1        395.4
                                                                                   aaa          aaa
The segment assets and liabilities at 31 December 2008 and capital expenditure for the year then
ended are as follows:
                             United      Gulf/   CIS, Med  Far East/    Central
                           Kingdom Middle East      & NA Pacific Rim      Costs Unallocated       Group
                                £m         £m         £m          £m       £m           £m          £m
Assets – continuing           104.4     96.1      26.3       293.8       57.7       58.0         636.3
Assets – discontinued           2.1        –         –           –          –          –           2.1
                             555       555       555        555         555        555          555
Total assets                  106.5     96.1      26.3       293.8       57.7       58.0         638.4
                             aaa       aaa       aaa        aaa         aaa        aaa          aaa
Non current assets
  included within total
  assets are as follows:
Continuing                  33.3        30.6       8.1       253.3       13.0        12.6        350.9
Discontinued                 2.0           –         –           –          –           –          2.0
                           555         555       555        555         555        555          555
Total non current assets    35.3        30.6       8.1       253.3       13.0        12.6        352.9
                           555         555       555        555         555        555          555
Liabilities – continuing    54.2        42.7       7.5        29.7       17.2       239.6        390.9
Liabilities – discontinued   1.3           –         –           –          –           –          1.3
                           555         555       555        555         555        555          555
Total liabilities           55.5        42.7       7.5        29.7       17.2       239.6        392.2
                           aaa         aaa       aaa        aaa         aaa        aaa          aaa
Capital expenditure –
   property, plant &
   equipment                 7.7        10.2       2.2        6.1          –          –          26.2
                           555         555       555        555         555        555          555
Capital expenditure –
   intangible assets           –          –         –          –           –          –           –
                           aaa         aaa       aaa        aaa         aaa        aaa          aaa




                                                 68
Segment assets and liabilities are reconciled to the Group assets and liabilities as follows:
                                                                                                       Assets     Liabilities
                                                                                                         £m              £m
Segment assets/liabilities                                                                             580.4          152.6
Unallocated:
– Deferred tax                                                                                             11.9        11.7
– Current tax                                                                                                 –         9.4
– Cash                                                                                                     46.1           –
– Current borrowings                                                                                          –        51.7
– Non current borrowings                                                                                      –       159.9
– Derivatives                                                                                                 –         6.9
                                                                                                   555            555
Total assets/liabilities                                                                            638.4          392.2
                                                                                                   aaa            aaa
The Group has non-current assets in the following geographic areas:
                                                       Non-Current assets (based on location of the assets)
                                                   Goodwill and intangibles                    Other
                                                  2010      2009        2008       2010        2009         2008
                                                   £m         £m          £m         £m          £m          £m
Continuing operations:
United Kingdom                                     4.2          3.0           3.9          23.5            27.5        31.4
Gulf/Middle East                                  47.3          0.7           0.7          25.5            23.0        29.9
CIS, Med & NA                                      6.1            –             –          10.4             9.4         8.1
  Australia                                      151.2        193.0         170.4          82.8            72.2        79.7
  Other Far East/Pacific Rim                      20.5            –             –          12.3            10.8         3.2
Total Far East/Pacific Rim                       171.7        193.0         170.4          95.1             83         82.9
Unallocated(i)                                       –            –             –          43.2            35.9        12.6
Central                                           12.2         13.8             –             –               –           –
                                             555           555          555           555          555            555
Total                                            241.5        210.5           188        197.7         178.8       164.9
                                             aaa           aaa          aaa           aaa          aaa            aaa
(i)   Unallocated includes financial instruments, deferred tax assets and post employment benefits only.

4.    EXCEPTIONAL ITEMS
The exceptional items comprise:
                                                                                    2010             2009              2008
                                                                                     £m               £m                £m
Continuing:
Reorganisation costs in relation to Australian acquisitions                     –      –   (2.9)
Relocation of Head Office                                                       –      –   (1.2)
                                                                            55555 55555 55555
Total continuing                                                                 –     –   (4.1)
                                                                            aaaaa aaaaa aaaaa
The cash effect of the above exceptional items was an outflow of £nil (2009: £nil; 2008:
£4.1 million).
The tax effect of the exceptional item in continuing operations is £nil (2009: £nil; 2008: credit of
£1.2 million).




                                                            69
5.    OPERATING PROFIT/(LOSS)
                                                                   2010          2009           2008
                                                                    £m            £m             £m
Analysis of operating profit/(loss)
Continuing operations
Revenue                                                         650.1         655.1        622.7
Cost of sales                                                  (528.2)       (541.8)      (533.2)
                                                             55555         55555        55555
Gross profit                                                    121.9         113.3         89.5
Operating expenses                                              (43.7)        (42.7)       (24.5)
                                                             55555         55555        55555
Operating profit before other items                              78.2          70.6         65.0
Amortisation of intangible assets                                (2.6)         (2.9)        (2.7)
Exceptional items                                                   –             –         (4.1)
Industrial disease costs                                         (0.4)        (74.2)        (5.7)
                                                             55555         55555        55555
Operating profit/(loss)                                          75.2          (6.5)        52.5
                                                             aaaaa         aaaaa        aaaaa
The following items have also been charged/(credited) in arriving at operating profit/(loss).
                                                                   2010          2009           2008
                                                                    £m            £m             £m
Employee benefit expense                                          338.2         333.6           321.8
Cost of inventories                                                57.4          43.0            49.8
Depreciation                                                       17.4          15.8            15.3
Operating lease payments – plant and equipment                     13.6          14.1            14.7
Operating lease payments – property                                 2.9           3.2             1.8
Auditor’s remuneration
– Fees payable to the Company’s auditor for the audit of
  the Company’s annual accounts                                      0.2          0.2             0.2
– Fees payable to the Company’s auditor and its associates
  for other services:
  – The audit of the Company’s subsidiaries pursuant
    to legislation                                               0.6   0.5   0.5
  – All other services                                           0.5     –   0.1
                                                             aaaaa aaaaa aaaaa
Administrative costs comprise principally of operating expenses and industrial disease expenses.
Cost of sales comprises principally of direct labour, materials and other direct costs.

6.   NET FOREIGN EXCHANGE GAINS/(LOSSES)
Exchange adjustments taken through the income statement amount to:
                                                                   2010          2009           2008
                                                                    £m            £m             £m
Cost of sales                                                    0.1  (2.3)  2.5
                                                             aaaaa aaaaa aaaaa

7.    OTHER GAINS/(LOSSES) – NET
                                                                   2010          2009           2008
                                                                    £m            £m             £m
Movement in respect of derivative financial instruments          –     0.3  (0.2)
                                                             aaaaa aaaaa aaaaa




                                                70
8.    EMPLOYEE BENEFIT EXPENSE
                                                                2010         2009         2008
                                                   Notes         £m           £m           £m
Wages and salaries                                              304.7       303.7        293.5
Social security costs                                            25.4        22.4         22.5
Share options granted and awarded to
  directors and employees                             29          2.2   1.6   1.2
Pension costs – defined contribution plans            17          4.2   3.7   2.7
Pension costs – defined benefit plans                 17          0.3   0.6   0.7
Other employee benefit costs                          17          1.4   1.6   1.2
                                                             55555 55555 55555
                                                                338.2 333.6 321.8
                                                             aaaaa aaaaa aaaaa
Average number of employees including
  Executive Directors                                          16,081 15,661 13,565
                                                             aaaaa aaaaa aaaaa

9.    AUDITOR REMUNERATION
Services provided by the Company’s auditor and its associates
During the year the Group (including its overseas subsidiaries) obtained the following services
from the Company’s auditor and its associates:
                                                                2010         2009         2008
                                                                 £m           £m           £m
Fees payable to the Company’s auditor for the audit of the
  Company’s annual accounts                                       0.2          0.2          0.2
Fees payable to the Company’s auditor and its associates
  for other services:
– The audit of the Company’s subsidiaries pursuant to
     legislation                                                 0.6   0.5   0.5
– All other services                                             0.5     –   0.1
                                                             55555 55555 55555
                                                                 1.3   0.7   0.8
                                                             aaaaa aaaaa aaaaa

10.   FINANCE INCOME AND COSTS
                                                                2010         2009         2008
                                                                 £m           £m           £m
Interest income:
– Short-term bank deposits                                       0.1   0.8   0.8
– Interest on Scheme funds                                       1.0   0.8   2.0
                                                             55555 55555 55555
Finance income                                                   1.1   1.6   2.8
                                                             aaaaa aaaaa aaaaa
Interest expense:
– Bank borrowings                                                (8.1) (10.5) (16.1)
– Finance leases                                                 (1.0)  (1.7)  (1.7)
– IDC unwind of provision                                        (4.0)
– Other                                                             –   (0.1)  (0.2)
                                                             55555 55555 55555
Finance costs                                                   (13.1) (12.3) (18.0)
                                                             55555 55555 55555
Net finance costs                                                (12.0) (10.7) (15.2)
                                                             aaaaa aaaaa aaaaa




                                              71
11.   INCOME TAX
                                                                   2010         2009          2008
                                                      Notes         £m           £m            £m
Current tax                                              18       12.6    9.9   7.1
Deferred tax                                                      (1.8) (24.0) (1.2)
                                                               55555 55555 55555
                                                                  10.8  (14.1)  5.9
                                                               aaaaa aaaaa aaaaa
The tax charge/(credit) on the Group’s profit/(loss) before tax differs from the theoretical amount
that would arise using the UK standard corporation tax rate applicable to profits of the
consolidated entities as follows:
                                                                   2010         2009          2008
                                                                    £m           £m            £m
Profit/(loss) before tax                                           63.2         (15.6)        37.8
Tax calculated at the standard rate of corporation tax in
  the UK of 28% (2009: 28%; 2008: 28.5%)                           17.7          (4.4)        10.8
Adjustments to tax in respect of prior periods                      0.3          (4.0)        (1.4)
Adjustments in respect of overseas tax rates                       (7.5)         (4.4)        (2.7)
Tax losses not recognised                                           0.2             –          2.5
Expenses non-deductible                                             0.3           0.4          0.1
Unrelieved overseas tax                                               –             –         (0.1)
Income not taxable                                                 (0.8)         (2.2)           –
Double tax relief                                                  (0.2)          1.0            –
Reduction in deferred tax liabilities arising from the
  rebasing of assets following the acquisition of Australian
  subsidiaries                                                       –      –  (3.3)
Change in tax rates                                                0.8      –     –
Adjustments in respect of overseas joint ventures                    –   (0.5)    –
                                                               55555 55555 55555
Tax charge/(credit)                                               10.8  (14.1)  5.9
                                                               aaaaa aaaaa aaaaa

A number of changes to the UK corporation tax system were announced in the June 2010 Budget
Statement. Legislation was passed in the Finance (No. 2) Act 2010 to reduce the main rate of UK
corporation tax to 27% as from 1 April 2011. However, in the March 2011 Budget Statement an
additional announcement was made advising that the main rate of corporation tax will be reduced
from 28% to 26% from 1 April 2011. This change was substantively enacted on 29 March 2011
through the Provisional Collection of Taxes Act 1968 and is expected to be passed through the
Finance Act 2011.
These changes are expected to impact the future current tax charges of the Group. The resulting
effect on the deferred tax balances has been disclosed in Note 18.




                                                 72
12. DISCONTINUED OPERATIONS
Analysis of the result of discontinued operations is as follows:
                                                                    2010        2009          2008
                                                                     £m          £m            £m
Charge in relation to disposal of Calsil business in 2002          –    –   (0.2)
Release of historic provision                                    0.4   –       –
                                                             55555 55555 55555
Profit before tax on discontinued operations                      0.4   –    (0.2)
Income tax expense                                              (0.1)   –      –
                                                             55555 55555 55555
Profit from discontinued operations                               0.3   –    (0.2)
                                                             aaaaa aaaaa aaaaa

13. EARNINGS/(LOSS) PER ORDINARY SHARE
The basic earnings per share calculation for the year ended 31 December 2010 (2009: loss
per share; 2008: earnings per share) is based on the profit after tax attributable to ordinary
shareholders of £49.5 million (2009: loss of £4.1 million; 2008: earnings of £30.6 million) divided
by the weighted average number of ordinary 25p shares of 116,268,784 (2009: 115,427,015;
2008: 114,537,257).
The diluted earnings per share calculation for the year ended 31 December 2010 (2009: diluted
loss per share; 2008: diluted earnings per share) is based on the profit after tax of £49.5 million
(2009: loss of £4.1 million: 2008: earnings of £30.6 million) divided by the diluted weighted
average number of ordinary 25p shares of 120,819,330 (2009: 118,038,129; 2008: 116,381,373).
Share options and awards are considered potentially dilutive as the average share price during the
year was above the average exercise prices.
                                                                    2010        2009          2008
                                                                   Shares      Shares        Shares
Basic weighted average number of shares                      116,268,784 115,427,015 114,537,257
Adjustments:
Weighted average number of outstanding share options          4,550,546   2,611,114   1,844,116
                                                            555555 555555 555555
Diluted weighted average number of shares                   120,819,330 118,038,129 116,381,373
                                                            aaaaaa aaaaaa aaaaaa




                                                 73
                                        2010                    2009                   2008
                                                          (Loss)/
                                 Earnings         EPS   earnings         EPS    Earnings        EPS
                                      £m        pence        £m        pence         £m       pence
Basic earnings/(loss)
  per share
Continuing operations              49.2       42.3        (4.1) (3.5) 30.8  26.9
Discontinued operations             0.3        0.3           –     –  (0.2) (0.2)
                                 5555       5555        5555 5555 5555 5555
Basic earnings/(loss) per share    49.5       42.6        (4.1) (3.5) 30.6  26.7
                                 5555       5555        5555 5555 5555 5555
Diluted earnings/(loss)
  per share
Continuing operations              49.2       40.7        (4.1) (3.4) 30.8  26.4
Discontinued operations             0.3        0.3           –     –  (0.2) (0.1)
                                 5555       5555        5555 5555 5555 5555
Diluted earnings/(loss) per share  49.5       41.0        (4.1) (3.4) 30.6  26.3
                                 5555       5555        5555 5555 5555 5555
Adjusted basic
  earnings/(loss) per share
Earnings/(loss) from continuing
  operations                       49.2          42.3        (4.1)      (3.5)       30.8       26.9
Amortisation                        2.6           2.3         2.9        2.5         2.7        2.3
Exceptional items                     –             –           –          –         4.1        3.6
IDC related costs and interest
  income                            3.4        2.9   73.4   63.6   3.7   3.2
Tax effect of adjusting items      (3.8)      (3.3) (21.4) (18.5) (3.0) (2.6)
Exceptional Australian tax credit     –          –   (6.6)  (5.7) (3.3) (2.9)
                                 5555       5555 5555 5555 5555 5555
Adjusted basic earnings
  per share                        51.4       44.2        44.2         38.4       35.0       30.5
                                 5555       5555        5555         5555       5555       5555
Adjusted diluted
  earnings/(loss) per share
Earnings/(loss) from continuing
  operations                       49.2          40.7        (4.1)      (3.4)       30.8       26.4
Amortisation                        2.6           2.2         2.9        2.4         2.7        2.3
Exceptional items                     –             –           –          –         4.1        3.5
IDC related costs and interest
  income                            3.4        2.8   73.4   62.2   3.7   3.2
Tax effect of adjusting items      (3.8)      (3.1) (21.4) (18.1) (3.0) (2.6)
Exceptional Australian tax credit     –          –   (6.6)  (5.6) (3.3) (2.8)
                                 5555       5555 5555 5555 5555 5555
Adjusted diluted earnings
  per share                        51.4       42.6        44.2         37.5       35.0       30.0
                                 aaaa       aaaa        aaaa         aaaa       aaaa       aaaa
The adjusted earnings per share calculations have been calculated after excluding the impact of
amortisation of intangible assets, exceptional items, IDC related costs and interest income, the tax
impact of these items and an exceptional tax credit received in Australia predominantly arising on
the consolidation of PCH assets in Australia which was acquired during 2007.
Options are dilutive at the profit from continuing operations level and so, in accordance with
IAS 33, have been treated as dilutive for the purpose of diluted earnings per share. Diluted loss
per share in 2008 is lower than basic loss per share in respect of discontinued operations because
of the effect of losses on discontinued operations.




                                                74
14.   INTANGIBLE ASSETS
                                                                  Total      Goodwill        Other
                                                                   £m            £m            £m
Cost:
At 1 January 2008                                                166.7         157.6           9.1
Adjustments to fair values                                         7.0           7.5          (0.5)
Adjustment relating to deferred consideration of previous
  acquisition                                                      (0.6)         (0.6)          –
Acquisition of remaining shares of PCH and additional
  direct costs relating to the acquisitions of PCH and
  Concept Hire                                                   3.8            3.8            –
Exchange adjustments                                            14.9           14.2          0.7
                                                            55555          55555         55555
At 31 December 2008                                            191.8          182.5          9.3
                                                            55555          55555         55555
Additions                                                        0.3              –          0.3
Exchange adjustments                                            25.1           24.5          0.6
                                                            55555          55555         55555
At 31 December 2009                                            217.2          207.0         10.2
                                                            aaaaa          aaaaa         aaaaa
Additions                                                          –              –            –
Exchange adjustments                                            33.6           33.4          0.2
                                                            55555          55555         55555
At 31 December 2010                                            250.8          240.4         10.4
                                                            aaaaa          aaaaa         aaaaa
Amortisation
At 1 January 2008                                                   1.1            –           1.1
Amortisation charge                                             2.7            –             2.7
                                                            55555          55555         55555
At 31 December 2008                                             3.8            –             3.8
                                                            55555          55555         55555
Amortisation charge                                             2.9            –             2.9
                                                            55555          55555         55555
At 31 December 2009                                             6.7            –             6.7
                                                            aaaaa          aaaaa         aaaaa
Amortisation charge                                             2.6            –             2.6
                                                            55555          55555         55555
At 31 December 2010                                             9.3            –             9.3
                                                            aaaaa          aaaaa         aaaaa
Net book value:
At 31 December 2010                                            241.5          240.4          1.1
                                                            55555          55555         55555
At 31 December 2009                                            210.5          207.0          3.5
                                                            55555          55555         55555
At 31 December 2008                                            188.0          182.5          5.5
                                                            55555          55555         55555
At 1 January 2008                                              165.6          157.6          8.0
                                                            aaaaa          aaaaa         aaaaa
Amortisation charges of £2.6 million (2009: £2.9 million; 2008: £2.7 million) have been charged to
cost of sales in the income statement.
One individually significant intangible asset remains. Two customer relationships and contracts
which had opening carrying values of £0.6 million and £0.8 million have been fully amortised to
£nil over the current year. A favourable lease contract which has a carrying value of £0.9 million
will be amortised to £nil over the next two years.




                                               75
Impairment tests for goodwill
Goodwill is allocated to the Group’s Cash-Generating Units (CGU). All goodwill relates to Industrial
Services.
During the 2010 financial year goodwill was reallocated to reflect changes made in the reporting
and organisational structure of the Group. The allocation was made on the basis of the relative
values of the CGVs affected.
The aggregate carrying amounts of goodwill allocated by geographical area is as follows:
                                                                                           2010                  2009             2008
                                                                                            £m                    £m               £m
UK                                                                                        16.2  16.2  16.2
Gulf/Middle East                                                                          47.3   0.7   0.7
Asia                                                                                      20.5     –     –
CIS                                                                                        6.1     –     –
Australia                                                                                150.3 190.1 165.6
                                                                                      55555 55555 55555
                                                                                         240.4 207.0 182.5
                                                                                      aaaaa aaaaa aaaaa

The recoverable amount of a CGU is determined based on value-in-use calculations. These
calculations use pre-tax cash flow projections based on financial budgets approved by management
covering a five-year period. Cash flows beyond the five-year period are extrapolated using the
estimated growth rates stated below.
The key assumptions used for value-in-use calculations are:
                               2010                                      2009                                       2008
                                 Average                                   Average                                    Average
                 Terminal       five-year   Discount       Terminal       five-year    Discount       Terminal       five-year   Discount
              growth rate   growth rate          rate   growth rate   growth rate           rate   growth rate   growth rate          rate
United
  Kingdom          3.0%          7.6%       11.0%           3.0%           3.2%        11.0%           3.0%           4.0%        7.9%
Gulf/Middle
  East          2.7%          6.5%          11.2%         3.0%          1.8%           10.2%         3.0%          5.0%           7.4%
Australia       2.7%         17.6%          11.7%         3.3%         17.6%           11.4%         3.3%          6.0%          10.5%
Asia            2.7%         18.4%          11.3%            –             –               –            –             –              –
CIS             2.7%          2.3%          11.4%            –             –               –            –             –              –
               aaa           aaa            aaa          aaa           aaa             aaa          aaa           aaa            aaa
Terminal growth rates are based on the long-term growth rates for the countries in which the CGU
operates. Management determined growth rates over the next five years based on internal forecasts
that were derived from detailed analysis on future prospects combined with the secured order
book for the relevant CGU. The discount rates used are pre-tax and reflect specific risks relating
to the relevant CGU.

Sensitivity analysis
A sensitivity analysis has been performed on the base case assumptions used for assessing the
goodwill. The directors have concluded that there are no reasonably possible changes in key
assumptions which would cause the carrying value of goodwill to exceed its value in use.




                                                               76
15. PROPERTY, PLANT AND EQUIPMENT
During the year ended 31 December 2010, the Group acquired assets with a cost of £12.4 million
(2009: £11.6 million; 2008: £26.2 million) and received proceeds from asset sales of £0.3 million (2009:
£1.1 million; 2008: £2.7 million) giving net capital expenditure of £12.1 million (2009: £10.5 million;
2008: £23.5 million). The capital expenditure of £11.9 million (2009: £10.0 million; 2008: £19.9 million)
shown in the cash flow statement represents the actual cash outflow and therefore excludes
purchases funded through finance leases of £0.5 million (2009: £1.6 million; 2008: £6.3 million).
                                                                                                     Plant,
                                                                                               machinery,
                                                                                Land and     fixtures and
                                                                       Total     buildings         fittings
                                                                        £m             £m               £m
Cost:
At 1 January 2008                                                  168.9          16.5          152.4
Exchange adjustments                                                29.9           1.5           28.4
Additions                                                           26.2           2.6           23.6
Disposals                                                          (10.5)         (0.3)         (10.2)
                                                                55555          55555         55555
At 31 December 2008                                                214.5          20.3          194.2
                                                                55555          55555         55555
Exchange adjustments                                                13.8           1.1           12.7
Additions                                                           11.6           0.2           11.4
Disposals                                                          (17.2)         (0.9)         (16.3)
                                                                55555          55555         55555
At 31 December 2009                                                222.7          20.7          202.0
                                                                aaaaa          aaaaa         aaaaa
Exchange adjustments                                                20.3           1.5           18.8
Additions                                                           12.4           2.0           10.4
Disposals                                                           (6.1)         (0.1)          (6.0)
                                                                55555          55555         55555
At 31 December 2010                                                249.3          24.1          225.2
                                                                aaaaa          aaaaa         aaaaa
Depreciation:
At 1 January 2008                                                  41.9            1.5          40.4
Exchange adjustments                                               11.3            0.3          11.0
Charge for the year                                                15.3            0.8          14.5
Disposals                                                          (6.3)             –          (6.3)
                                                                55555          55555         55555
At 31 December 2008                                                62.2            2.6          59.6
                                                                55555          55555         55555
Exchange adjustments                                               10.6            0.6          10.0
Charge for the year                                                15.8            0.9          14.9
Disposals                                                          (8.8)          (0.4)         (8.4)
                                                                55555          55555         55555
At 31 December 2009                                                79.8            3.7          76.1
                                                                aaaaa          aaaaa         aaaaa
Exchange adjustments                                                3.5            0.2           3.3
Charge for the year                                                17.4            0.9          16.5
Disposals                                                          (5.7)             –          (5.7)
                                                                55555          55555         55555
At 31 December 2010                                                95.0            4.8          90.2
                                                                aaaaa          aaaaa         aaaaa
Net book amount:
At 31 December 2010                                                154.3          19.3          135.0
                                                                55555          55555         55555
At 31 December 2009                                                142.9          17.0          125.9
                                                                aaaaa          aaaaa         aaaaa
At 31 December 2008                                                152.3          17.7          134.6
                                                                55555          55555         55555
At 1 January 2008                                                  127.0          15.0          112.0
                                                                aaaaa          aaaaa         aaaaa




                                                   77
Depreciation expense of £17.4 million (2009: £15.8 million; 2008: £15.3 million) has been charged
to cost of sales in the income statement.
Exchange adjustments relate to the translation of assets held by foreign operations into the
presentation currency.
Included within Land and buildings is an investment property with a value of £2.0 million (2009:
£2.0 million; 2008: £2.0 million). No rent is received from the investment property. The fair value
of the investment property has not been estimated as the property is the residual land left over
from the sale of the Calsil businesses.
The Group leases plant and machinery under finance lease agreements. The leased equipment
secures lease obligations (see note 23).
At 31 December 2010 the net carrying amount of leased plant and machinery was £22.0 million
(2009: £21.0 million; 2008: £26.3 million).

16.   INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
                                                                   2010          2009          2008
                                                                    £m            £m            £m
At 1 January                                                     0.1   0.6   0.1
Share of post tax profits                                       (0.1)  1.6   0.5
Dividends                                                        0.1  (2.1)    –
                                                             55555 55555 55555
At 31 December                                                   0.1   0.1   0.6
                                                             aaaaa aaaaa aaaaa
The Group’s share of post tax operating (loss)/profit of joint ventures is £(0.1) million (2009:
£1.6 million; 2008: £0.5 million) and dividends paid/(received) from joint ventures are £0.1 million
(2009: £(2.1) million; 2008: £nil).
The Group has a 51 per cent. interest in Cape C.I.S.L. a joint venture incorporated in Trinidad for
the provision of insulation services.
The Group has a 50 per cent. interest in Orascom Cape a joint venture incorporated in Egypt for
the provision of insulation and scaffolding services.
The Group has a 50 per cent. interest in Orascom Cape WLL, a joint venture incorporated in
Bahrain for the provision of insulation services.
The Group has a 50 per cent. interest in Cape Resa, a joint venture incorporated in Spain for the
provision of scaffolding, rope access and insulation services.
The Group has a 50 per cent. interest in Ship Support Services Limited, a joint venture
incorporated in the United Kingdom for the provision of scaffolding and painting services.
The Group accounts for the investments in Cape C.I.S.L. as joint ventures due to the Group not
having control over the financial and operating policies of these entities.

17. RETIREMENT BENEFIT OBLIGATIONS
The Group operates a defined benefit scheme and a defined contribution scheme for employees
within the UK and provides pensions for employees of overseas companies in accordance with
local requirements and practices. The assets of both the defined benefit and defined contribution
schemes are held in trustee administered funds. The latest full valuation of the defined benefit
scheme was assessed by independent qualified actuaries as at 6 April 2010 using the projected unit
method. The valuation showed that the assets of the defined benefit scheme had a market value
of £125.1 million and was 100 per cent. funded. Included within the assets balance is an amount
of £81.3 million in respect of insurance policies covering pensioner liabilities. The next full
valuation will take place as at 6 April 2013.




                                                78
Some of the Group’s overseas subsidiary undertakings operate leaving indemnity schemes as
required by local laws and regulations. These schemes are unfunded. The provision for leaving
indemnities is based on the number of years service and the current salary of the employee.
The pension expense in the period for the defined contribution pension scheme of £4.2 million
(2009: £3.7 million; 2008: £2.7 million) equalled the Group contributions to the scheme.
The defined benefit scheme disclosures of the Group in this note also include figures relating to
a small scheme held by a subsidiary undertaking.
                                                                  2010         2009         2008
                                                                   £m           £m           £m
Balance sheet assets/(obligations) for:
Pension benefit assets                                           0.1   0.1   0.1
Pension benefit obligations                                     (0.4) (0.4) (0.4)
                                                             55555 55555 55555
                                                                (0.3) (0.3) (0.3)
Leaving indemnities                                             (6.3) (5.2) (4.8)
                                                             55555 55555 55555
                                                                (6.6) (5.5) (5.1)
                                                             aaaaa aaaaa aaaaa
Income statement charge for:
Leaving indemnities charged through cost of sales                1.4   1.6   1.2
                                                             55555 55555 55555
                                                                 1.4   1.6   1.2
                                                             aaaaa aaaaa aaaaa
                                                                  2010         2009         2008
                                                                   £m           £m           £m
Actuarial gain/(loss) recognised in the statement of other
  comprehensive income in the year (before tax)                    1.7          0.2          (3.3)
Cumulative actuarial losses recognised in the statement of
  other comprehensive income (before tax)                       (50.3) (52.0) (52.2)
                                                             aaaaa aaaaa aaaaa

Pension benefits
The amounts recognised in the balance sheet are determined as follows:
                                                                  2010         2009         2008
                                                                   £m           £m           £m
Present value of funded obligations                            (113.1) (113.6) (104.8)
Fair value of plan assets                                       126.3   124.3   114.8
                                                             55555 55555 55555
                                                                 13.2    10.7    10.0
Restriction of surplus                                          (13.5)  (11.0)  (10.3)
                                                             55555 55555 55555
Net liability in the balance sheet                               (0.3)   (0.3)   (0.3)
                                                             aaaaa aaaaa aaaaa
In accordance with IFRIC 14, the Group must consider the minimum funding requirements of the
pension scheme. This has resulted in the recognised surplus on the main scheme being reduced
to £nil at 31 December 2010 (2008 and 2009: £nil).




                                               79
The amounts recognised in the income statement are as follows:
                                                                   2010         2009           2008
                                                                    £m           £m             £m
Current service cost                                            0.1   0.5   0.7
Interest cost                                                   6.4   6.3   6.2
Expected return on plan assets                                 (6.9) (6.7) (6.6)
Settlements and curtailments                                   (0.1) (0.1) (0.3)
                                                            55555 55555 55555
Total                                                          (0.5)    –     –
                                                            aaaaa aaaaa aaaaa
The actual return on plan assets was £6.4 million (2009: £14.0 million; 2008: £3.3 million).
The movement in the fair value of plan assets over the year is as follows:
                                                                   2010         2009           2008
                                                                    £m           £m             £m
Beginning of year                                              124.3  114.8  122.1
Expected return on plan assets                                   6.9    6.7    6.6
Actuarial gains/(losses)                                        (0.3)   7.2   (9.8)
Employer contributions                                           0.3    0.6    0.7
Employee contributions                                             –    0.2    0.2
Benefits paid                                                   (4.9)  (5.2)  (5.0)
                                                            55555 55555 55555
End of year                                                    126.3  124.3  114.8
                                                            aaaaa aaaaa aaaaa
The movement in the defined benefit obligation over the year is as follows:
                                                                   2010         2009           2008
                                                                    £m           £m             £m
Beginning of year                                              113.6  104.8  109.5
Current service cost                                             0.1    0.5    0.7
Interest cost                                                    6.4    6.3    6.2
Contributions by plan participants                                 –    0.2    0.2
Actuarial losses/(gains)                                        (2.0)   7.1   (6.5)
Benefits paid                                                   (4.9)  (5.2)  (5.0)
Settlements and curtailments                                    (0.1)  (0.1)  (0.3)
                                                            55555 55555 55555
End of year                                                    113.1  113.6  104.8
                                                            aaaaa aaaaa aaaaa
The principal actuarial assumptions used were as follows:
                                                                   2010         2009           2008
Discount rate                                                 5.30% 5.75% 6.25%
Expected return on plan assets                                5.27% 5.63% 5.99%
Future salary increases                                       4.60% 4.70% 4.10%
Future pension increases                                      3.30% 3.40% 3.00%
Inflation rate – RPI                                          3.60% 3.70% 3.10%
                                                            aaaaa aaaaa aaaaa




                                                80
Mortality rate
Assumptions regarding future mortality experience are set based on advice in accordance with
published statistics and scheme experience.
The average remaining life expectancy in years of a pensioner retiring at age 65 on the balance
sheet date is as follows:
                                                                    2010         2009          2008
Male                                                            22.0  22.0  23.4
Female                                                          24.5  24.5  26.0
                                                             aaaaa aaaaa aaaaa
The average remaining life expectancy in years of a pensioner retiring at age 65, 20 years after the
balance sheet date is as follows:
                                                                    2010         2009          2008
Male                                                            24.0  24.0  25.6
Female                                                          26.5  26.5  28.0
                                                             aaaaa aaaaa aaaaa

Pension benefits
Plan assets are comprised as follows:
                                    2010     Expected       2009    Expected       2008     Expected
                                     £m        return        £m       return        £m        return
Insurance annuities              81.5        5.30%         83.6     5.75%         81.0     6.25%
Index-linked Gilts               15.7        3.80%         14.3     4.10%         13.8     3.75%
Bonds                            13.0        4.85%         11.8     5.25%         10.9     6.25%
Equities                          8.9        7.70%          7.9     7.50%          5.4     7.25%
Property                          3.1        7.95%          2.8     8.25%          3.2     7.25%
Cash                              0.6        0.90%          0.7     0.50%          0.5     2.00%
Other                             3.5        4.85%          3.2     5.25%            –         –
                              5555          5555        5555       5555        5555       5555
Total/weighted average return   126.3        5.27%        124.3     5.63%        114.8     6.00%
                              aaaa          aaaa        aaaa       aaaa        aaaa       aaaa
The expected return on plan assets is determined by considering the expected returns on the
assets underlying the current investment policy. Expected yields on fixed interest investments are
based on gross redemption yields at the balance sheet date. Expected returns on equity and
property investments reflect long-term real rates of return experienced in the respective markets.
Expected contributions to defined benefit schemes for the year ended 31 December 2010 are
£0.2 million.
                                                2010        2009       2008        2007        2006
                                                 £m          £m         £m          £m          £m
Fair value of plan assets                    126.3    124.3          114.8   122.1   117.9
Fair value of plan liabilities              (113.1) (113.6)         (104.8) (109.5) (102.7)
                                           5555 5555               5555 5555 5555
Surplus                                       13.2     10.7           10.0    12.6    15.2
                                           5555 5555               5555 5555 5555
Experience adjustments on plan assets         (0.4)     7.3           (9.7)    1.9     2.2
Experience adjustments on plan liabilities     6.2      1.7           (3.4)   (4.8)    0.3
                                           aaaa aaaa               aaaa aaaa aaaa

18. DEFERRED INCOME TAX
Deferred income tax assets and liabilities are offset where there is a legally enforceable right to
offset current tax assets against current tax liabilities and when the deferred income taxes relate
to the same fiscal authority.




                                                81
Deferred tax assets and liabilities are attributable to the following:
                                     Assets                               Liabilities                          Net
                             2010        2009          2008      2010            2009     2008       2010         2009       2008
                              £m            £m          £m        £m               £m      £m         £m           £m         £m
Property, plant
  and
  equipment       0.5                     0.6          0.2      (16.2)       (11.4)       (9.9)    (15.7)       (10.8)       (9.7)
Intangible
  assets            –                        –            –      (0.3)         (0.9)      (1.8)     (0.3)         (0.9)      (1.8)
Retirement
  benefits          –                        –            –      (0.3)         (0.2)         –      (0.3)         (0.2)         –
Derivative
  financial
  instruments     2.1                    2.1           3.3           –             –         –      2.1           2.1        3.3
Provisions       23.4                   22.2           4.7           –             –         –     23.4          22.2        4.7
Employee share
  options         2.7                     0.6             –          –             –         –       2.7           0.6          –
Tax losses
  carried
  forward        14.5                10.2           3.7             –      –      –  14.5                     10.2           3.7
                555                 555           555          555 555 555 555                               555           555
                 43.2                35.7          11.9         (16.8) (12.5) (11.7) 26.4                     23.2           0.2
                aaa                 aaa           aaa          aaa aaa aaa aaa                               aaa           aaa
The movement in deferred tax assets and liabilities during the year, without taking into
consideration the offsetting of balances within the same tax jurisdiction, is as follows:
                                    Accelerated
                                        capital                    Tax                              Share
                                    allowances    Provisions     losses      Pension    Hedging    options   Intangibles     Total
Deferred tax assets/(liabilities)           £m           £m        £m            £m         £m         £m           £m        £m
At 1 January 2008                        (6.6)         4.6           –             –         –       0.4          (2.1)      (3.7)
(Charged)/credited to
  the income statement                   (2.2)        (0.4)       3.5              –         –          –          0.3       1.2
(Charged)/credited
  directly to equity       –    –                                  –         –            3.3      (0.4)    –    2.9
Exchange differences    (0.9) 0.5                                0.2         –              –         –     –   (0.2)
                       555 555                                 555        555           555       555 555 555
At 31 December 2008     (9.7) 4.7                                3.7         –            3.3         –  (1.8)   0.2
Deferred tax asset       0.2  4.7                                3.7         –            3.3         –     –   11.9
Deferred tax liability  (9.9)   –                                  –         –              –         –  (1.8) (11.7)
                       555 555                                 555        555           555       555 555 555
At 31 December 2008     (9.7) 4.7                                3.7         –            3.3         –  (1.8)   0.2
                       aaa aaa                                 aaa        aaa           aaa       aaa aaa aaa
                                    Accelerated
                                        capital                    Tax                              Share
                                    allowances    Provisions     losses      Pension    Hedging    options   Intangibles     Total
Deferred tax assets/(liabilities)           £m           £m        £m            £m         £m         £m           £m        £m
At 1 January 2009                        (9.7)         4.7        3.7              –       3.3          –         (1.8)      0.2
(Charged)/credited to
  the income statement                    0.2        17.3         5.4          (0.1)         –       0.4           0.8      24.0
(Charged)/credited
  directly to equity        –     –                                –       (0.1) (1.2) 0.2                       –   (1.1)
Exchange differences     (1.3)  0.2                              1.1          –     –    –                     0.1    0.1
                       555 555                                 555        555 555 555                        555 555
At 31 December 2009     (10.8) 22.2                             10.2       (0.2)  2.1  0.6                    (0.9)  23.2
Deferred tax asset        0.6  22.2                             10.2          –   2.1  0.6                       –   35.7
Deferred tax liability  (11.4)    –                                –       (0.2)    –    –                    (0.9) (12.5)
                       555 555                                 555        555 555 555                        555 555
At 31 December 2009 (10.8)     22.2                             10.2       (0.2)  2.1  0.6                    (0.9)  23.2
                       aaa aaa                                 aaa        aaa aaa aaa                        aaa aaa




                                                                   82
                                    Accelerated
                                        capital                    Tax                            Share
                                    allowances    Provisions     losses    Pension    Hedging    options    Intangibles    Total
Deferred tax assets/(liabilities)           £m           £m        £m          £m         £m         £m            £m       £m
At 1 January 2010                      (10.8)        22.2       10.2        (0.2)        2.1       0.6            (0.9)   23.2
(Charged)/credited to
  the income statement                   (2.8)         0.9       2.2        (0.1)          –       0.9            0.7      1.8
(Charged)/credited
  directly to equity                     –     –                   –          –    –              1.2           –    1.2
Exchange differences                  (2.1)  0.3                 2.1          –    –                –        (0.1)   0.2
                                    555 555                    555        555 555               555         555 555
At 31 December 2010                  (15.7) 23.4                14.5       (0.3) 2.1              2.7        (0.3)  26.4
Deferred tax asset                     0.5  23.4                14.5          –  2.1              2.7           –   43.2
Deferred tax liability               (16.2)    –                   –       (0.3)   –                –        (0.3) (16.8)
                                    555 555                    555        555 555               555         555 555
At 31 December 2010                  (15.7) 23.4                14.5       (0.3) 2.1              2.7        (0.3)  26.4
                                    aaa aaa                    aaa        aaa aaa               aaa         aaa aaa
Deferred taxation has not been provided in the event of the distribution of the unappropriated
profits or reserves of certain overseas subsidiary undertakings as the Group does not currently
intend to make such distributions.
At the balance sheet date, the Group has unused tax losses of £8.6 million (2008: £15.9 million)
available for offset against future profits, subject to agreement with the tax authorities. The losses
carried forward are in certain entities and can only be utilised against future profits of those
entities. No deferred tax asset has been recognised in respect of these losses as there is uncertainty
in respect of its future recoverability. In particular, £3.3 million (2008: £10.4 million) of the balance
relates to losses arising in the Australian consolidated group which are subject to strict recognition
rules. The Group is still determining whether the losses can be recognised and if so, the extent to
which they can be recognised.
Advance corporation tax written off to date amounts to £1.8 million (2009: £1.8 million; 2008:
£1.7 million) and is available for offset against future United Kingdom corporation tax liabilities
subject to certain conditions being met. The future benefit of advance corporation tax has not
been accounted for in the provision of deferred taxation as its recoverability is not probable.
A number of changes to the UK corporation tax system were announced in the June 2010 Budget
Statement. Legislation was passed in the Finance (No 2) Act 2010 to reduce the main rate of UK
corporation tax to 27 per cent. as from 1 April 2011. The deferred tax balances in the financial
information have therefore been measured at 27 per cent.
However, in the March 2011 Budget Statement an additional announcement was made advising that
the main rate of corporation tax will be reduced from 28 per cent. to 26 per cent. from 1 April
2011. This change was substantively enacted on 29 March 2011 through the Provisional Collection
of Taxes Act 1968 and is expected to be passed though the Finance Act 2011. Had the new
corporate tax rate been adopted, the deferred tax assets as of 31 December 2010 would reduce
by £0.9 million. Further reductions to the main rate are proposed to reduce the main rate of
corporation tax by 1 per cent. per annum to 23 per cent. by 1 April 2014. These changes had not
been substantively enacted at the balance sheet date, and have therefore not been included in the
financial information.

19.       INVENTORIES
                                                                                         2010              2009           2008
                                                                                          £m                £m             £m
Materials                                                                                5.8   5.0   8.2
Contract work in progress                                                                  –   8.7   5.3
Finished goods                                                                           3.0   3.6   3.7
                                                                                     55555 55555 55555
                                                                                         8.8  17.3  17.2
                                                                                     aaaaa aaaaa aaaaa



                                                                   83
The cost of inventories recognised as an expense and has been charged to cost of sales in the
income statement amounted to £57.4 million (2009: £43.0 million; 2008: £49.8 million).
There was no work in progress held at 31 December 2010. In the prior years there was a build
up of manufacturing components held in stock at the year end.
Payments received on account in excess of the value of the work performed on the related
contract are included within trade and other payables (see note 25).

20.   TRADE AND OTHER RECEIVABLES
                                                                   2010          2009          2008
                                                      Note          £m            £m            £m
Trade receivables                                             111.0  115.8  128.8
Less: provision for impairment of trade receivables            (2.5)  (3.2)  (3.5)
                                                           55555 55555 55555
Trade receivables – net                                       108.5  112.6  125.3
Amounts recoverable on contracts                               37.4   26.1   32.7
Receivables from joint ventures                         36      0.5    0.4    0.2
Other receivables                                              16.8   10.7   18.4
Prepayments and accrued income                                  6.9    6.2    8.1
                                                           55555 55555 55555
                                                              170.1  156.0  184.7
                                                           aaaaa aaaaa aaaaa
Trade receivables include retentions of £11.6 million (2009: £10.1 million; 2008: £10.5 million).
Receivables from joint ventures are repayable on demand and bear no interest.
The fair values of trade and other receivables equals their carrying amount, as the impact of
discounting is not material.
As of 31 December 2010, trade receivables of £5.8 million (2009: £8.7 million; 2008: £6.0 million)
were partially impaired. The amount of the provision was £2.5 million (2009: £3.2 million; 2008:
£3.5 million). The individually impaired receivables mainly relate to contracts within the UK and
Gulf/Middle East. It was assessed that a portion of the receivables is expected to be recovered. The
ageing of these receivables is as follows:
                                                                   2010          2009          2008
                                                                    £m            £m            £m
Less than 3 months                                               1.1   2.4   2.5
3 to 6 months                                                    4.4   2.8   1.3
7 to 12 months                                                   0.3   2.1   1.2
Over 12 months                                                     –   1.4   1.0
                                                             55555 55555 55555
                                                                 5.8   8.7   6.0
                                                             aaaaa aaaaa aaaaa
As of 31 December 2010, trade receivables of £61.2 million (2009: £62.3 million; 2008:
£59.6 million) were past due but not impaired. These relate to a number of customers for whom
there is no recent history of default. The ageing analysis of these trade receivables is as follows:
                                                                   2010          2009          2008
                                                                    £m            £m            £m
Less than 3 months                                              55.4  57.4  54.7
3 to 6 months                                                    5.5   4.6   3.1
7 to 12 months                                                   0.2   0.1   0.6
Over 12 months                                                   0.1   0.2   1.2
                                                             55555 55555 55555
                                                                61.2  62.3  59.6
                                                             aaaaa aaaaa aaaaa




                                                84
The carrying amounts of the Group’s trade and other receivables are denominated in the following
currencies:
                                                                  2010          2009         2008
                                                                   £m            £m           £m
Australian dollar                                               25.8  20.0  23.7
Bahraini dinar                                                   1.8   0.7   4.0
Euro                                                             2.1   0.7   1.4
GB pound                                                        53.2  60.1  77.7
Indian rupee                                                       –     –   0.1
Kazakhstan tenge                                                 7.1     –     –
Kuwaiti dinar                                                    0.3   0.5   1.7
Omani rial                                                       1.9   0.9   2.0
Philippine peso                                                  2.1   2.8   0.8
Qatar riyal                                                     13.4  10.2   6.8
Saudi Arabian riyal                                             19.5  18.2  25.5
Singapore dollar                                                12.3   3.3   6.2
Thai baht                                                        1.4   1.8   1.7
UAE dirham                                                       8.1   9.3   8.2
US dollar                                                       21.1  27.5  24.8
Other currencies                                                   –     –   0.1
                                                            55555 55555 55555
                                                               170.1 156.0 184.7
                                                            aaaaa aaaaa aaaaa
Provision for impairment of trade receivables:
                                                                  2010          2009         2008
                                                                   £m            £m           £m
At 1 January                                                    3.2   3.5   4.1
Provision for receivables impairment                            2.0   2.8   2.5
Receivables written off during the year as uncollectable       (0.4) (1.2) (0.3)
Write back of receivables previously written off                  –     –   0.9
Unused amounts reversed                                        (2.3) (1.9) (3.7)
                                                            55555 55555 55555
At 31 December                                                  2.5   3.2   3.5
                                                            aaaaa aaaaa aaaaa
The creation and release of provision for impaired receivables have been included in cost of sales
in the income statement. Amounts charged to the bad debt provision account are generally written
off when there is no expectation of recovering additional cash.
The other classes within trade and other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the fair value of each class of
receivable mentioned above.
The Group does not hold any collateral as security.

21.   CASH – IDC SCHEME FUNDS (RESTRICTED)
                                                                  2010          2009         2008
                                                                   £m            £m           £m
                                                            55555 55555 55555
Cash – IDC Scheme funds (restricted)                           31.6  33.8  37.5
                                                            aaaaa aaaaa aaaaa
Cape Claims Services Limited (‘CCS’) is the Scheme company in which Scheme funding is
accounted for (note 35). Under the terms of the Scheme, there is a funding agreement between
Cape plc and CCS under which Cape plc has provided CCS with initial funding of £40 million.




                                                 85
The fund held by CCS of £31.6 million (2009: £33.8 million; 2008: £37.5 million) is restricted for
use primarily in settling the Group’s UK asbestos-related liabilities.

22.   CASH, CASH EQUIVALENTS AND BANK OVERDRAFTS
                                                                      2010           2009          2008
                                                         Note          £m             £m            £m
Cash at bank and in hand                                  23       95.8  66.7  46.1
Bank overdrafts                                                       –  (0.4) (2.2)
                                                                55555 55555 55555
Cash, cash equivalents and bank overdrafts in the
  statement of cash flows                                          95.8  66.3  43.9
                                                                aaaaa aaaaa aaaaa

23.   BORROWINGS
                                                                      2010           2009          2008
                                                         Note          £m             £m            £m
Non current
Finance leases                                                       4.4   9.2  12.1
Bank loans                                                         109.6 125.4 147.5
Cumulative preference shares                                         0.3   0.3   0.3
                                                                55555 55555 55555
                                                                   114.3 134.9 159.9
                                                                55555 55555 55555
Current
Finance leases                                                    5.9   5.4   8.6
Loan notes                                                          –     –   3.7
Bank loans                                                       28.5  39.6  37.2
Bank overdrafts                                           22        –   0.4   2.2
                                                             55555 55555 55555
                                                                 34.4  45.4  51.7
                                                             55555 55555 55555
Total borrowings                                                148.7 180.3 211.6
                                                             aaaaa aaaaa aaaaa
Bank borrowings
The bank loans and overdrafts of £138.1 million (2009: £165.4 million; 2008: £186.9 million) are
secured by fixed and floating charges over the assets of the Group. Bank loans are stated net of
unamortised issue costs of £1.3 million (2009: £2.1 million; 2008: £2.8 million). The Group incurred
issue costs of £3.9 million in respect of the five-year facility entered into in September 2007 (amended
December 2007 and July 2008) under which amounts were drawn down in part to part fund the
acquisitions in Australia. These issue costs together with the interest expense are allocated to the
income statement over the five-year term of the facility at a constant rate on the carrying amount.
The following table analyses the Group’s remaining contractual maturity of borrowings and finance
leases. The table has been drawn up based on undiscounted cashflows of financial liabilities based
on the earliest date on which the Group is obliged to pay.
The exposure of the Group’s borrowings to interest rate changes and the contractual repricing
dates at the balance sheet dates are as follows:
                                                                      2010           2009          2008
                                                                       £m             £m            £m
6 months or less                                                    20.0  43.4  66.9
6 to 12 months                                                      14.4  18.8   8.6
1 to 5 years                                                       114.0 117.8 135.8
Over 5 years                                                         0.3   0.3   0.3
                                                                55555 55555 55555
                                                                   148.7 180.3 211.6
                                                                aaaaa aaaaa aaaaa
Trade and other payables are all aged less than 6 months.




                                                  86
The carrying amounts and fair value of the non current borrowings are as follows:
                                                     Carrying amount                                    Fair value
                                           2010            2009          2008              2010           2009            2008
                                            £m              £m            £m                £m             £m              £m
Finance lease obligations                   4.4           9.2         12.1             4.0             8.1                10.1
Bank loans                                109.6         125.4        147.5            96.0           105.5               116.2
Cumulative preference shares                0.3           0.3          0.3             0.2             0.2                 0.2
                                        5555          5555         5555            5555            5555                5555
                                          114.3         134.9        159.9           100.2           113.8               126.5
                                        aaaa          aaaa         aaaa            aaaa            aaaa                aaaa
The fair value of current borrowings equals their carrying amount, as the impact of discounting is
not significant. The fair values are based on cash flows discounted using a rate based on the
borrowing rate of 5.45 per cent. (2009: 6.0 per cent.; 2008: 8.1 per cent.).
The carrying amounts of the Group’s borrowings are denominated in the following currencies:
                                                                                    2010                2009              2008
                                                                                     £m                  £m                £m
Australian dollar                                                                 24.1  25.7  47.9
GB pound                                                                         105.4 136.0 142.8
US dollar                                                                         19.2  18.6  20.9
                                                                              55555 55555 55555
                                                                                 148.7 180.3 211.6
                                                                              aaaaa aaaaa aaaaa
The Group has the following undrawn borrowing facilities:
                                                                                    2010                2009              2008
                                                                                     £m                  £m                £m
Floating rate:
– Expiring beyond 1 year                                                         16.0  13.4   2.8
                                                                              aaaaa aaaaa aaaaa

3.5 per cent. cumulative preference shares
During the year, the Company had in issue 250,000 cumulative preference shares of £1 with a
fixed cumulative preferential dividend of 3.5 per cent. per annum payable half yearly in arrears on
31 March and 30 September, and with no redemption entitlement. All arrears of dividends were
paid up to 30 September 2010, and the dividend due to 31 March 2011 was paid on the due date.
As stated in note 36, the Preference Shares were repurchased and cancelled on 13 April 2011.

Finance lease liabilities
Finance lease liabilities are payable as follows:
                                           Present                               Present                                  Present
                   Future                 value of       Future                 value of       Future                    value of
                minimum                  minimum      minimum                  minimum      minimum                     minimum
                    lease                    lease        lease                    lease        lease                       lease
                payments     Interest    payments     payments     Interest    payments     payments        Interest    payments
                    2010       2010          2010         2009       2009          2009         2008          2008          2008
                      £m         £m            £m           £m         £m            £m           £m            £m            £m
Less than
  1 year            6.9         1.0          5.9          6.4         1.0          5.4         10.4            1.8          8.6
Between 1
  and 5 years     4.4           –          4.4         10.0         0.8          9.2         13.5           1.4          12.1
                555         555          555          555         555          555          555           555           555
                 11.3         1.0         10.3         16.4         1.8         14.6         23.9           3.2          20.7
                aaa         aaa          aaa          aaa         aaa          aaa          aaa           aaa           aaa




                                                           87
24. FINANCIAL INSTRUMENTS
Details of financial instruments are set out below.
                                                                                       Other
                                                                                   financial
                                                                 Derivatives   liabilities at
                                                   Loans and       used for       amortised
Financial instruments by category                  receivables      hedging              cost    Total
31 December 2010                                          £m             £m               £m      £m
Assets as per balance sheet
Trade and other receivables (excluding
  prepayments)                                        163.2   –     –   163.2
Cash and cash equivalents                              95.8   –     –    95.8
Cash – IDC Scheme funds (restricted)                   31.6   –     –    31.6
                                                   55555 55555 55555 55555
                                                      290.6  –      –   290.6
                                                   55555 55555 55555 55555
Liabilities as per balance sheet
Borrowings (excluding finance lease liabilities)            –             –          (138.4)    (138.4)
Finance lease liabilities                                   –             –           (10.3)     (10.3)
Derivative financial instruments                            –          (4.1)              –       (4.1)
Trade and other payables (excluding statutory
  liabilities)                                          –      –   (83.0)  (83.0)
                                                   55555 55555 55555 55555
                                                        –   (4.1) (231.7) (235.8)
                                                   aaaaa aaaaa aaaaa aaaaa
                                                                                       Other
                                                                                   financial
                                                                 Derivatives   liabilities at
                                                   Loans and       used for       amortised
Financial instruments by category                  receivables      hedging              cost    Total
31 December 2009                                          £m             £m               £m      £m
Assets as per balance sheet
Trade and other receivables (excluding
  prepayments)                                        149.8   –     –   149.8
Cash and cash equivalents                              66.3   –     –    66.3
Cash – IDC Scheme funds (restricted)                   33.8   –     –    33.8
                                                   55555 55555 55555 55555
                                                      249.9  –      –   249.9
                                                   55555 55555 55555 55555
Liabilities as per balance sheet
Borrowings (excluding finance lease liabilities)            –             –          (165.7)    (165.7)
Finance lease liabilities                                   –             –           (14.6)     (14.6)
Derivative financial instruments                            –          (4.4)              –       (4.4)
Trade and other payables (excluding statutory
  liabilities)                                         –       –   (76.6)  (76.6)
                                                   55555 55555 55555 55555
                                                        –   (4.4) (256.9) (261.3)
                                                   aaaaa aaaaa aaaaa aaaaa




                                                   88
                                                                                       Other
                                                                                   financial
                                                                 Derivatives   liabilities at
                                                   Loans and       used for       amortised
Financial instruments by category                  receivables      hedging              cost     Total
31 December 2008                                          £m             £m               £m       £m
Assets as per balance sheet
Trade and other receivables (excluding
  prepayments)                                        176.6   –     –   176.6
Cash and cash equivalents                              43.9   –     –    43.9
Cash – IDC Scheme funds (restricted)                   37.5   –     –    37.5
                                                   55555 55555 55555 55555
                                                      258.0  –      –   258.0
                                                   55555 55555 55555 55555
Liabilities as per balance sheet
Borrowings (excluding finance lease liabilities)            –             –          (190.9)    (190.9)
Finance lease liabilities                                   –             –           (20.7)     (20.7)
Derivative financial instruments                            –          (6.9)              –       (6.9)
Trade and other payables (excluding statutory
  liabilities)                                          –      –  (107.4) (107.4)
                                                   55555 55555 55555 55555
                                                        –   (6.9) (319.0) (325.9)
                                                   aaaaa aaaaa aaaaa aaaaa
Disclosures in respect of the Group’s financial risks are set out below.

Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk,
cash flow interest rate risk and fair value interest rate risk), credit risk and liquidity risk. The
Group’s overall risk management programme focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the Group’s financial performance. The Group
uses derivative financial instruments to hedge certain risk exposures.
Risk management is carried out by the Group treasury department under policies approved by the
Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close
cooperation with the Group’s operating units. The Board provides written principles for overall risk
management, as well as written policies covering specific areas, such as foreign exchange risk,
interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial
instruments, and investment of excess liquidity.

(a)   Market risk
      (i) Foreign exchange risk
          The Group operates internationally and is exposed to foreign exchange risk arising
          from various currency exposures, primarily with respect to the US dollar, Australian
          dollar and the GB pound.
             The primary exposure to the Group in terms of foreign currency risk is translation of the
             subsidiary results. This risk is managed primarily through borrowings denominated in the
             relevant foreign currencies. No sensitivity analysis has been performed for the purposes
             of these accounts as under IFRS 7 translation related risk is not taken into account.
             Foreign currency transaction exposure arising on normal trade flows is not hedged.
             The exposure of overseas operating subsidiaries to transaction risk is minimised by
             matching functional currency income with functional currency costs. Group
             management has completed a sensitivity analysis on the exposure of the Group to
             reasonable movements in the main functional currencies used by the subsidiaries and
             conclude that the impact on profit and equity is minimal.




                                                   89
      (ii)   Cash flow and fair value interest rate risk
             The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at
             variable rates expose the Group to cash flow interest rate risk. Borrowings issued at
             fixed rates expose the Group to fair value interest rate risk.
             As at 31 December 2010, the Group’s debt was denominated in GB pounds,
             US dollars and Australian dollars and was all at a floating rate. The Group has interest
             rate swaps in place for both the US dollar denominated debt and a proportion of the
             GB pound debt.
             The Group reviews its interest rate exposure, taking into consideration refinancing,
             renewal of existing positions and alternative financing and hedging.
             Based on various scenarios, the Group manages its cash flow interest rate risk by
             using floating to fixed interest rate swaps. Such interest rate swaps have the economic
             effect of converting borrowings from floating to fixed rates. Under interest rate swaps,
             the Group has entered into transactions to exchange, at specified intervals (primarily
             quarterly), the difference between fixed contract rates and floating rate interest
             amounts calculated by reference to the agreed notional amounts.
             Management has performed a sensitivity analysis on the impact of reasonable
             movements in interest rates on Group profit and equity and consider that the impact
             is negligible.

(b)   Credit risk
      Credit risk is the risk of financial loss to the Group if a customer or counterparty to a
      financial instrument fails to meet its contractual obligations, and arise principally from the
      Group’s receivables from customers and deposits with financial institutions.
      The Group’s exposure to credit risk (see note 20 for additional information) is influenced
      mainly by the individual characteristics of each customer. The Group has an established
      credit policy under which each new customer is analysed for creditworthiness before the
      Group’s standard payment and delivery terms and conditions are offered. The Group’s
      review includes external ratings, and in some cases bank references.

(c)   Liquidity risk
      Liquidity risk is the risk that the Group will not be able to meet its financial obligations as
      they fall due (see note 23 for additional information). The Group’s approach to managing
      liquidity is to ensure that it will always have sufficient liquidity to meet its liabilities when
      due, under both normal and stressed conditions, without incurring unacceptable losses or
      damage to the Group’s reputation.

(d)   Capital management
      The Group’s objectives when managing capital are to safeguard the Group’s ability to
      continue as a going concern in order to provide returns for shareholders and benefits for
      other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
      In order to maintain or adjust the capital structure the Group may adjust the amount of
      dividends payable to shareholders, return capital to shareholders, issue new shares or sell
      assets to reduce debt.

(e)   Accounting for derivative financial instruments and hedging activities
      On inception derivatives are accounted and measured at fair value and subsequently
      remeasured at fair value. The gain or loss on remeasurement is taken to the income
      statement except where the derivative is a designated hedging instrument when it is
      recognised in equity. The accounting treatment of derivatives classified as hedges depends




                                                  90
on their designations, which occurs on the date that the derivative contract is committed
to. The Group designates derivatives as:
– a hedge of the income/cost of a highly probable forecasted transaction or commitment
  (‘cash flow hedge’);
– a hedge of the net investment in a foreign entity (‘net investment hedge’); and
– a hedge of the fair value of an asset or liability (‘fair value hedge’).
In order to qualify for hedge accounting, the Group documents in advance the relationship
between the item being hedged and the hedging instrument and demonstrates the
relationship between the hedged item and the hedging instrument, to show that the hedge
will be effective on an on-going basis. Testing the effectiveness of the hedging instrument is
performed bi-annually.
In order to qualify for hedge accounting, the Group documents in advance the relationship
between the item being hedged and the hedging instrument and demonstrates the
relationship between the hedged item and the hedging instrument, to show that the hedge
will be effective on an on-going basis. Testing the effectiveness of the hedging instrument is
performed bi-annually.
Gains or losses on cash flow hedges that are regarded as highly effective are recognised in
equity. Where the forecast transaction results in a financial asset or liability, the gains or
losses previously recognised in equity are reclassified to the income statement in the same
period as the asset or liability affects income or expenditure. Where the forecasted
transaction or commitment results in a non-financial asset or a liability, then any gains or
losses previously deferred in equity are included in the cost of the related asset or liability.
If the forecasted transaction or commitment results in future income or expenditure, gains
or losses deferred in equity are transferred to the income statement in the same period as
the underlying income or expenditure.
For the portion of hedges deemed ineffective or transactions that do not qualify for hedge
accounting under IAS 39, any change in assets or liabilities is recognised immediately in the
income statement. Where a hedge no longer meets the effectiveness criteria, any gains or
losses deferred in equity are only transferred to the income statement when the committed
or forecasted transaction is recognised in the income statement. However, where the Group
applied cash flow hedge accounting for a forecasted or committed transaction that is no
longer expected to occur, then the cumulative gain or loss that has been recorded in equity
is transferred to the income statement. When a hedging instrument expires or is sold, any
cumulative gain or loss existing in equity at that time remains in equity and is recognised
when the forecast transaction is ultimately recognised in the income statement.
Where the Group hedges net investments in foreign entities through currency borrowings
that are regarded as highly effective, the gains or losses on the translation of the borrowings
are recognised in equity. If the Group uses derivatives as the hedging instrument, the
effective portion of the hedge is recognised in equity with any ineffective portion
recognised in the income statement. On disposal of the foreign operation gains and losses
accumulated in equity are transferred to the Income Statement.
The Group has not entered into any fair value hedges.
The fair values of short-term deposits, loans and other borrowings with a maturity of less
than one year are assumed to approximate to their book values. In the case of the bank
loans and other borrowings due in more than one year, the fair value of financial liabilities
for disclosure purposes is estimated by discounting the future contractual cash flows at the
current market interest rate available to the Group for similar financial instruments. The fair
value of the interest rate swaps (cashflow hedges) are calculated using quoted prices in
active markets for identical assets and liabilities.




                                           91
      The maximum exposure to credit risk at the reporting date is the fair value of the derivative
      assets in the balance sheet.

      (i)    Interest rate swaps
             The notional principal amounts of the outstanding interest rate swap contracts at
             31 December 2010 were £78.4 million (2009: £85.6 million; 2008: £109.5 million).
             At 31 December 2010 the main floating rates were UK LIBOR, US LIBOR and
             Australian inter bank rate. Interest rate swaps were in place which swapped floating
             LIBOR amounts for fixed rates. UK LIBOR was swapped for a fixed rate of 5.145 per
             cent. on £60 million of the sterling debt and 5.66 per cent. on £7 million of the
             sterling debt. US LIBOR was swapped for a fixed rate of 3.23 per cent. on $30 million
             of US dollar denominated debt.

      (ii)   Forward foreign exchange contracts
             The notional principal amounts of the outstanding forward foreign exchange contracts
             at 31 December 2010 were £nil (2009: £nil; 2008: £4.8 million).
             Gains and losses recognised through the statement of changes in equity on forward
             foreign exchange contracts as of 31 December 2008 are recognised in the income
             statement in the period or periods during which the hedged forecast transaction
             affects the income statement, which is generally within 12 months from the balance
             sheet date unless the gain or loss is included in the initial recognition of a financial
             asset in which case recognition is over the lifetime of the asset.
                                          2010                     2009                 2008
                                       Assets   Liabilities    Assets   Liabilities     Assets    Liabilities
                                         £m            £m        £m            £m         £m             £m
             Interest rate swaps –
               cash flow hedges             –          (4.1)       –           (4.4)          –         (6.3)
             Forward foreign
               exchange
               contracts – cash flow
               hedges                     –           –           –           –           –          (0.6)
                                       555        555          555        555          555          555
             Total                        –        (4.1)          –        (4.4)          –          (6.9)
                                       aaa        aaa          aaa        aaa          aaa          aaa
      There was no ineffectiveness to be recorded from net investment in foreign entity hedges.
25.   TRADE AND OTHER PAYABLES
                                                                        2010           2009            2008
                                                                         £m             £m              £m
Payments received on account                                        4.7  3.5    7.3
Trade payables                                                     37.0 30.0   43.4
Social security and other taxes                                    17.3 19.1   25.6
Other payables                                                     25.9 24.3   29.3
Payables to joint ventures                                            –  0.6    0.1
Accrued expenses                                                   15.4 18.2   27.3
                                                               55555 55555 55555
                                                                  100.3 95.7  133.0
                                                               aaaaa aaaaa aaaaa
Other payables include £0.5 million (2009: £0.9 million; 2008: £1.2 million) in respect of deferred
contingent consideration.
Trade payables to joint ventures are repayable on demand and bear no interest.




                                                  92
26.   CURRENT TAX LIABILITIES
                                                                    2010         2009          2008
                                                                     £m           £m            £m
UK taxation                                                      8.6   5.3   3.8
Overseas taxation                                                4.5   6.0   5.6
                                                             55555 55555 55555
                                                                13.1  11.3   9.4
                                                             aaaaa aaaaa aaaaa

27.   PROVISIONS FOR LIABILITIES AND CHARGES
                                                               Industrial
                                                                  disease        Other
                                                                      £m           £m            £m
At 1 January 2008                                                7.1            4.9         12.0
Provisions charged                                               5.7            0.2          5.9
Provisions released                                             (0.5)             –         (0.5)
Provision utilised                                              (2.6)          (0.4)        (3.0)
                                                             55555          55555        55555
At 31 December 2008                                              9.7            4.7         14.4
                                                             55555          55555        55555
At 1 January 2009                                                9.7            4.7         14.4
                                                             55555          55555        55555
Provisions charged                                              74.2            0.8         75.0
Provisions released                                                –              –            –
Provision utilised                                              (3.7)          (0.1)        (3.8)
                                                             55555          55555        55555
At 31 December 2009                                             80.2            5.4         85.6
                                                             55555          55555        55555
At 1 January 2010                                               80.2            5.4         85.6
                                                             55555          55555        55555
Provisions charged                                                 –            0.9          0.9
Provisions released                                                –           (0.8)        (0.8)
Unwind of provision discount                                     4.0              –          4.0
Provision utilised                                              (2.5)          (0.2)        (2.7)
                                                             55555          55555        55555
At 31 December 2010                                             81.7            5.3         87.0
                                                             aaaaa          aaaaa        aaaaa
Industrial disease provision
There is a history of asbestos claims being lodged against the Cape Group. Where the Group has
deemed that it is appropriate to do so, settlement has been made.
In order to provide for the long -term financing of future asbestos related claims likely to be made
successfully against the Group, in 2006 Cape plc put in place a Scheme of Arrangement, details of
which are set out in note 35.
The 2007 actuarial review resulted in a range of low and high estimates of £48 million and
£203 million respectively, although there was no certainty that the total costs of such claims would
fall within this range. Given the wide range and the significant uncertainty, under accounting
standards no provision could be recorded for the unknown claims. A provision of £9.7 million was
recorded for the notified claims. Following further work by independent actuaries in 2009, the
Board considered that the value of the total future asbestos related liabilities could be estimated
with sufficient reliability and a provision was recorded.
In accordance with the terms of the Scheme, the Directors have commissioned independent
actuaries to review and provide estimates of the Group’s unpaid and uninsured asbestos related
claims as at 31 December 2010.
The actuaries provided a reasonable range of estimates which resulted in a range of £60 million
(2009: £60 million) to £100 million (2009: £100 million) with a consistent central estimate of
£81.7 million (2009: £79.0 million).




                                                93
The actuaries’ estimates are of the aggregate projected, discounted value, net of insurance
recoveries, of the unpaid UK asbestos related claims.
There has been a overall increase in the 2010 central estimate, in comparison to what was
anticipated during the last full actuarial review in 2007. While there has been better than expected
claims (experience) overall between full reviews, this has been more than offset by an overall
strengthening of assumptions. The main assumptions in question are as follows:
(a)     Future population mortality – these assumptions have been updated to the 2008
        population projections from the Office for National Statistics: “English Males, Principal
        assumption” to reflect the latest views on longevity trends. This has contributed to an
        increase of estimates over all disease types.
(b)     Average claim size – this has increased for mesothelioma claims as a result of analysis of
        historical data which shows an approximate increase of around 10 per cent. in average
        indemnity over the base period.
Overall claims experience within Cape has been favourable for the high value claims such as
mesothelioma and lung cancer, although slightly worse than expected for asbestosis and pleural
thickening.
The assumptions made in assessing the appropriate level of provision include:
(i)     future claim numbers – the latest disease emergence studies conducted in the UK by the
        HSE were used along with several academic studies, and overlaid with Cape specific
        exposure data;
(ii)    future average claim sizes;
(iii)   allocation of gross claims to exposure year for the purposes of Insurance;
(iv)    future UK earnings and judicial inflation; and
(v)     claims payment pattern for known claims and future reported disease claims.
Due to the nature of this provision there remains uncertainty over the number, nature, timing and
validity of future claims which could occur over a period of more than 40 years and the provision
will be updated should any material change occur. However, the Directors anticipate that, assuming
no material deterioration in the Group’s trading performance, that the Group will be able to
ensure that: (i) it’s subsidiary Cape Claims Services Limited will be sufficiently funded to satisfy all
Scheme claims; and (ii) the Group will be sufficiently funded to satisfy any UK asbestos-related
claims falling outside of the Scheme.
The provision in respect of the industrial disease is discounted at 5 per cent. (2009: 5 per cent.).
The deferred tax asset related to this provision is shown within the deferred tax balance (note 18).
The net discounted after tax provision is £59.6 million as shown below:
Total provision                                £81.7 million
Deferred tax benefit                          (£22.1 million)
                                               55555
Net provision after tax                        £59.6 million
                                               aaaaa
Other provisions
Other provisions relate to the decision made in 2002 to sell and close the Calsil business and
provisions for property dilapidations and national insurance on share options.
Due to the inherent uncertainty regarding the timing of settlement, these provisions have been
classed as non current.




                                                  94
28.   COMMITMENTS
(a)   Capital commitments
      Capital expenditure contracted for at the balance sheet date but not yet incurred:
                                                                   2010          2009        2008
                                                                    £m            £m          £m
      Property, plant and equipment                             1.6   1.5   1.5
                                                            aaaaa aaaaa aaaaa
      These commitments are expected to be settled in the following financial year.

(b)   Operating lease commitments
      The Group leases various properties, plant and machinery under non-cancellable operating
      lease agreements. The leases have varying terms, escalation clauses and renewal rights. The
      lease expenditure charged to the income statement during the year was £2.9 million (2009:
      £3.2 million; 2008: £1.8 million) property leases, and £13.6 million (2009: £14.1 million;
      2008: £14.7 million) plant and equipment leases.
      The future aggregate minimum lease payments under non-cancellable operating leases are
      due:
                                         Plant and               Plant and               Plant and
                                Property equipment      Property equipment      Property equipment
                                   2010       2010         2009       2009         2008       2008
      Within 1 year                     1.8       2.0       2.6           2.1       1.9        1.2
      Later than 1 year and
        less than 5 years         2.9            3.9       3.9        2.4          4.2        2.4
      After 5 years               1.3              –       0.9          –          1.1          –
                               5555           5555      5555       5555         5555       5555
                                  6.0            5.9       7.4        4.5          7.2        3.6
                               aaaa           aaaa      aaaa       aaaa         aaaa       aaaa

29.   SHARE CAPITAL
Issued and fully paid
                                2010           2010      2009        2009         2008       2008
                               Shares           £m      Shares        £m         Shares       £m
Ordinary shares of 25p each
At 1 January                 116,029,082 29.0 114,989,087            28.8 113,837,618         28.5
Issue of shares and options
   in settlement of deferred
   consideration                       –    –     677,726            0.1           –    –
Exercise of share options        915,914  0.2     362,269            0.1 1,151,469    0.3
                             55555 55555 55555                   55555 55555 55555
At 31 December               116,944,996 29.2 116,029,082           29.0 114,989,087 28.8
                             55555 55555 55555                   55555 55555 55555
Deferred shares of 1p each
At 1 January                 431,906,031  4.3 431,906,031            4.3    431,906,031 4.3
Purchased for cancellation (431,906,031) (4.3)          –              –              –   –
                             55555 55555 55555                   55555      55555 55555
At 31 December                         –    – 431,906,031            4.3    431,906,031 4.3
                             55555 55555 55555                   55555      55555 55555
plc Scheme share
At 1 January and
   31 December                         1    –           1              –   1       –
                             55555 55555 55555                   55555 55555 55555
                                         29.2                       33.3        33.1
                             aaaaa aaaaa aaaaa                   aaaaa aaaaa aaaaa




                                                 95
Deferred shares
The holders have no dividend rights, redemption entitlement or voting rights. On a winding up
the holders were entitled to repayment of capital only after ordinary shareholders had received
£100 each for each ordinary share. Following approval by shareholders on 20 May 2010, the
deferred shares were purchased bor an aggregate consideration of £1 and cancelled on 20 August
2010.

plc Scheme Share
The plc Scheme Share is held by the Law Debenture Trust Corporation plc on behalf of the
Scheme creditors.
The rights attaching to the share are designed to ensure that Scheme assets are only used to settle
Scheme claims and ancillary costs and do not confer any right to receive a distribution or return
of surplus capital save that the holder will have the right to require the Company to redeem the
share at par value on or at any time after the termination of the Scheme.
The share carries two votes for every vote which the holders of the other classes of shares in
issue are entitled to exercise on any resolution proposed during the life of the Scheme to engage
in certain activities specified in the Company’s Articles of Association.
The Company will not be permitted to engage in certain activities specified in the Company’s
Articles of Association without the prior consent of the holder of the share.

Share based payments
The Group has a savings related share option scheme (‘Sharesave plan’) which entitles employees
of the Group to buy shares in the Company. Grants of share options under this scheme are offered
to employees periodically and the options are usually awarded at a 20 per cent. discount to the
market price at the date the options are offered to employees. These options must be exercised
within six months of the vesting date.
The Employee Incentive Plan (EIP) allows the Group to grant options to Directors and senior
employees. The EIP carries a non-market based performance criteria. The contractual life of the
options is 10 years. The options become exercisable on the third anniversary of the date of grant,
subject to a growth in earnings per share over that period exceeding an average 3 per cent.
compounded annually above the growth in the consumer price index over the same period.
Exercise of an option is subject to continued employment.
The Old Cape 2007 Performance Share Plan (PSP) is the award of Ordinary Shares to the
participant employees or Executive Directors of the Group. Awards are made upon the terms set
out in the plan and such other additional terms as the Board shall determine. Vesting of the
conditional awards made to date is subject to Cape plc adjusted diluted Earnings Per Share (EPS)
meeting the specified performance criteria over a three-year vesting period. The performance
criteria is adjusted diluted EPS growth of the Retail Price Index (‘RPI’) plus 3 per cent. for the
minimum of 30 per cent. of the shares awarded to vest, and EPS growth of RPI plus 10 per cent.
for all of the shares awarded to vest, calculated on an annually compounded basis. The contractual
life of the award is three years and is subject to continued employment.
Options are valued using the Black-Scholes option pricing model. The fair value per option granted
and the assumptions used in the calculation for the current and preceding year are as follows:




                                                96
                                                                 Employee           3-year        5-year
                                                                 Incentive       Sharesave     Sharesave
                                                                     Plan             plan          plan
Weighted average fair value at measurement date                   80.9p      87.5p     110.0p
Share price at grant date                                        269.0p     266.0p     266.0p
Exercise price                                                   269.0p     230.0p     230.0p
Vesting period                                                   3 years    3 years    5 years
Expected option life                                          3.95 years 3.25 years 5.25 years
Risk free interest rate                                           4.97%      4.89%      4.89%
Expected share price volatility                                     28%        27%        28%
                                                             aaaaa aaaaa aaaaa
The expected share price volatility is based on historic volatility. The expected option life is the
average expected period to exercise. The risk free rate of return is the yield on a five-year zero
coupon UK Government bond. The assumed dividend yield is zero.
The shares issued under the PSP, are deemed to have a fair value equivalent to the share price on
the day of grant. Therefore the shares granted in April and July 2009 have fair values of
118.0 pence and 212.25 pence respectively. The shares granted in March 2010 have a fair value of
240.5 pence.
The number and weighted average exercise price of the share options under the EIP and Sharesave
plan and the share awards under the PSP are as follows:
                                 Weighted                Weighted                  Weighted
                                  average                 average                   average
                                  exercise    Number      exercise    Number        exercise    Number
                                     price    of share       price   of share          price    of share
                                     2010      options       2009      options         2008      options
Employee Incentive Plan            (pence)       2010     (pence)        2009        (pence)       2008
Outstanding at 1 January     235.0 1,565,000  223.1 2,182,500 195.3 3,980,000
Granted                          –         –      –         – 269.0    100,000
Exercised                    206.7 (747,500)  147.3 (215,000) 110.1 (1,120,000)
Forfeited                    269.0   (85,000) 217.2 (402,500) 249.5 (777,500)
                           5555 5555 5555 5555 5555 5555
Outstanding at 31 December   260.7   732,500  235.0 1,565,000 223.1 2,182,500
                           aaaa aaaa aaaa aaaa aaaa aaaa
Out of the 732,500 outstanding options (2009: 1,565,000; 2008: 2,182,500 options), 732,500
(2009: 562,500 options; 2008: 125,000) were exercisable. Options exercised in 2010 resulted in nil
shares (2009: nil; 2008: 505,000 shares) being issued at £0.60 each, 5,000 shares (2009: 110,000
shares; 2008: 280,000 shares) being issued at £1.20 each, 492,500 shares (2009: 105,000 shares;
2008: 330,000) being issued at £1.76 each and 250,000 shares (2009: nil shares; 2008: 5,000) being
issued at £2.69 each. The options were exercised on a regular basis during the year. The average
share price in 2010 was £2.75 (2009: £1.57; 2008: £2.03).
                                 Weighted                Weighted                  Weighted
                                  average                 average                   average
                                  exercise    Number      exercise    Number        exercise    Number
                                     price    of share       price   of share          price    of share
                                     2010      options       2009      options         2008      options
Sharesave Plan                     (pence)       2010     (pence)        2009        (pence)       2008
Outstanding at 1 January     178.2            922,785  173.4 1,352,023 173.0 1,823,112
Exercised                    204.3           (141,437) 135.6 (147,269) 138.8   (31,469)
Forfeited                    187.4           (129,197) 177.4 (281,969) 174.4 (439,620)
                           5555              5555 5555 5555 5555 5555
Outstanding at 31 December   168.0            652,151  178.2   922,785 173.4 1,352,023
                           aaaa              aaaa aaaa aaaa aaaa aaaa




                                                 97
Out of the 652,161 outstanding options (2009: 922,785; 2008: 1,352,023 options), 39,455 options
(2009: 35,620; 2008: nil) were exercisable. Options exercised in 2010 resulted in 38,722 shares
(2009: 146,722; 2008: 30,209 shares) being issued at £1.35 each and 103,364 shares (2009: 892;
2008: 1,260) being issued at £2.30.
                                 Weighted                Weighted                Weighted
                                  average                 average                 average
                                  exercise    Number      exercise    Number      exercise    Number
                                     price    of share       price   of share        price    of share
                                     2010      options       2009      options       2008      options
Performance Share Plan             (pence)       2010     (pence)        2009      (pence)       2008
Outstanding at 1 January       – 3,363,386  –   900,201 –                                           –
Exercised                      –   (26,977) –         – –                                           –
Granted                        – 1,046,628  – 2,648,712 –                                     900,201
Forfeited                      – (181,110)  – (185,527) –                                           –
                           5555 5555 5555 5555 5555                                          5555
Outstanding at 31 December     – 4,201,927  – 3,363,386 –                                     900,201
                           aaaa aaaa aaaa aaaa aaaa                                          aaaa
Out of the 4,201,927 outstanding PSP awards (2009: 3,363,386; 2008: 900,201 awards), 26,977 was
vested during 2010 (2009: nil; 2008: nil).
Share options and awards outstanding at the end of the year have the following expiry date and
exercise prices:
                                Exercise price per                           Number of shares
Employee Incentive Plan         share (pence)                        2010        2009            2008
7 May 2014                      60.0                                 –         –    35,000
24 October 2015                 120.0                                –     5,000   170,000
7 July 2016                     176.0                           65,000   557,500   720,000
1 April 2017                    269.0                          667,500 1,002,500 1,157,500
8 January 2018                  269.0                                –         –   100,000
                                                             55555 55555 55555
                                                               732,500 1,565,000 2,182,500
                                                             aaaaa aaaaa aaaaa
                                Exercise price per                           Number of shares
Sharesave Plan                  share (pence)                        2010        2009            2008
1   March 2010                  135.0                                –  35,620   207,385
1   June 2011                   230.0                          404,495 465,073   595,866
1   March 2012                  135.0                           39,455 170,363   221,382
1   June 2013                   230.0                          208,201 251,729   327,390
                                                             55555 55555 55555
                                                               652,151 922,785 1,352,023
                                                             aaaaa aaaaa aaaaa
                                Exercise price per                           Number of shares
Performance Share Plan          share (pence)                        2010        2009            2008
28   April 2011                 –                               562,238   582,296 696,026
23   September 2011             –                               123,830   150,216 204,175
30   April 2012                 –                             2,104,630 2,144,630       –
29   July 2012                  –                               370,491   486,244       –
17   March 2013                 –                             1,040,738         –       –
                                                             55555 55555 55555
                                –                             4,201,927 3,363,386 900,201
                                                             aaaaa aaaaa aaaaa
On 17 March 2010, 1,046,628 share awards were awarded to Directors and employees under
the PSP which vest after three years subject to performance criteria being met. If the criteria are
met, the awards vest at no cost to the employees and Directors.




                                                 98
On 30 April 2009 and 29 July 2009, 2,162,468 share awards and 486,244 share awards respectively
were awarded to Directors and employees under the PSP.
On 28 April and 23 September, 696,026 and 204,175 shares respectively were awarded to Directors
and employees under the PSP.
These shares vest after three years subject to performance criteria being met. If the criteria are
met, the awards vest at no cost to the employees and Directors.
The total charge for the year relating to employee share based payment plans was £2.2 million
(2009: £1.6 million; 2008: £1.2 million), all of which related to equity settled share based payment
transactions.

30. DIVIDENDS PER SHARE
An interim dividend was paid in 2010 amounting to £4,660,619 (4 pence per share) (2009: nil;
2008: nil). A final dividend in respect of the year ended 31 December 2010 of 8 pence per share,
is to be proposed at the General Meeting convened for 25 May 2011, making a total dividend of
12 pence for the year. These financial statements do not reflect this final dividend payable.

31.   CASH GENERATED FROM OPERATIONS
(a)   Reconciliation of Group operating profit to net operating cash flow from
      operating activities
                                                                    2010         2009          2008
                                                                     £m           £m            £m
      Cash flows from operating activities
      Continuing operations
      Operating Profit/(loss) for the year                          75.2          (6.5)        52.5
      Depreciation                                                  17.4          15.8         15.3
      Amortisation of intangibles                                    2.6           2.9          2.7
      Share option charge                                            2.2           1.6          1.2
      Loss/(profit) on sale of property, plant and equipment         0.1           1.4         (0.8)
      Difference between pension charge and cash
        contributions                                               (0.7)         (0.5)         (0.5)
      Share of profit of associates                                 (0.1)          1.6           0.5
      Changes in working capital (excluding effects of
        exchange adjustments on consolidation)
      Decrease/(increase) in inventories                             3.9          (0.5)         1.4
      Decrease/(increase) in trade and other receivables             0.2          22.4        (21.6)
      (Decrease)/increase in trade and other payables               (2.3)        (29.2)        15.2
      (Decrease)/increase in provisions
        (excluding deferred tax)                                  (0.4) 71.2   2.4
      Industrial disease costs paid                                0.4   4.2   3.6
                                                               55555 55555 55555
      Cash generated from continuing operations                   98.5  84.4  71.9
                                                               aaaaa aaaaa aaaaa
      Discontinued operations
      Profit/(loss) for the year                                   0.4     –  (0.2)
      Increase in trade and other receivables                        –     –  (0.1)
      Decrease in trade and other payables                           –     –  (0.7)
      Decrease in provisions                                      (0.4)    –
      Cash outflow from discontinued operations                       –     –  (1.0)
                                                               55555 55555 55555
      Cash generated from operating activities                    98.5  84.4  70.9
                                                               aaaaa aaaaa aaaaa




                                                99
      In the statement of cash flows, proceeds from sale of property, plant and equipment
      comprise:
                                                                  2010          2009         2008
                                                                   £m            £m           £m
      Net book amount                                               0.4          2.5           1.9
      (Loss)/profit on disposal of property, plant and
        equipment                                              (0.1) (1.4)  0.8
                                                            55555 55555 55555
      Proceeds from disposal of property, plant and
        equipment                                               0.3   1.1   2.7
                                                            aaaaa aaaaa aaaaa

(b)   Analysis of cash flows relating to restricted funds
                                                               2010   2009   2008
                                                                 £m     £m     £m
      At 1 January                                              33.8   37.5   39.1
      Payment of Scheme creditors                               (2.2)  (4.1)  (3.4)
      Operating costs                                              –   (0.1)  (0.2)
      Interest received                                            –    0.5    2.0
                                                            55555 55555 55555
      At 31 December                                            31.6   33.8   37.5
                                                            aaaaa aaaaa aaaaa

32. REPAYMENT OF BORROWINGS
The repayment of borrowings shown in the cash flow statement represents a scheduled repayment
under the Group’s Senior Debt facility.

33. SETTLEMENT OF LOAN NOTES
The loan notes of £3.7 million relate to deferred consideration payable for the acquisition of the
DBI Group which took place during 2006. These loan notes were settled during January 2009.

34. CONTINGENCIES
The Group has contingent liabilities in respect of guarantees and bonds entered into in the normal
course of business, in respect of which no loss is expected.

35. THE SCHEME OF ARRANGEMENT
On 14 June 2006, the Scheme became effective and binding upon Cape plc and the following 12
of its wholly-owned subsidiaries:
Cape Building Products Limited
Cape Calsil Systems Limited
Cape Contracts International Limited
Cape Durasteel Limited
Cape East Limited
Cape Industrial Services Limited
Cape Industries Limited
Cape Insulation Limited
Cape Specialist Coatings Limited
Predart Limited
Somewatch Limited
Somewin Limited




                                                100
The detailed terms of the Scheme are set out in the Scheme itself, a copy of which has been filed
with the Registrar of Companies, the Articles of Association of Cape and Cape Claims Services
Limited (‘CCS’) and a number of other ancillary agreements. The effect of the Scheme as a whole
can be summarised as follows:
(a)   While Scheme creditors retain their rights against Scheme companies, and may bring
      proceedings against Scheme companies for declaratory relief to determine whether they
      have a claim and, if so, of what amount, their rights, subject as provided in sub paragraphs
      (k) and (m) below are only enforceable against CCS under the terms of the Scheme
      guarantee;
(b)   CCS was funded in the first instance with a sum of £40 million which represented what
      was considered to be a sufficient sum to discharge CCS’s liabilities to Scheme creditors
      which became payable over at least eight years from 1 January 2006;
(c)   Every three years there is an assessment of the projected Scheme claims against Scheme
      companies payable by CCS over the following nine years, by reference to which the Funding
      Requirement, is established;
(d)   The use of Scheme funds is restricted to the payment of established Scheme claims and
      Scheme creditor costs;
(e)   In the event that an assessment reveals a shortfall between the Scheme assets and the
      Funding Requirement, the Company will top up CCS’s funding over the following three
      years provided that sufficient cash is available, Cape’s obligation being limited to 70 per
      cent. of the Group’s consolidated adjusted operational cash flow (including, for example,
      adjustments to take account of acquisitions, an element of capital expenditure and
      repayment of borrowing facilities);
(f)   Should the Company not be able to meet its top up obligation in any one year, it will be
      required to make good the shortfall in the next year, again subject to sufficient cash being
      available;
(g)   Alongside the Funding Requirement there is the Scheme Funding Requirement which is
      assessed every year by reference to projected Scheme claims against Scheme companies
      payable by CCS over the next six years;
(h)   If at any time the ratio of the Scheme assets to the Scheme Funding Requirement (the
      Scheme Funding Percentage) falls below 60 per cent., CCS will have the ability to reduce
      the percentage (the Payment Percentage) of each established claim which it pays to Scheme
      creditors until such time as the Scheme Funding Percentage is restored to 60 per cent.;
(i)   Cape is permitted to pay dividends provided that at the time of payment: (i) the Scheme
      Funding Percentage in relation to the last preceding financial year was certified to be not
      less than 110 per cent.; (ii) the Directors of Cape certify that they anticipate that the
      Scheme Funding Percentage for the current and following financial year will be not less than
      110 per cent.; and (iii) the Payment Percentage has not at any time within the previous
      40 business days been below 100 per cent. Any distribution which Cape proposes to make
      to its shareholders may not, without the consent of the Scheme Shareholder, exceed the
      greater of: (i) 50 per cent. of the consolidated operating profits of the Group for the last
      preceding financial year; and (ii) the aggregate of any permitted dividends made in the
      preceding financial year. This restriction therefore places a cap on the amount of dividends
      that the Company may pay in any one year;
(j)   There have been established special voting shares (the Scheme Shares) in CCS and Cape
      which are held by an independent third party (the Scheme Shareholder) on trust for Scheme




                                               101
      creditors. The Scheme Shares have special rights which are designed to enable the Scheme
      Shareholder to protect the interests of Scheme creditors;
(k)   In the case of certain Scheme creditors (Recourse Scheme Creditors), who are those Scheme
      creditors whose claims are in whole or in part the subject of a contract of insurance
      (Recourse Scheme Claims) their rights to enforce their Recourse Scheme Claims against a
      relevant Scheme company will revive in certain circumstances. These circumstances are
      where the relevant Scheme company is insolvent or where there has been a specified
      reduction in the Payment Percentage and if the Scheme creditor was able to bring about
      the insolvency of the relevant Scheme company he would be able to recover greater
      compensation from the FSCS (‘Financial Services Compensation Scheme’) or, in certain
      circumstances, from a solvent insurer than is available from CCS at that time under the
      Scheme. There will be a specified reduction if either: (i) the Payment Percentage has been
      reduced below 100 per cent. but above 50 per cent. and the Scheme creditor has not been
      paid in full after 12 months; or (ii) the Payment Percentage is reduced to 50 per cent. or
      below;
(l)   Each Scheme company will agree to hold on trust for any Scheme creditor concerned the
      proceeds of any policy of insurance (or any compensation received from the FSCS) referable
      to that Scheme claim;
(m)   The restriction described in sub-paragraph (a) above will not apply to proceedings to
      enforce the right to confer under sub-paragraph (l) above; and
(n)   There are provisions contained in two reimbursement agreements which preserve certain
      rights of proof by CCS and Cape respectively in any insolvency of Cape or any of the other
      Scheme companies.

36. RELATED PARTY TRANSACTIONS
The Company has taken advantage of the exemption available under IAS 24 not to disclose any
transactions or balances between Group entities that have been eliminated on consolidation.

(a)   Key management compensation
                                                                 2010         2009         2008
                                                                 £000         £000         £000
      Salaries and other short-term employee benefits        2,427 2,363 2,021
      Post-employment benefits                                 163   163   149
      Share based payments                                     997   743   295
                                                          55555 55555 55555
                                                             3,587 3,269 2,465
                                                          aaaaa aaaaa aaaaa
      The key management with Group wide responsibility are considered to be the Group
      Directors and the head office Group management team.




                                              102
(b)   Directors
                                                                   2010         2009         2008
                                                                   £000         £000         £000
      Aggregate emoluments                                         1,903       1,903         1,512
      Company contributions to defined benefit pension
        scheme                                                         –            –          11
      Company contributions to defined contribution
        pension scheme                                               117   117    91
                                                                55555 55555 55555
                                                                   2,020 2,020 1,614
                                                                aaaaa aaaaa aaaaa
      Highest paid director
      Aggregate emoluments                                         1,066 1,066 933
                                                                55555 55555 55555
      Defined contribution pension scheme:
      Contributions in year                                         70    70    65
                                                                aaaaa aaaaa aaaaa
      No Directors (2009: nil; 2008: one) accrued benefits under the Group’s defined benefit
      pension scheme.
      There were no termination payments during the year (2009: nil; 2008: £0.4 million).
      The following summarises the emoluments received by the Directors during the year:
                                                Performance
                                                      related
      31 December 2010              Salary/fees        bonus      Benefits     Pension       Total
      Executive Directors
      Martin K May                    465,000         581,250      19,673      69,750    1,135,673
      Richard Bingham                 315,000         315,000      12,098      47,250      689,348
      Non-Executive Directors
      Sean O’Connor                    75,000              –               –        –       75,000
      David Robins                     60,000              –               –        –       60,000
      David McManus                    60,000              –               –        –       60,000
                                   5555 5555 5555 5555 5555
      Total                         975,000 896,250 31,771 117,000 2,020,021
                                   aaaa aaaa aaaa aaaa aaaa
                                                Performance
                                                      related
      31 December 2009              Salary/fees        bonus      Benefits     Pension       Total
      Executive Directors
      Martin K May                    465,000         581,250      19,673      69,750    1,135,673
      Richard Bingham                 315,000         315,000      12,098      47,250      689,348
      Non-Executive Directors
      Sean O’Connor                    75,000              –               –        –       75,000
      David Robins                     60,000              –               –        –       60,000
      David McManus                    60,000              –               –        –       60,000
                                   5555 5555 5555 5555 5555
      Total                         975,000 896,250 31,771 117,000 2,020,021
                                   aaaa aaaa aaaa aaaa aaaa




                                                103
                                                        Performance
                                                              related
31 December 2008                            Salary/fees        bonus           Benefits        Pension                  Total
Executive Directors
Martin K May                                  435,000          478,000         19,500           65,250               997,750
Richard Bingham                               175,000          131,000          7,000           26,250               339,250
Non-Executive Directors
Sean O’Connor                                  62,500                 –             –                –                62,500
David Robins                                   45,000                 –             –                –                45,000
David McManus                                  60,000                 –             –                –                60,000
Michael Reynolds                               94,000                 –         5,000           11,729               110,729
                                            5555 5555 5555 5555 5555
Total                                        871,500 609,000 31,500 103,229 1,615,229
                                            aaaa aaaa aaaa aaaa aaaa
Benefits in kind include a company car and private medical insurance.
No Directors (2009: nil; 2008: one) accrued benefits under the Group’s defined benefit
pension scheme.
There were no termination payments paid during the year (2009: none, 2008 £0.4 million).
The interests of Directors in options to acquire ordinary shares were as follows:
During 2010                                                                                Market      Date from
                             At                                           At              price at          which
              Grant 31 December                                  31 December    Option     date of    exercisable/       Expiry
               date        2009   Granted    Exercised    Lapsed        2010      price    exercise   awards vest          date
Martin K May
EIP      7 July        400,000         –      400,000          –          –      176p      305p*          7 July           N/A
           2006                                                                                            2009
EIP   22 March         200,000         –            –          –    200,000      269p            –     22 March      22 March
           2007                                                                                            2010          2017
PSP     28 April       191,122         –            –          –    191,122          –           –      28 April          N/A
           2008                                                                                            2011
PSP     30 April       703,835         –            –          –    703,835          –           –      30 April           N/A
           2009                                                                                            2012
PSP   17 March               –    243,455           –          –    243,455          –           –     17 March            N/A
           2010                                                                                            2013
Richard Bingham
PSP    28 April        131,119         –            –          –    131,119          –           –      28 April           N/A
          2008                                                                                             2011
PSP    30 April        357,593         –            –          –    357,593          –           –      30 April           N/A
          2009                                                                                             2012
PSP   17 March               –    123,691           –          –    123,691          –           –     17 March            N/A
          2010                                                                                             2013
* Exercised on 10 September 2010.

During 2009                                                                                Market      Date from
                             At                                           At              price at          which
              Grant 31 December                                  31 December    Option     date of    exercisable/       Expiry
               date        2008   Granted    Exercised    Lapsed        2009      price    exercise   awards vest          date
Martin K May
EIP      7 July        400,000         –            –          –    400,000      176p            –        7 July         7 July
          2006                                                                                             2009           2016
EIP   22 March         200,000         –-           –          –    200,000      269p            –    22 March        22 March
          2007                                                                                             2010           2017
PSP    28 April        190,122         –            –          –    190,122          –           –      28 April           N/A
          2008                                                                                             2011
PSP    30 April              –    703,835           –          –    703,835          –           –      30 April           N/A
          2009                                                                                             2012
Richard Bingham
PSP    28 April        131,119         –            –          –    131,119          –           –      28 April           N/A
          2008                                                                                             2011
PSP    30 April              –    357,593           –          –    357,593          –           –      30 April           N/A
          2009                                                                                             2012




                                                         104
      During 2008                                                                              Market      Date from
                                   At                                          At             price at          which
                    Grant 31 December                                 31 December   Option     date of    exercisable/      Expiry
                     date        2007   Granted   Exercised    Lapsed        2008     price    exercise   awards vest         date
      Martin K May
      EIP      7 May         400,000         –    400,000           –          –      60p       255p          7 May           N/A
                2004                                                                                           2007
      EIP      7 July        400,000         –           –          –    400,000     176p            –        7 July        7 July
                2006                                                                                           2009          2016
      EIP   22 March         200,000         –           –          –    200,000     269p            0     22 March      22 March
                2007                                                                                           2010          2017
      PSP    28 April              –    190,122          –          –    190,122         –           –      28 April          N/A
                2008                                                                                           2011
      Richard Bingham
      PSP    28 April              –    131,119          –          –    131,119         –           –      28 April          N/A
                2008                                                                                           2011

      Details of the plans are given in Note 29.
      On 8 March 2011, Martin K May exercised options over 200,000 Ordinary Shares under the
      EIP at a price of 269 pence per Ordinary Share and, on 8 and 9 March 2011, sold these
      shares for personal reasons at an average price of 496.06 pence per Ordinary Share.
      On 13 April 2011 awards were made under the Performance Share Plan to Martin K May and
      Richard Bingham over 273,718 Ordinary Shares and 130,208 Ordinary Shares, respectively.
      Awards made on 28 April 2008 under the Performance Share Plan to Martin K May and
      Richard Bingham over 190,122 and 131,119, shares respectively, vested on 28 April 2011, of
      which Martin K May has subsequently sold 190,122 shares, and Richard Bingham has sold
      68,182 shares.

(c)   Other related party transactions
      There have been no material transactions with related parties during the year. As at the year
      end there was a balance of £0.5 million (2009: £0.4 million; 2008: £0.2 million) owed by
      joint ventures.

37.   POST BALANCE SHEET EVENTS
Facilities refinancing
On 5 January 2011, The Group signed an agreement to refinance its banking facilities through to
June 2015 with a new £220 million syndicated credit facility.

Repurchase and cancellation of Preference Shares
On 25 March 2011, the Company entered into a share purchase agreement (the “Agreement”) with
the registered holder of 250,000 preference shares of £1 each in the capital of Company, being all
the preference shares in issue (the “Preference Shares”), pursuant to which the Company agreed
to purchase the Preference Shares for an aggregate amount of £284,200 (the “Consideration”),
following which the Preference Shares would be cancelled.
The terms of the Agreement were approved by shareholders at a General Meeting of the Company
held on 13 April 2011, and the Preference Shares were cancelled on that date.

General Meeting and Scheme of Arrangement
The Company has recently mailed to its Shareholders a circular containing, inter alia, details of
proposed Scheme of Arrangement (the “Scheme”) to establish a new Jersey incorporated holding
company of the Cape Group and related matters (the “Proposals”) and convening a General
Meeting to approve the Proposals.
On 2 March 2011, the Company announced its intention to seek admission to the main market of
the London Stock Exchange.




                                                              105
                                             PART III

                       OPERATING AND FINANCIAL REVIEW

The following is a summary of the Group’s results, operations and financial condition for the three
financial years ended 31 December 2008, 2009 and 2010. Prospective investors should read the
following discussion, together with the whole of this document and should not just rely solely on
the key or summarised information contained in this Part III. The financial information considered
in this Part III is extracted from Part II: ‘Historical Financial Information on the Group’. The
financial information referred to in this discussion are prepared in accordance with IFRS.
The accounting principles set out in the Group’s annual report and audited accounts have been
applied consistently for the purposes of preparation of this financial information.
This section contains “forward looking statements”. Those statements are subject to risks,
uncertainties and other factors that could cause the Company’s future results or operations to
differ materially from the results or operations expressed or implied in such forward looking
statements.
Management use a number of performance measures throughout this Prospectus, these are denoted
with a footnote and defined on page 120.

1.    Operational summary
                               2010                       2009                      2008
                                   Operating                  Operating                 Operating
                                 profit before              profit before             profit before
                        Revenue other items        Revenue other items       Revenue other items
                            £m             £m          £m             £m         £m             £m
United Kingdom            273.4          28.0          304.7        25.4        309.0         27.0
Middle East/Gulf          137.7          35.4          170.7        38.6        112.0         23.1
CIS, Med & NA              51.0           7.8           48.4         6.1         54.4          5.8
Far East/Pacific Rim      188.0          14.8          131.3         7.9        147.3         16.1
Central costs                 –          (7.8)             –        (7.4)           –         (7.0)
                        555          555           555          555          555          555
Group                    650.1        78.2          655.1        70.6         622.7        65.0
                        aaa          aaa           aaa          aaa          aaa          aaa
Operational performance year ended 31 December 2010
The UK Region contributed 32.6 per cent. of operating profit before other items with the stronger
margin performance more than offsetting the decline in revenue, when compared to 2009.
UK operating profit before other items increased by 10.2 per cent. to £28.0 million (2009:
£25.4 million) despite the 10.3 per cent. reduction in revenue to £273.4 million (2009:
£304.7 million). As discussed at the half year, the performance reflects the closure of the hire &
sales division last year and the restructuring of the region into three autonomous business units.
With the restructuring now complete, the underlying strength of Cape’s business in the UK is
clearly visible in these numbers.
Some 94 per cent. of the UK Region’s revenues (2009: 84 per cent. of revenues) were derived
from plant maintenance or production support activities and were therefore met from clients’
operational budgets.
Cape’s excellent safety performance continued to be recognised by our clients in 2010 with a
number of prestigious safety awards.




                                                 106
The UK region’s order book has remained close to prior year levels with some 66 per cent. of
the region’s 2011 planned revenues now secured (2009: 71 per cent.).
The Gulf/Middle East Region contributed 41.2 per cent. of operating profit before other items
(2009: 48.5 per cent.) reflecting the impact of the slowdown in construction activity across the region.
Revenues declined by 19.3 per cent. (CER(8): –19.3 per cent.) to £137.7 million (2009:
£170.7 million), although operating profit before other items remained more resilient at
£35.4 million (2009: £38.6 million).
Some £91.0 million (65 per cent.) of revenues were related to construction support activities
down from nearly 70 per cent. in 2009 reflecting the expected decline from the highs of last year
as projects completed across the region.
Cape was active on 29 major construction projects in the Gulf/Middle East including Pearl GTL
in Qatar, Kayan, Karan Gas, National Chevron Philips (NCP) and Ma’aden in Saudi Arabia and Emal
and Borouge II in the UAE.
The region continued to build on our dominant position in the maintenance and shutdown market
across the region. Cape increased its maintenance portfolio to 72 sites (2009: 63 sites).
Cape again secured all the shutdown work available in the UAE and completed its first shutdown
in Oman at the Sohar refinery.
Cape completed almost 28 million man hours in the region with just one Lost Time Incident (LTI).
This achievement was again recognised by our clients across the region with numerous awards.
The region’s order book is now 28 per cent. higher than at the beginning of 2010. There has been
an increase in project awards in the second half of 2010 and activity within the downstream
onshore sector is expanding. Some 65 per cent. of planned 2011 revenues have now been secured
(2009: 60 per cent.).
Revenue in the Far East/Pacific Rim increased by 43.2 per cent. (CER(8): +26.0 per cent.) to
£188.0 million (2009: £131.3 million) making it the Group’s largest revenue generating region
outside the UK.
Operating profit before other items nearly doubled to £14.8 million (2009: £7.9 million)
representing 17.2 per cent. (2009: 9.9 per cent.) of the Group’s operating profit before other
items.
The transformation of the business in the region continued throughout the year. As expected the
region experienced significant revenue growth (CER(8): +37.8 per cent.) in our industrial services
businesses which accounted for 88 per cent. (2009: 83 per cent.) of revenues in the region. Some
34 per cent. of revenues were derived from maintenance and shutdown activities with 47 per
cent. relating to construction support activities driven by large, capitally funded LNG and
petrochemical projects.
Cape has continued to invest in our established training facilities in both the Philippines and
Australia during the year to ensure we are best placed to provide the increasing numbers of highly
trained operatives our clients demand.
The region’s order book increased by 4 per cent. in the year largely reflecting the progress with
major construction projects. Secured revenues now represent some 50 per cent. (2009: 48 per
cent.) of 2011 planned revenues.
The CIS, Mediterranean & North Africa region is Cape’s smallest region and contributed
9.0 per cent. of operating profit before other items (2009: 9.7 per cent.). Revenues increased by
5.4 per cent. to £51.0 million (2009: £48.4 million) with operating profit before other items
increasing by 27.9 per cent. to £7.8 million (2009: £6.1 million).




                                                  107
The vast majority, some 91 per cent. (2009: 92 per cent.) of the region’s revenues were derived
from construction support services.
Cape’s activities in the CIS countries in 2010 were again concentrated on construction support
activities at Kashagan and Karachaganak in Kazakhstan, and Odoptu and Chayevo in Sakhalin,
Russia.
In addition to Kazakhstan and Sakhalin, Cape made progress in expanding its operations further in
2010. As announced on 1 July 2010, Cape established a joint venture in Azerbaijan with state oil
company SOCAR. The joint venture was awarded its first contract with the Amec-Tekfen-Azfen
(ATA) Alliance to provide access services for the fabrication of West Chirag Platform topsides. We
also registered a branch in Turkmenistan during the year, where offices will be opened in 2011.
In August 2010, Cape announced that it had been awarded a contract valued in excess of
127 million (£22.5 million) for the provision of insulation works for the Sonatrach GL3-Z LNG
Project in Arzew, Algeria. This award marked the first major LNG project contract win for Cape in
North Africa since the Damietta LNG project in Egypt in 2002. The work is now expected to
commence in the second quarter of 2011. This was another significant award for Cape, in the
strategically important LNG sector.
The region’s order book increased by 49 per cent. over prior year levels with some 54 per cent.
of the region’s 2011 planned revenues now secured.

Operational performance year ended 31 December 2009
The UK Region delivered a solid result in 2009 given the impact of pricing pressures and the
global financial crisis on a number of the Group’s clients and markets. Revenues declined by
1.4 per cent. to £304.7 million (2008: £309.0 million) with an operating profit before other items
of £25.4 million (2008: £27.0 million).
The region’s safety performance was evidenced by a 48 per cent. improvement in the Lost Time
Incident frequency rate (LTI) and an improvement of 19 per cent. in the all injury accident
frequency rate (AFR). The UK business also received several safety awards including:
l     SABIC Global Contractor SHE Award & SABIC European Contractor SHE Award
l     Sellafield’s Resident Engineer Safety Award
l     RoSPA Gold Award
l     Drax Power’s “Safe Contractor of the Outage” Award
The value of the UK Region’s order book reached record levels having increased by 72 per cent.
since year end 2008 levels with high quality strategic long term contract wins both onshore and
offshore resulting in secured revenues at 71 per cent. of expected 2010 turnover entering into the
year.
The Gulf/Middle East region delivered another year of strong revenue growth and margin progression
in 2009. Headline revenues increased by 52.4 per cent. to £170.7 million (2008: £112.0 million) with
operating profit before other items up 67.1 per cent. to £38.6 million (2008: £23.1 million). On a CER(8)
basis, revenue and profit grew 27.9 per cent. and 40.7 per cent. respectively.
The continuation of several large scale industrial construction projects in the region underpinned
Cape’s performance with approximately 70 per cent. of revenues generated from construction
projects. Despite a tight labour market and clients seeking to limit project delays, margins remained
consistent throughout the year. Of the three business units in the region, Qatar delivered a
particularly notable result.
Some 87 per cent. (2008: 97 per cent.) of the region’s 2009 revenues were from the oil and gas
and petrochemical sectors and the key drivers of our success have been our growing reputation




                                                  108
for providing a cost effective bundled service offering combined with our excellent safety track
record.
Employee numbers in the region peaked at over 7,500 and we delivered more than 24 million
man hours (2008: 19 million) with a safety performance which won several awards as follows:
l     RasGas in recognition of Cape’s contribution towards 10 million man hours without a LTI
      across their LNG trains at Ras Laffan;
l     BAPCO in Bahrain with “Safety Contractor of the Year – category 2”;
l     Abu Dhabi Gas Liquefaction Company Ltd (ADGAS) in recognition of Cape’s contribution
      towards ten million man hours worked without a LTI over the last three years on the
      ADGAS annual turnaround;
l     In Saudi Arabia, a certificate of excellence was received from Samsung for Cape’s access and
      insulation work on the Saudi Kayan PP/PH project.
The region’s order book remained broadly flat since the beginning of 2009 reflecting the
slow-down in new oil, gas and petrochem projects. Nonetheless, about 60 per cent. of budgeted
2010 revenue was secured as at 31 December 2009.
2009 proved to be another positive year in the development of the Cape business in the CIS,
Mediterranean and North Africa region with operating profit before other items increasing by
22 per cent. to £7.7 million (2008: £6.3 million) including a £1.6 million (2008: £0.5 million) post
tax contribution from the joint venture Cape-Resa in Southern Europe. Revenues in the region
(excluding Cape’s share of JV revenue) reduced to £48.4 million (2008: £54.4 million). On a CER(8)
basis revenue fell by 25.4 per cent. whilst operating profits increased by 3.2 per cent.
Cape repeated the previous year’s safety performance on the KPO site in Aksai, Kazakhstan, again
winning the General Directors’ Annual award as “Best Contractor HSSE Practice” for a million
hours achieved without a LTI.
The region’s order book closed slightly ahead of year end 2008 level, with 54 per cent. of the
region’s budgeted 2010 revenue secured.
Revenue in the Far East/Pacific Rim region reduced by £16.0 million to £131.3 million
(2008: £147.3 million) with operating profit before other items reducing to £7.9 million
(2008: £16.1 million). This was due to our business in this region operating in a number of
sectors that were less resilient to the prevailing economic conditions than the energy sector,
including commercial and residential construction and mining services.
In many respects, 2009 was a challenging year for Cape in the region and required a degree of
restructuring including depot rationalisation, management de-layering and overhead reduction
measures. These were undertaken at a time when key post acquisition integration projects were
still ongoing. We are seeing signs of confidence returning to our markets and believe our business
is well positioned to benefit from the expected increase in activity levels in 2010.
Safety performance also continued to improve as Cape systems were rolled out across the acquired
businesses. Notable safety achievements included the milestone two million man hours worked on
the Pluto LNG project in Thailand without a LTI, a significant contribution to the project’s
29 million safe working hours and awards from Esso in respect of its Sriracha Refinery in Thailand
and Foster Wheeler/Shell on the Shell Monoethylene Glycol (MEG) plant in Singapore.
The region’s order book has continued to grow and increased over year end 2008 levels. Secured
revenues represented some 48 per cent. of 2010 budgeted revenues. The secured revenue is lower
than other regions, reflecting the different nature of the business.




                                                109
Operational performance year ended 31 December 2008
Revenues in the UK region increased by 14.4 per cent. to £309.0 million and reflected Cape’s
ability to continue to grow market share in a mature competitive environment. The business also
benefited from a full year contribution from the environmental services division.
Operating profits before other items increased by 25.6 per cent. to £27.0 million with operating
margins before other items widening to 8.7 per cent.
Cape’s UK business has over 4,500 employees and expended over 11 million man hours in 2008.
With 28 facilities located strategically throughout the country and in excess of 38,000 tonnes of
access equipment Cape has one of the largest stockholdings within the UK. In addition, Cape UK
applied over 1.2 million metres of insulation to our UK clients’ pipe-work systems in 2008.
The forward order visibility in the UK is favourable given that a typical contract arrangement is
of three to seven years’ duration. The UK Region’s forward order value is based upon actual
committed orders with initial contract order values, defined by the clients’ maintenance and outage
programmes. Over 83 per cent. of the UK Region’s budgeted 2009 revenues were secured by
31 December 2008.
The Gulf/Middle East region enjoyed another year of strong growth in 2008 with revenues
growing by 69.4 per cent. to £112.0 million. Although the region’s performance benefited from
exchange movements, this represents a particularly impressive performance coming after the
62.8 per cent. revenue growth achieved in 2007. Operating profits before other items increased by
86.3 per cent. in 2008 to £23.1 million (2007: £12.4 million).
Cape has been operating in the Gulf/Middle East for over thirty years and now has operations
in over 20 locations throughout all six Gulf Cooperation Council (GCC) countries, with its
strongest presence in Qatar, Saudi Arabia and Abu Dhabi. Cape ended the year with
4,800 employees in the region and delivered 19 million man hours in the year. While the region
holds an inventory of over 37,000 tonnes of access equipment, the major service provided
continues to be insulation services, including refractory lining and fireproofing.
Qatar, Saudi and Abu Dhabi again accounted for 85 per cent. of 2008 revenue. Cape’s investment
in the infrastructure and energy sectors in the Middle East during 2007 continued into 2008 and
has been focused on the petrochemicals sectors. We have also seen significant investment in Qatar
in the LNG sector and expansion of its downstream oil and gas refining capability.
Cape’s strategic decision during 2006 to invest in the region continued with capital expenditure
of over £10 million in 2008 again increasing our access capability in the region. Access revenues
grew from around 12 per cent. of overall revenue in 2007 to more than 30 per cent. in 2008.
Whilst the vast majority of the region’s revenues are generated from the oil and gas/petrochemical
sectors, Cape also provides services to power/desalination, steel, aluminium, chemical and cement
plants. Cape provides services at 50 of the 80 large scale industrial complexes in the region
requiring significant ongoing maintenance, shutdowns and capital programs.
Apart from the refractory market, where Cape is recognised as the dominant service provider in
the Gulf with over 50 per cent. market share, the market for Cape’s services is highly fragmented
with many local small companies offering single discipline services.
Cape’s revenues in the CIS, Mediterranean & Northern Africa region, which are largely project
driven, increased by 15.5 per cent. year on year to £54.4 million (2007: £47.1 million) whilst
operating profits before other items increased by 20.8 per cent. to £5.8 million (2007: £4.8 million).
With 1,000 employees, the region delivered over 5.2 million man hours in 2008 (2007: 6.1 million).
The region holds an inventory of 4,000 tonnes of access equipment and the major services
provided are access, coatings and insulation.




                                                 110
The Sakhalin 2 build project was completed on time with over 7.5 million man hours executed
without a Lost Time Incident (LTI). Cape has secured a four year maintenance contract at the plant.
Cape generated revenues of £147.3 million (2007: £45.5 million) from its operations in the Far
East/Pacific Rim region in 2008 with an operating profit before other items of £16.1 million; this
result reflects the full year contribution from the three Australian acquisitions which were
completed in 2007.
The integration, restructuring and repositioning of these acquisitions into a single multi-disciplinary
Industrial Services business trading under the Cape brand is continuing with significant investment
in Health Safety Environment and Quality management, extension of service offering, marketing and
re-branding and information systems.
Once again Cape’s safety record in the region was recognised with an award from Esso Thailand
for the safest contractor on site on the Sup 5 project Esso Sriracha refinery 2008.

2.    FINANCIAL SUMMARY
Summary income statement
                                                                2010             2009             2008
                                                                Total            Total            Total
                                                                 £m               £m               £m
Continuing operations
Revenue                                                       650.1           655.1            622.7
                                                             555             555              555
Operating profit before other items                              78.2             70.6            65.0
Amortisation of intangible assets                                (2.6)            (2.9)           (2.7)
Industrial disease costs                                         (0.4)           (74.2)           (5.7)
Exceptional items                                                   –                –            (4.1)
                                                             555             555              555
Operating profit/(loss)                                           75.2             (6.5)           52.5
Share of post tax profits from joint ventures                    (0.1)             1.6             0.5
                                                             555             555              555
Total operating profit/(loss)                                     75.1             (4.9)           53.0
Finance income                                                    1.1              1.6             2.8
Finance costs                                                   (13.1)           (12.3)          (18.0)
                                                             555             555              555
Profit/(loss) before tax                                          63.1            (15.6)           37.8
Taxation                                                        (10.8)           14.1              (5.9)
                                                             555             555              555
Profit/(loss) from continuing operations                       52.3             (1.5)           31.9
                                                             aaa             aaa              aaa
2.1   Financial summary, year ended 31 December 2010
      Total adjusted PBT(1) increased by 13.8 per cent. to £69.1 million (2009: £60.7 million) from
      revenues of £650.1 million (2009: £655.1 million). This improvement was driven by an
      8.2 per cent. increase in EBITA(9) to £78.1 million (2009: £72.2 million) combined with a
      reduced finance charge.
      Adjusted diluted earnings per share(2) increased by 13.6 per cent. to 42.6p (2009: 37.5p).
      Basic earnings per share increased to 42.6p (2009: loss per share of 3.5p).
      The profit after tax of £52.3 million (before discontinued operations) compares with a loss
      of £1.5 million in 2009 reflecting the booking of the discounted, post tax, industrial disease
      provision of £50.8 million.
      These headline results have again benefitted from favourable exchange movements and in
      particular the strength of the Australian Dollar relative to sterling. The overall foreign




                                                 111
exchange impact has been to increase revenues by £22.4 million or 3.6 per cent. and
adjusted operating profits by £2.2 million, equivalent to 1.3p per share.

Operating and free cash flow
The Group’s strong operating cash generation continued throughout the year with a full
year cash generated from operations of £98.5 million (2009: £84.4 million) representing an
operating cash conversion rate(4) of 103.1 per cent. (2009: 95.9 per cent.). After servicing of
debt, taxation and capital expenditure the Group’s free cash flow(3) was £68.0 million (2009:
£57.9 million). The net finance charge (excluding interest earned on the restricted IDC
Scheme funds and the unwind of the discount relating to future asbestos provision) reduced
to £9.0 million (2009: £11.5 million) with interest cover(13) increasing to 8.6 times (2009:
5.7 times).
As expected, the seasonal working capital outflow in the first half reversed in the second
half resulting in a full year working capital inflow of £1.8 million (2009: £7.3 million
outflow). With little growth capex in the period, the Asset Replacement Ratio(14) fell to
71.3 per cent. (2009: 73.4 per cent.) reflecting the level of maintenance capex requirements
of the business. After interest, taxation and capital expenditure the Group’s free cash flow(3)
increased by 17.4 per cent. to £68.0 million (2009: £57.9 million).

Capital structure and new debt facility
The Group’s year-end net debt(5) excluding the ring fenced IDC Scheme funds reduced year
on year by 54 per cent. to £52.9 million (2009: £113.6 million) including finance lease
obligations of £10.3 million (2009: £14.6 million). Balance sheet gearing(10) reduced to
14.3 per cent. (2009: 42.4 per cent.) and the ratio of net debt(5) to adjusted EBITDA(7) has
fallen to 0.6 times (2009: 1.3 times).
As announced on 6 January 2011, the Group successfully refinanced its banking facilities
through to June 2015. The new unsecured GBP£200 million and AUD$30 million syndicated
credit facility with Lloyds Banking Group, Barclays Bank, National Australia Bank and HSBC,
acting as joint mandated lead arrangers, provides Cape with a strong financial platform and
the flexibility to support future growth.
Return on Managed Assets (ROMA)(11) increased to 33.6 per cent. (2009: 32.0 per cent.) and the
Group’s investment in receivables and work in progress increased to 100 days (2009: 96 days).

Finance charges
The net finance charges, before IDC, of £9.0 million (2009: £11.5 million) included finance
lease interest of £1.0 million (2009: £1.7 million) and amortisation of loan issue costs of
£0.8 million (2009: £0.7 million) in respect of commitment and ancillary fees under the
Group’s Senior debt facility. The Group’s effective interest rate on borrowings reduced to
5.45 per cent. (2009: 6.09 per cent.) with interest cover(13) increasing to 8.6 times (2009:
5.7 times). The decrease in effective interest rate was primarily due to an increase in UK
denominated debt not hedged and thus benefiting from the low UK LIBOR rates.
During October 2010, the Group’s GBP denominated interest rate swap reduced by
£7.5 million so at year end it had a £52.5 million (2009: £60.0 million) swap in place that
converted the interest rate on its GBP denominated debt from a floating LIBOR rate to a
fixed interest rate of 5.145 per cent. In addition, the Group had a swap in place converting
the interest rate on $30.0 million of its US dollar denominated debt from a floating
USD LIBOR rate to a fixed interest rate of 3.23 per cent.; this expired in January 2011.

Provision for estimated future asbestos related liabilities and Scheme funds
The provision for future asbestos related IDC claims is a discounted pre-tax provision using
a discount rate of 5 per cent., consistent with prior reviews.




                                          112
The deferred tax asset related to this provision is shown within the deferred tax balance.
The unwinding of the discount applied to the future asbestos related provision is included
under finance costs in the income statement.
The triennial independent actuarial assessment of the Group’s unpaid and uninsured UK
asbestos related claims was completed in January 2011. This is the third such review the
Scheme actuaries have undertaken the previous assessments being undertaken in both 2004
and 2007. The provision held continues to reflect the central estimate of the total future
discounted liabilities, net of insurance recoveries, out to 2080.
Illustrated below is the undiscounted, discounted and post-tax information of the provision
held, net of insurance recoveries:
                                                                                            At
                                                                                   31 December
                                                                                          2010
                                                                                           £m
Undiscounted provision                                                                    191.1
Discount                                                                                 (109.4)
                                                                                       555
Discounted pre tax provision                                                               81.7
Deferred tax                                                                              (22.1)
                                                                                       555
Discounted post-tax provision                                                           59.6
                                                                                       aaa
The ring-fenced Asbestos Scheme funds reduced by £2.2 million (2009: £3.7 million) to
£31.6 million (2009: £33.8 million) comprising entirely of settlements and costs paid to
claimants. Whilst accrued interest of £1.0 million (2009: £0.8 million) was earned on Scheme
Funds, the longer fixed term deposits resulted in no cash interest being received in the period.
Based on the actuarial assessment Scheme funds would be sufficient to cover the cost of
claims for at least the next 9 years.

Tax charge and effective tax rate
The Group’s tax charge, before other items, in the period for the continuing operations
(excluding JV’s) increased to £14.6 million (2009: £13.9 million) with an underlying effective
tax rate(15) of 21.1 per cent. (2009: 23.5 per cent.). This decrease predominately relates to a
change in the mix of source of profit generation and the reduction in tax rates of overseas’
jurisdictions (e.g. Qatar and Sakhalin). Tax paid in the period increased to £11.5 million
(2009: £7.6 million) due to many jurisdictions making payments on account for estimated
profits during 2010.
The Group’s total tax charge for the year is £10.8 million (2009: credit £14.1 million),
comprising a current tax charge of £12.6 million (2009: £9.9 million) and a deferred tax
credit of £1.8 million (2009: credit £24.0 million).

Balance sheet
Total equity attributable to owners of Cape plc at 31 December 2010 increased by
£99.5 million to £364.2 million (2009: £264.7 million) and reflect both the retained profits
for the year of £52.6 million and the impact of foreign exchange.
The translation reserve increased by £50.9 million to £115.1 million (2009: £64.2 million)
driven by the continued strengthening of the Australian dollar relative to sterling with a
closing exchange rate of AUD 1.53 (2009: AUD 1.80). The translation reserve reflects the
34 per cent. appreciation in the Australian dollar against sterling since the acquisitions in
Australia were completed in 2007 at an exchange rate of AUD 2.32.




                                          113
      The Group’s intangible assets, which had a year-end book value of £241.5 million (2009:
      £210.5 million), comprises acquired goodwill that arose on acquisitions, in particular the
      three strategic acquisitions in Australia in 2007. The increase in the value of intangible assets
      during the year was entirely due to the movement in foreign exchange rates.
      The Group completed a goodwill impairment test based on value in use calculations which
      estimate the recoverable amounts of the Group’s Cash Generating Units. The test
      demonstrated that no impairment was necessary.
      The Group had a year end Property, Plant and Equipment balance of £154.3 million (2009:
      £142.9 million). Additions of £12.4 million (2009: £11.6 million) were made during the year
      and the depreciation charge for the year was £17.4 million (2009: £15.8 million). The most
      significant proportion, some £129.5 million (2009: £117.5 million), relates to access and
      scaffolding equipment. The Group’s real property assets totalled £19.3 million (2009:
      £17.1 million) and include £2.0 million in respect of 130 acres of land adjacent to the M25
      in Uxbridge.
      Current trade and other receivables increased by £14.1 million to £170.1 million (2009:
      £156.0 million). At the year end trade receivables represented 60.9 days (2009: 62.7 days) of
      invoicing.
      Non-current provisions of £87.0 million (2009: £85.6 million) primarily relate to industrial
      disease liabilities comprising £10.7 million (2009: £9.7 million) in respect of the estimated
      costs of settling notified claims and £71.0 million (2009: £70.5 million) in respect of the
      additional provision raised for the estimated future liability.

      Pensions
      The Defined Benefit Pension Scheme had a net surplus of £13.2 million as at 31 December
      2010 (2009: £10.7 million), this continues to be restricted to nil in the accounts under
      IFRIC 14.

      Dividend
      The Board is recommending a Final Dividend of 8 pence per Ordinary share (2009: nil) to
      give a total dividend of 12 pence in respect of the year ended 31 December 2010
      (2009: nil) reflecting our continued confidence in the longer term prospects for the Group.
      Subject to approval by shareholders at the General Meeting of the Company which is being
      convened for 25 May 2011, the Final Dividend of 8 pence per Ordinary share will be paid
      on 3 June 2011 to shareholders on the register at the record date of 13 May 2011.

2.2   Financial summary, year ended 31 December 2009
      Revenue for the year increased 5.2 per cent. to £655.1 million (2008: £622.7 million) with
      operating profit before other items and after joint ventures (EBITA)(9) increasing by 10.2 per
      cent. to £72.2 million (2008: £65.5 million).
      The strong performance during the year resulted in growth of 25.0 per cent. in adjusted
      diluted earnings per share to 37.5p (2008: 30.0p). Basic earnings per share decreased by
      113.1 per cent. to a 3.5p loss (2008: earnings per share of 26.7p).
      As reported at the half year, the Group’s headline results have materially benefited from
      favourable exchange movements, the Group’s results being retranslated at different average
      rates from year to year. In 2009, the headline results benefited from the weakness in sterling
      against the US Dollar relative to last year particularly in the first half. The table below sets
      out the impact on 2009 revenues and operating profit before other items had 2008 average
      exchange rates applied.




                                                 114
                                      2009 – translated at actual          2009 – translated at
                                             average rates                  2008 average rates
                                      Revenue           EBITA(9)       Revenue           EBITA(9)
                                          £m               £m               £m               £m
UK                                      304.7             25.4           304.7              25.4
Gulf/Middle East                        170.7             38.6           143.3              32.5
CIS, Med & NA (incl. JV)                 48.4              7.7            40.6               6.5
Far East/Pacific Rim                    131.3              7.9           117.1               6.9
Central                                     –             (7.4)              –              (7.4)
                                     555              555             555              555
Total                                 655.1            72.2            605.7            63.9
                                     aaa              aaa             aaa              aaa
The overall foreign exchange impact has been to increase revenues by £49.4 million or
8.2 per cent. and adjusted operating profits by £8.3 million, equivalent to 5.4p per share.

Operating and free cash flow
The Group’s strong operating cash generation continued throughout the year with a full year
operating cash flow of £84.4 million (2008: £70.9 million) representing an operating cash
conversion rate(4) of 95.9 per cent. (2008: 87.7 per cent.). After servicing of debt the Group’s
free cash flow was £39.1 million (2008: £3.7 million). This result was driven by the increased
EBITDA as well as continued tight controls on capital expenditure and working capital.

Capital structure and debt reduction
The Group’s year end net debt, excluding the ringfenced IDC Scheme funds, amounted to
£113.6 million (2008: £165.5 million) including finance lease obligations of £14.6 million
(2008: £20.7 million). The Group’s five year syndicated senior credit facility (with expiry on
3 September 2012) reduced by £15.0 million (2008: £20.0 million) to £185.0 million (2008:
£200.0 million).
The Group’s balance sheet gearing(10) reduced to 42.4 per cent. (2008: 67.2 per cent.) and
the ratio of net debt to adjusted EBITDA has fallen to 1.3 times (2008: 2.1 times) and close
to the Board’s target of up to 1 times.
Return on Managed Assets (ROMA)(11) increased to 32.0 per cent. (2008: 29.4 per cent.) with
the Group’s investment in receivables and work in progress reducing to 96 days (2008:
118 days).

Finance charge
The net finance charge (excluding Scheme interest) amounted to £11.5 million (2008:
£17.2 million) and included finance lease interest of £1.7 million (2008: £1.7 million) and
amortisation of loan issue costs of £0.7 million (2008: £0.7 million) in respect of
commitment and ancillary fees under the Group’s Senior debt facility. The Group’s effective
interest rate fell to 7.3 per cent. (2008: 8.1 per cent.) with interest cover(13) increasing to
5.7 times (2008: 3.6 times).
At the year end, the Group had an interest rate swap in place that converted the interest
rate on £60.0 million (2008: £90.0 million) of its sterling denominated debt from a floating
LIBOR rate to a fixed interest rate of 5.145 per cent. In addition the Group had a swap in
place converting the interest rate on $30.0 million of its US dollar denominated debt from
a floating USD LIBOR rate to a fixed interest rate of 3.23 per cent.

Provision for estimated future asbestos related liabilities
Scheme funds reduced by £3.7 million (2008: £1.6 million) to £33.8 million (2008:
£37.5 million). The reduction largely reflects the reduced interest received of £0.5 million
(2008: £2.0 million) in the year. During the year a total of £4.1 million (2008: £3.6 million)
was paid to asbestos related claimants.



                                          115
The net charge to the income statement for industrial disease claims lodged and outstanding
reduced to £3.7 million (2008: £5.7 million).
With five years having now elapsed since the first independent actuarial assessment of the
Group’s unpaid and uninsured UK asbestos related claims in 2004, the Directors considered
it appropriate to review the accounting treatment whereby the Group provides in the
income statement for the estimated liability in respect of claims lodged and outstanding but
not for an estimate of the total aggregate discounted value of unpaid UK asbestos related
liabilities. To assist in this review, the independent actuaries quantified a reasonable range of
reserve estimates as between £60 million and £100 million with a central estimate of
£79 million. Following consideration of this report, the Directors consider that making an
additional provision for the total aggregate discounted value of unpaid UK asbestos related
liabilities is both appropriate and more meaningful to the users of the Group’s financial
information. Consequently an additional provision of £70.5 million has been recognised in
the Group’s financial information with an additional charge to the income statement net of
deferred tax of £50.8 million (2008: £nil).

Tax charge and effective tax rate
The tax charge in the period before other items increased to £13.9 million (2008:
£12.2 million) with an effective tax rate of 23.7 per cent. (2008: 25.3 per cent.). Tax paid
in the period increased to £7.6 million (2008: £4.8 million); this increase predominately
relates to the Middle East and Far East regions where payment on account systems have
been introduced in certain jurisdictions along with the overall increase in profits in the
Middle East.
The Group’s total tax credit for the year of £14.1 million (2008: £5.9 million) comprised a
current tax charge of £9.9 million (2008: £7.1 million) and a deferred tax credit of
£24.0 million (2008: £1.2 million).
The deferred tax credit relates predominantly to the recognition of a deferred tax asset on
the provision raised for future asbestos related liabilities and a further Australian tax benefit
from the acquisition of PCH.

Balance sheet
The increase in total equity attributable to owners of Cape plc at 31 December 2009, to
£264.7 million (2008: £245.5 million), reflects both the retained profits for the year and the
change in accounting treatment relating to the provision for future industrial (largely
asbestos related) disease claims in the UK.
The Group’s intangible assets, which had a year end book value of £210.5 million (2008:
£188.0 million), comprised acquired customer contracts and goodwill that arose on
acquisitions predominantly in Australia and the increase in value of the assets during the
year was due to changes in foreign exchange rates. The Group completed a goodwill
impairment test based on value in use calculations which estimate the recoverable amounts
of the Group’s Cash Generating Units. The test demonstrated that no impairment was
necessary.
The Group had a year end Property, Plant and Equipment balance of £142.9 million (2008:
£152.3 million). Additions of £11.3 million (2008: £26.2 million) were made during the year
and the depreciation charge for the year was £15.8 million (2008: £15.3 million). The most
significant proportion, some £117.7 million (2008: £128.2 million), relates to access and
scaffolding equipment. The Group’s real property assets totalled £17.1 million (2008:
£17.7 million) and includes £2.0 million in respect of 130 acres of land adjacent to the M25
in Uxbridge.




                                           116
      Current trade and other receivables decreased by £28.7 million to £156.0 million (2008:
      £184.7 million). Trade receivables have decreased by £12.7 million to £112.6 million (2008:
      £125.3 million) reflecting further improved credit control procedures across the Group. At
      the year end trade receivables represented 62.7 days (2008: 73.4 days) of invoicing.
      Non-current provisions for other liabilities and charges of £85.6 million (2008: £14.4 million)
      primarily relate to industrial disease liabilities comprising £9.7 million (2008: £9.7 million)
      in respect of the estimated costs of settling notified claims and £70.5 million (2008: £nil) in
      respect of the additional provision raised for the estimated future liability.

      Pensions
      The Group Defined Benefit Pension Scheme had a net surplus of £10.7 million as at
      31 December 2009 (2008: £10.0 million), this continues to be restricted to nil in the
      accounts under IFRIC 14.

2.3   Financial summary, year ended 31 December 2008
      Cape’s adjusted diluted earnings per share(2) increased by 24.5 per cent. in 2008 to 30.0p.
      Basic earnings per share increased by 2.7 per cent. to 26.7p.

      Operating and free cash flow
      The Group’s operating cash flow of £74.7 million represents a strong operating cash
      conversion(4) rate of 115.3 per cent. Net cash inflow from operating activities was
      £48.2 million. The working capital inflow in the second half of £5.4 million was insufficient
      to recover the first half outflow resulting in a full year working capital outflow of
      £2.9 million.
      Capital expenditure net of disposals in the year (including assets acquired on finance lease)
      amounted to £23.5 million. This investment was weighted heavily towards the first half and
      was predominantly Middle East focused. With slower growth forecast and the extensive
      amounts of equipment acquired through the Australian acquisitions, Cape expects the capital
      investment programme to be substantially reduced going forward.
      Cape generated free cash flow of £26.9 million in the second half of 2008 giving rise to
      full year free cash inflow of £23.7 million.

      Capital structure and debt reduction
      The Group’s primary sources of liquidity are cash flow from operations and borrowings
      under its syndicated banking facilities. The Group’s primary uses of cash are debt service
      and capital expenditure.
      At 31 December 2008, Cape had net debt excluding Scheme Funds of £165.5 million
      including cash balances of £33.3 million.
      Cape entered into a five year syndicated Senior Credit Facility totalling £220.0 million on
      3 September 2007. Borrowings under the facilities are available to fund the Group’s working
      capital requirements, capital expenditures and other general corporate purposes and will
      terminate on 3 September 2012. Some £20.0 million was repaid during 2008 and the
      remaining facilities comprise:
      l     A £75.0 million fully amortising term loan with bi-annual repayments totalling
            £15.0 million in 2009 increasing to £20.0 million in 2010, 2011 and 2012;
      l     A revolving credit facility of £80.0 million expiring on 3 September 2012; and
      l     An overdraft and ancillary facility of £45.0 million expiring on 3 September 2012.




                                                117
Of the revolving credit facility some £43.9 million is denominated in US and Australian
dollars and these foreign currency borrowings provide a partial hedge for the Group’s net
investment in non-sterling denominated entities.
The Group’s balance sheet gearing has reduced to 67.2 per cent. and the ratio of net debt
to adjusted EBITDA(7) has fallen from 4.0 times to 2.1 times.
Total equity at 31 December 2008 totalled £246.2 million.

Finance charges
The finance charge amounted to £18.0 million and included £15.5 million of bank interest
charges. The Group’s effective average interest rate in 2008 was 8.1 per cent.
Interest rate risk exposure is managed through a balance of fixed and variable rate funding.
At 31 December 2008 the Group had fixed 70.6 per cent. of its interest cost on borrowings
over the following twelve months.

Exceptionals and impairment
The Group recognised exceptional charges of £0.6 million in the second half of 2008 giving
rise to a full year charge of £4.1 million. These charges relate to the restructuring and
integration of the Australian acquisitions and relocation of the Group’s head office from
Wakefield to Stockley Park.
The Group completed a goodwill impairment test based on value in use calculations which
estimate the recoverable amounts of the Group’s cash generating units (CGU). The test
demonstrated that no impairment was necessary.

Foreign exchange
The Group’s results are impacted by the effect of retranslating foreign currency at different
average rates from year to year. In 2008 the results benefited from the strengthening of the
US dollar and the Australian dollar. The table below sets out the impact on 2008 operating
profit before other items had 2007 exchange rates applied.
                                     2008 – translated at actual         2008 – translated at
                                            average rates                 2007 average rates
                                                    Operating                        Operating
                                                 profit before                    profit before
                                     Revenue      other items        Revenue       other items
                                         £m                £m             £m                £m
UK                                     309.0             27.0          309.0              27.0
Gulf/Middle East                       112.0             23.1          103.5              21.4
CIS, Med & NA                           54.4              5.8           50.4               5.4
Far East/Pacific Rim                   147.3             16.1          134.6              14.5
Central                                    –             (7.0)             –              (7.0)
                                    555             555             555              555
Total                                622.7           65.0            597.5            61.3
                                    aaa             aaa             aaa              aaa
The overall foreign exchange impact has been to increase revenues by £25.2 million or
4.2 per cent. and operating profits by £3.7 million or 6.0 per cent.

Industrial disease claims
Scheme funds reduced by £1.6 million to £37.5 million. During the year a total of
£3.4 million was paid to asbestos related claimants who are primarily former employees of
Group companies. During the year the Scheme fund received interest income of
£2.0 million.




                                         118
Whilst Cape has a continuing obligation to top up the Scheme fund to the extent that the
triennial actuarial assessments show that there is a shortfall in the Scheme funding
requirement, the most recent review carried out in early 2008 showed that the Scheme was
fully funded for 13 years from 31 December 2007. Consequently there is no requirement to
top up the Scheme funds at this time.
The net charge to the income statement for industrial disease claims was £5.7 million and
reflects a number of factors including an increase in the standards applied following review
by the Judicial Standards Board.

Tax charge and effective tax rate
The tax charge for the year on continuing operations before other items was £12.2 million,
with an underlying tax rate of 25.3 per cent. The tax charge again benefited in 2008 from a
reduction in deferred tax liabilities of £3.3 million arising from the rebasing of assets following
the Australian acquisitions, giving an effective tax rate for the Group of 15.6 per cent.

Pensions
The Group’s main pension arrangements are on a defined contribution basis. Although
closed to new members in 2001, the Group continues to operate a UK defined benefit
scheme which had 73 active members and 2,030 deferred or pensionable members as at
31 December 2008. The scheme had a surplus of £10.0 million at the year end. However
this has been restricted to £nil in accordance with IFRIC 14.




                                            119
Footnotes to the Prospectus
(1) Adjusted PBT comprises profit/(loss) before tax of £63.1 million (2009: loss of £15.6 million, 2008: £37.8 million),
    adjusted for the IDC charge of £0.4 million (2009: £74.2 million, 2008: £5.7 million), IDC finance income of
    £1.0 million (2009: £0.8 million, 2008: £2.0 million), unwind of discount in respect of IDC provision £4.0 million
    (2009: nil, 2008: nil) and amortisation of intangible assets of £2.6 million (2009: £2.9 million, 2008: £2.7 million).
(2) Adjusted diluted earnings per share is calculated by dividing EBITA, net of tax, by the weighted average number of
    ordinary shares in issue during the year adjusted to assume conversion of all potentially dilutive ordinary shares.
(3) Free cash flow is defined as cash generated from operations of £98.5 million (2009: £84.4 million, 2008: £70.9 million)
    adjusted for the impact of net interest paid of £8.2 million (2009: £10.7 million, 2008: £16.4 million), tax paid of
    £11.5 million (2009: £7.6 million, 2008: £4.8 million), net capital expenditure of £11.6 million (2009: £8.9 million, 2008:
    £17.2 million) and the amortisation of the bank fee of £0.8 million (2009: £0.7 million, 2008: £0.7 million).
(4) Operating cash conversion is defined as cash generated from operations of £98.5 million (2009: £84.4 million, 2008:
    £70.9 million) divided by adjusted EBITDA(7).
(5) Net debt is calculated by deducting borrowings of £148.7 million (2009: £180.3 million, 2008: £198.8 million) from
    cash and cash equivalents of £95.8 million (2009: £66.7 million, 2008: £33.3 million).
(6) Ratio of net debt to adjusted EBITDA(7) is calculated by dividing the net debt(5) figure at the year end of £52.9 million
    (2009: £113.6 million, 2008: £165.5 million) by the adjusted EBITDA(7) of £95.5m (2009: £88.0 million, 2008:
    £80.8 million).
(7) Adjusted EBITDA is calculated by adding back depreciation of £17.4 million (2009: £15.8 million, 2008: £15.3 million)
    to EBITA(9) of £78.1 million (2009: £72.2 million, 2008: £65.5 million).
(8) Constant currency figures reflect actual 2010 results retranslated using the foreign currency exchange rates used for
    the 2009 reporting. The average exchange rates for the year ended 31 December 2010 were GBP/AUD 1.6901 and
    GBP/USD 1.5526 (2009: GBP/AUD 1.9828 and GBP/USD 1.5513, 2008: GBP/AUD 2.19628 and GBP/USD 1.85175).
(9) EBITA comprises profit/(loss) before interest and taxation of £75.1 million (2009: £(4.9) million, 2008: £53.0 million),
    adjusted for IDC charge of £0.4 million (2009: £74.2 million, 2008: £5.7 million) and amortisation of intangible assets
    of £2.6 million (2009: £2.9 million, 2008: £2.7 million).
(10) Gearing is net debt(5) divided by total equity.
(11) Return on Managed Assets (ROMA) is calculated as operating profit before other items of £78.2 million (2009:
     £70.6 million, 2008: £65.0 million) divided by managed assets(12).
(12) Managed assets is calculated by deducting the trade and other payables before other items of £100.3 million (2009:
     £95.7 million, 2008: £133.0 million) from the sum of property, plant and equipment of £154.3 million (2009:
     £142.9 million, 2008: £152.3 million), inventories of £8.8 million (2009: £17.3 million, 2008: £17.2 million) and trade
     and other receivables of £170.1 million (2009: £156.0 million, 2008: £184.7 million).
(13) Interest cover is calculated by dividing the operating profit before other items of £78.2 million (2009: £70.6 million,
     2008: £65.0 million) by the finance costs (excluding unwind of discount in respect of IDC provision of £4.0m (2009:
     nil, 2008: nil)) of £9.1 million (2009: £12.3 million, 2008: £18.0 million).
(14) Asset replacement ratio is calculated by dividing the capex spend for the year £12.4 million (2009: £11.6 million, 2008:
     £26.2 million) by depreciation charge £17.4 million (2009: £15.8 million, 2008: £15.3 million).
(15) Effective tax rate is tax on ongoing operations of £14.6 million (2009: £13.9 million, 2008: £12.2 million) divided by
     adjusted PBT(1).
(16) Adjusted operating margin is calculated as operating profit before other items of £78.2 million (2009: £70.6 million;
     2008: £65.0 million) divided by revenue of £650.1 million (2009: £655.1 million).




                                                             120
                                            PART IV

     DIRECTORS, CORPORATE GOVERNANCE AND EMPLOYEES

1.     NEW CAPE AND OLD CAPE BOARD OF DIRECTORS
The Board of New Cape comprises the Directors set out below. The Board of Old Cape will, up
until the Scheme Effective Date, be the same as the board of New Cape. After the Scheme Effective
Date, Mr May and Mr Bingham will be the only Directors of Old Cape and each of the other Old
Cape Directors will resign from the Board of Old Cape. The business address of each of the Old
Cape Directors is 9 The Square, Stockley Park, Uxbridge, Middlesex, UB11 1FW. The business
address of each of the New Cape Directors is 47 Esplanade, St Helier, Jersey JE1 0BD. The
Directors’ full names and functions within the Group, together with brief biographical details of
each of them, are as set out below.
Mr May and Mr Bingham were each appointed as directors of New Cape on 19 April 2011 upon
incorporation of that company. The remaining Directors were each appointed as directors of New
Cape on 4 May 2011. Each of the Non-Executive Directors of New Cape, including the Chairman,
Mr Eggar, are independent within the definition set out in the UK Corporate Governance Code.

Timothy Eggar (aged 59) – Non-Executive Chairman
Mr. Eggar was a member of Parliament in the United Kingdom from 1979 to 1997 and served in
a number of minsterial positions including Minister for Energy from 1992 to 1996. He has
extensive international experience including being Global Head of ABN AMRO’s Global Energy
Corporate Finance Group, Chief Executive Officer of Monument Oil and Gas plc, Chairman of
Harrison Lovegrove, Chairman of Indago Petroleum plc and Chairman of Nitol Solar Ltd.

Martin K. May (aged 57) – Chief Executive
Mr May was appointed as interim Chief Executive of Old Cape in June 2002 and became executive
Chairman of Old Cape in June 2003, a role that he relinquished on becoming Chief Executive in
2006. Since July 2006, Mr May has worked with the senior management team to drive forward
performance in different areas within the Group and ensure that each region maximises the
opportunities provided and consolidates its international footprint within the market. Mr May is a
Fellow of the Institute of Chartered Management Accountants and a founder member and Fellow
of the Society of Turnaround Practitioners.

Richard Bingham (aged 48) – Chief Financial Officer
Mr Bingham was appointed as Chief Financial Officer of Old Cape in June 2008. With a
background in reorganisation and turnaround, he has previously held executive and non-executive
roles at several public and privately owned companies as well as that of Chief Financial Officer of
a national law firm. Prior to this, Mr. Bingham spent several years in professional practice with
PricewaterhouseCoopers.

David McManus (aged 57) – Non-Executive Director and Senior Independent Director
Mr McManus was appointed as a Non-Executive Director of Old Cape in 2004 and served as
non-executive Chairman between 2006 and 2008. He is chairman of the Remuneration Committee
and is a member of the Audit and Nominations Committee. Mr McManus is currently Executive
Vice President of Pioneer Natural Resources, a US listed oil and gas company, with responsibility
for International Operations. Prior to Pioneer he was Executive Vice President with BG Group
where he was responsible for developing technical and commercial capabilities within the
company and directing assets in the Eastern Hemisphere. Previously Mr McManus was President of
ARCO Europe until ARCO’s merger with BP in 2000.




                                               121
Michael Merton (aged 60) – Non-Executive Director
Mr Merton was appointed as a Non-Executive Director of Old Cape in January 2011. He is a
Chartered Accountant with significant experience in the international resources industry, having
spent the majority of his executive career at Rio Tinto, where he held senior operational roles
around the world, including Head of Global Business Services from 2005 to 2009, and was a
member of the Executive Committee. Michael is currently a non-executive director of BlackRock
Commodities Income Investment Trust plc, a trustee of the Rio Tinto Pension Fund and the HALO
Trust and Chairman of the J Sainsbury Pension Scheme.

2.     COMMITTEES OF THE BOARD
In order to comply with the UK Corporate Governance Code upon Admission, New Cape will
establish Audit, Remuneration and Nomination Committees of the Board. These committees will be
comprised of the same directors who comprised the equivalent committees for Old Cape. Further
details of these board committees are as follows:

Audit Committee
The members of the Audit Committee will be Mr M Merton (Chairman) and Mr D McManus.
The committee’s members shall be appointed by the Board, on the recommendation of the
Nomination Committee in consultation with the chairman of the Audit Committee.
The terms of reference of the Audit Committee, in summary, will be, to:
l     monitor the integrity of the financial information of New Cape, including its annual and
      half-yearly reports, interim management statements and any other formal announcement
      relating to its financial performance, reviewing significant financial reporting issues and
      judgements which they contain;
l     review and challenge:
      –     the consistency of, and any changes to, accounting policies both on a year on year
            basis and across the company/group;
      –     the methods used to account for significant or unusual transactions where different
            approaches are possible;
      –     whether the Company has followed appropriate accounting standards and made
            appropriate estimates and judgements, taking into account the views of the external
            auditor;
      –     the clarity of disclosure in the Company’s financial reports and the context in which
            statements are made; and
      –     all material information presented with the financial information, such as the business
            review/operating and financial review and the corporate governance statement
            (insofar as it relates to the audit and risk management).
l     keep under review the adequacy and effectiveness of New Cape’s internal financial controls
      and internal control and risk management systems;
l     consider any necessary disclosure implications of the process that has been applied by the
      Board to deal with material internal control aspects of any significant problems;
l     consider the major findings of any relevant internal investigations into control weaknesses,
      fraud or misconduct and management’s response (in the absence of management where
      necessary);




                                               122
l   monitor and review the effectiveness of the Company’s finance function;
l   monitor systematically and obtain assurance that the executive limitations relating to
    financial matters (which require certain expenditure and commitments to be approved by
    the Board) are being observed;
l   review other disclosures or documents as determined by the Board;
l   review treasury policy including management of foreign exchange exposures;
l   review and approve the statements to be included in the annual report concerning internal
    controls and risk management;
l   review the adequacy and security of the Company’s arrangements for its employees and
    contractors to raise concerns, in confidence, about possible wrongdoing in financial
    reporting or other matters. The committee shall ensure that these arrangements allow
    proportionate and independent investigation of such matters and appropriate follow up
    action;
l   review the Company’s procedures for detecting fraud;
l   review the Company’s systems and controls for the prevention of bribery and receive
    reports on non-compliance;
l   monitor and review the effectiveness of New Cape’s internal audit function and ensure it
    has adequate resources and appropriate access to information to enable it to perform its
    function effectively and in accordance with the relevant professional standards. The
    committee shall also ensure the function has adequate standing and is free from
    management or other restrictions;
l   review and assess the annual internal audit plan;
l   review reports addressed to the committee from the internal auditor;
l   review and monitor management’s responses to the findings and recommendations of the
    internal auditor;
l   meet the director of Group Audit at least once a year, without management being present,
    to discuss their remit and any issues arising from the internal audits carried out. In addition,
    the director of Group Audit shall be given the right of direct access to the chairman of the
    board and to the committee;
l   consider and make recommendations to the Board, to be put to shareholders for approval
    at the Annual General Meeting, in relation to the appointment, re-appointment and removal
    of the Company’s external auditor. The committee shall oversee the selection process for a
    new auditor and if an auditor resigns the committee shall investigate the issues leading to
    this and decide whether any action is required;
l   oversee the relationship with the external auditor including (but not limited to):
    (a)   recommendations on their remuneration, whether fees for audit or non-audit services,
          and the level of those fees, as appropriate;
    (b)   approval of their terms of engagement, including any engagement letter issued at the
          start of each audit and the scope of audit;
    (c)   assessing annually their independence and objectivity taking into account relevant
          professional and regulatory requirements and the relationship with the auditors as a
          whole, including the provision of any non-audit services;




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    (d)   satisfying itself that there are no relationships (such as family, employment,
          investment, financial or business) between the auditors and New Cape (other than in
          the ordinary course of business);
    (e)   monitoring the auditors’ compliance with relevant ethical and professional guidance
          on the rotation of audit partner, the level of fees paid by New Cape compared to the
          overall fee income of the firm, office and partner and other related requirements;
    (f)   assessing annually their qualifications, expertise and resources and the effectiveness of
          the audit process which shall include a report from the external auditors on their
          own internal quality procedures; and
    (g)   seeking to ensure coordination with the activities of the internal audit function;
l   meet with the external auditors, including once at the planning stage before the audit and
    once after the audit at the reporting stage. The committee shall meet the external auditor
    at least once a year, without management being present, to discuss the auditor’s remit and
    any issues arising from the audit;
l   review and approve the annual audit plan and ensure that it is consistent with the scope
    of the audit engagement;
l   review the findings of the audit with the external auditors. This shall include, but not be
    limited to:
    (a)   a discussion of any major issues which arose during the audit;
    (b)   any accounting and audit judgements;
    (c)   levels of error identified during the audit; and
    (d)   the effectiveness of the audits;
l   review any representation letter(s) requested by the external auditor before they are signed
    by management;
l   review the management letter and management’s response to the auditors’ findings and
    recommendations;
l   develop and implement a policy on the supply of non-audit services by the external
    auditors, taking into account any relevant ethical guidance on the matter;
l   the committee chairman shall report formally to the board on its proceedings after each
    meeting on all matters within its duties and responsibilities;
l   the committee shall make whatever recommendations to the board it deems appropriate on
    any area within its remit where action or improvement is needed;
l   the committee shall produce a report on its activities to be included in the New Cape’s
    annual report;
l   have the power to delegate any of its powers to one or more members or to the secretary
    of the committee;
l   give due consideration to laws and regulations, the provisions of the Code and the
    requirements of the Listing Rules, Prospectus Rules and DTRs and any other applicable
    Rules, as appropriate;
l   oversee any investigation of activities which are within its terms of reference; and




                                              124
l     arrange for periodic reviews of its own performance and, at least annually, review its
      constitution and terms of reference to ensure it is operating at maximum effectiveness and
      recommend any changes it considers necessary to the Board for approval.

Remuneration Committee
The Remuneration Committee members will be Mr D. McManus (Chairman), Mr T Eggar and
Mr M Merton. The committee will have delegated authority to deal with remuneration matters on
behalf of the Board and will be responsible for the Directors’ remuneration report. The chair of
the committee should attend all Annual General Meetings to respond to any shareholder questions
that might be raised on the committee’s activities.
The terms of reference of the Remuneration Committee, in summary, will be, to:
l     determine and agree with the Board the framework or broad policy for the remuneration of
      the Chairman of New Cape, the Chief Executive, the Executive Directors and such other
      members of the executive management as it is designated to consider (the “Key
      Management Group”);
l     in determining such policy, take into account all factors which it deems necessary. The
      objective of such policy is to ensure that members of the Key Management Group are
      provided with appropriate incentives to encourage enhanced performance and are, in a fair
      and responsible manner, rewarded for their individual contributions to the success of New
      Cape. The committee must also, when setting remuneration policy for directors, review and
      have regard to the remuneration trends across the Company or Group;
l     review the ongoing appropriateness and relevance of the remuneration policy;
l     within the terms of the agreed policy and in consultation with the Chairman of New Cape
      and/or the Chief Executive (as appropriate) determine the total individual remuneration
      package of the Chairman and members of the Key Management Group including bonuses,
      incentive payments and share options or other share awards;
l     obtain reliable, up-to-date information about remuneration policies in other companies, and
      appoint remuneration consultants to commission reports or surveys when it considers
      necessary within any budgetary restriction imposed by the Board;
l     be responsible for establishing the selection criteria, selecting, appointing and setting the
      terms of reference for any remuneration consultants who advise the committee;
l     approve the design of, and determine targets for, any performance related pay schemes
      operated by New Cape and approve the total annual payments made under such schemes;
l     review the design of all share incentive plans for approval by the Board and shareholders.
      For any such plans, determine each year whether awards will be made, and if so, the overall
      amount of such awards, the individual awards to executive directors, company secretary and
      other designated senior executives and the performance targets to be used;
l     determine the policy for and scope of pension arrangements for the Key Management
      Group;
l     ensure that all contractual terms on termination, and any payments made, are fair to the
      individual and New Cape, that failure is not rewarded and that the duty to mitigate is fully
      recognised;
l     oversee any major changes in employee benefit structures throughout New Cape;
l     agree the policy for authorising claims for expenses from the Directors;




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l     in determining such packages and arrangements, give due regard to the comments and
      recommendations of the UK Corporate Governance Code as well as the Listing Rules,
      Prospectus and Disclosure Rules and any other applicable Rules, as appropriate;
l     produce a report of the committee’s remuneration policy and practices to be included in
      New Cape’s annual report and ensure each year that it is put to shareholders for approval
      at the Annual General Meeting; and
l     review the committee’s performance, constitution and terms of reference annually and
      report any recommendations it considers necessary to the Board for approval.

Nomination Committee
The Nomination Committee members will be Mr T Eggar (Chairman), Mr M K May, Mr D McManus
and Mr M Merton. The Nomination Committee will meet at least twice a year and otherwise as
required. Mr T Eggar will not chair the committee when it considers the appointment of a
successor chairman.
The terms of reference of the Nomination Committee, in summary, will be, to:
l     regularly review the structure, size and composition of the Board (including the skills,
      knowledge, experience and diversity) and make recommendations to the Board with regard
      to any changes that are deemed necessary;
l     give full consideration to succession planning for Directors and the Key Management Group
      in the course of its work, taking into account the challenges and opportunities facing New
      Cape and the skills and expertise needed on the Board in the future;
l     keep under review the leadership needs of the organisation, both executive and
      non-executive, with a view to ensuring the continued ability of the organisation to compete
      effectively in the marketplace;
l     keep up to date and fully informed about strategic issues and commercial changes affecting
      the Company and the market in which it operates;
l     be responsible for identifying and nominating, for the Board’s approval, candidates to fill
      Board vacancies as and when they arise;
l     before any appointment is made by the Board, evaluate the balance of skills, knowledge,
      experience and diversity on the Board and, in the light of this evaluation, prepare a
      description of the role and capabilities required for a particular appointment. In identifying
      suitable candidates the committee shall:
      (i)     use open advertising or the services of external advisers to facilitate the search;
      (ii)    consider candidates from a wide range of backgrounds; and
      (iii)   consider candidates on merit and against objective criteria with due regard for the
              benefits of diversity on the Board, including gender, taking care that appointees have
              enough time available to devote to the position;
l     for the appointment of a Chairman, the committee should prepare a job specification,
      including the time commitment expected. A proposed Chairman’s other significant
      commitments should be disclosed to the Board before appointment and any changes to the
      Chairman’s commitments should be reported to the Board as they arise;
l     prior to the appointment of a director, the proposed appointee should be required to
      disclose any other business interests that may result in a conflict of interest and be required
      to report any future business interests that could result in a conflict of interest;




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l     ensure that on appointment to the Board, Non-Executive Directors receive a formal letter of
      appointment setting out clearly what is expected of them in terms of time commitment,
      committee service and involvement outside board meetings;
l     review the results of the board performance evaluation process that relate to the
      composition of the Board; and
l     review annually the time required from Non-Executive Directors and undertake a
      performance evaluation to assess whether the Non-Executive Directors are spending enough
      time to fulfil their duties.
The Nomination Committee shall also make recommendations to the Board concerning:
l     formulating plans for succession for both Executive and Non-Executive Directors and in
      particular for the key roles of Chairman and Chief Executive Officer;
l     suitable candidates for the role of Senior Independent Director;
l     membership of the Audit Committee and Remuneration Committee, and any other formally
      constituted committee of the Board, in consultation with the chairmen of those committees;
l     the re-appointment of any Non-Executive Director at the conclusion of their specified term
      of office having given due regard to their performance and ability to continue to contribute
      to the Board in light of the knowledge, skills and experience required;
l     the re-election by shareholders of any Director under the annual re-election provisions of
      the Code or the retirement by rotation provisions in New Cape’s articles, having given due
      regard to their performance and ability to continue to contribute to the Board in light of
      their knowledge, skills and experience required and the need for progressive refreshing of
      the Board (particularly in relation to Directors being re-elected for a term beyond six years;
l     any matters relating to the continuation in office of any Director at any time, including the
      suspension or termination of service of an Executive Director as an employee of New Cape,
      subject to the provisions of the law and their service contract; and
l     the appointment of any Director to an executive or other office.

3.     CORPORATE GOVERNANCE AND BOARD PRACTICES
As an AIM quoted company, Old Cape was not required to comply in full with the requirements
of the Combined Code (in the case of Old Cape’s financial years ended on or before 31 December
2010) or the UK Corporate Governance Code (in the case of financial years beginning thereafter).
As explained in the section titled ‘Corporate governance report’ on pages 34 to 37 of the 2010
Annual Report and Accounts of the Group, Old Cape implemented policies and procedures
designed to comply with the Combined Code as far as reasonably practicable and appropriate for
a public company of its size and complexity.
Following the Scheme Effective Date, as a fully listed company New Cape intends to comply with
the UK Corporate Governance Code for the financial year ending 31 December 2011 and
subsequent financial years (as applicable).
Upon Admission, New Cape will be required to comply with the Model Code as published in the
Listing Rules.
Old Cape has also adopted a continuous disclosure policy pursuant to which all of Old Cape’s
Directors, senior executives and employees are required to ensure that Shareholders and the
market are provided with full and timely information about Cape and the Group and to fulfil the
relevant requirements of the AIM Rules, the Companies Act and the DTRs and Prospectus Rules.




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New Cape will adopt a similar policy upon Admission in respect of the disclosure requirements
which will be applicable to it going forward as a company listed on the Official List.

4.     EMPLOYEES AND SUBCONTRACTORS
As at 31 March 2011, the Group employed 18,831 people. The table below sets out the number
of full time employees and subcontractors, employed by the Group in each of the last three
financial years, at the end of each such financial year:
                                                                    Year ended     Year ended     Year ended
                                                                  31 December    31 December    31 December
                                                                          2010           2009           2008
Direct employees                                                       14,052         13,544         11,004
Indirect employees                                                      2,029          2,107          2,561
Sub contractors                                                         1,926          1,414          1,012
                                                                     555            555            555
Total                                                                 18,007         17,075         14,577
                                                                     aaa            aaa            aaa
The table below sets out the number of full time employees employed by the Group in those
geographic areas as set out below in each of the last three financial years, at the end of each
financial year:
                                                                    Year ended     Year ended     Year ended
                                                                  31 December    31 December    31 December
                                                                          2010           2009           2008
United Kingdom                                                          3,758          4,381          4,683
Gulf/Middle East                                                        8,520          7,719          5,809
CIS, Mediterranean and North Africa                                     2,013          1,910          1,057
Far East/Pacific Rim                                                    3,716          3,065          3,028
                                                                     555            555            555
Total*                                                                18,007         17,075         14,577
                                                                     aaa            aaa            aaa
* including direct, indirect employees and subcontractors

5.     EMPLOYEE INCENTIVES
Participants in the Old Cape Employee Share Plans will be written to separately to explain the
impact of the Scheme on their participation in these Plans.
New Cape has adopted one new employee share plan, the New Cape 2011 Performance Share
Plan, conditional upon Old Cape Shareholders approving its adoption by New Cape at the General
Meeting to be held on 25 May 2011 and subject to the Scheme becoming effective. The New Cape
2011 Performance Share Plan will relate to New Cape Shares and employees of the Group but will
otherwise be essentially the same as the corresponding Old Cape 2007 Performance Share Plan,
save that it will include higher individual participation limits and a dividend equivalence
mechanism. Details of the main provisions of the New Cape 2011 Performance Share Plan are set
out in paragraph 9.2 of Part V (‘The Proposals’) and paragraph 13.2 of Part VIII (‘Additional
Information’).
No further options or awards will be granted under the Old Cape Employee Share Plans after the
Scheme becomes effective.




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                                             PART V

                                     THE PROPOSALS

1.     INTRODUCTION
On 2 March 2011, Old Cape announced its intention to put in place a new parent company for
the Group, New Cape, being a Jersey-incorporated company that will be tax-resident in Singapore
(New Cape will also be tax resident in Jersey, although no tax liability is expected to arise there).
It is intended that this new corporate structure will be implemented by means of a scheme of
arrangement under Part 26 of the Companies Act involving a reduction of capital.
Details of the Scheme are set out in the Scheme Circular sent to Old Cape Shareholders on 9 May
2011. If the Scheme is implemented, Old Cape Shareholders at the Scheme Record Time, expected
to be 6.00 p.m. on 15 June 2011, will receive, in exchange for their Old Cape Shares, New Cape
Shares on the following basis:
               for every one Old Cape Share             one New Cape Share
Upon the implementation of the Scheme, New Cape Shareholders will effectively have the same
proportionate interest in the profits, net assets and dividends of the Cape Group as they currently
have as an Old Cape Shareholder.

2.     BACKGROUND TO AND REASONS FOR THE PROPOSALS
The Board, together with the Group’s advisers, have closely examined the current corporate
structure and concluded that the establishment of a new Group holding company would facilitate
the Group’s international operational structure and place the Group in the best position to achieve
its growth aspirations to the benefit of Cape and its Shareholders. Furthermore, the Proposals
should provide greater certainty over the Group’s position under the Controlled Foreign company
tax rules. The Board believes that the most appropriate structure is for the new Group holding
company to be listed on the Official List, incorporated in Jersey and with tax residence in
Singapore. New Cape will also be tax resident in Jersey, although no tax liability is expected to
arise there.
The Proposals are not expected to have any adverse impact on Old Cape Shareholders as a whole.
New Cape will have the same Board of Directors and management team as Old Cape on the
Scheme Effective Date, although increased time will be spent in Singapore. The Board will continue
to evaluate further opportunities to strengthen the Board, as appropriate, particularly in light of
the Group’s growth and increased presence in the Far East/Pacific Rim. As an AIM quoted company,
Old Cape sought to comply with the main principles of the Combined Code. As a company listed
on the premium listing segment of the Official List, New Cape will be required to comply with
the UK Corporate Governance Code (formerly the Combined Code) or explain any departures
therefrom. As such, the Proposals are expected to strengthen the Group’s commitment to high
standards of governance and corporate responsibility.
The Group will have the same business and operations after the Scheme Effective Date as before
the Scheme Effective Date.
The Proposals will not result in any immediate changes in the day-to-day operations of the business
of the Group or its strategy. New Cape will continue to report the Group financial results in
pounds sterling.
New Cape is proposing to undertake the New Cape Reduction of Capital shortly after the Scheme
Effective Date which will create a reserve of profit in the accounts of New Cape. Distributions
paid out of this reserve should then be regarded as a dividend on receipt by UK shareholders.




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3.     PRINCIPAL FEATURES OF THE PROPOSALS
The establishment of a new holding company for the Group entails a number of steps. The
principal steps involved in the Scheme are as follows:

3.1   Cancellation of Scheme Shares
      Under the Scheme, all the Scheme Shares will be cancelled on the Scheme Effective Date
      (which is expected to be 17 June 2011).
      In consideration of the cancellation of the Scheme Shares, the Scheme Shareholders will
      receive, in respect of any Scheme Shares held as at the Scheme Record Time (6.00 p.m. on
      15 June 2011):
                     for every one Old Cape Share            one New Cape Share
      After the General Meeting and before the Court Hearing, New Cape will be issued with an
      Old Cape Share which will, on or prior to the Scheme Effective Date, be reclassified as a
      Cape A Ordinary Share, pursuant to a resolution to be proposed at the General Meeting. The
      Cape A Ordinary Share will not be a Scheme Share and will not therefore be cancelled
      pursuant to the Scheme. The purpose of the Cape A Ordinary Share is to facilitate the
      allotment of new shares in Old Cape to New Cape in accordance with section 593(2) of
      the Companies Act.
      With effect from the Scheme Effective Date, the rights attaching to the New Cape Shares
      will be substantially the same as those attaching to the existing Old Cape Shares. Upon the
      implementation of the Scheme, a New Cape Shareholder will effectively have the same
      voting rights and the same proportionate interest in the profits, net assets and dividends of
      the Group as they currently have as an Old Cape Shareholder. A summary of the principal
      differences between the English law and Jersey law, and a summary of the rights attaching
      to the New Cape Shares and the New Cape Creditor Scheme Share are set out in
      paragraphs 5 and 6 of Part VIII (‘Additional Information’) of this Prospectus. Certain
      provisions in the New Cape Articles have been included in order to enshrine rights that are
      not conferred by the Jersey Companies Law but which shareholders in a company listed on
      the main market of the London Stock Exchange would normally expect.

3.2   Establishing New Cape as the new holding company of the Group
      Following the cancellation of the Scheme Shares, the credit arising in the books of Old Cape
      as a result of the cancellation will be applied in paying up in full new ordinary shares in
      Old Cape such that the aggregate nominal value of those ordinary shares equals the
      aggregate nominal value of the Scheme Shares cancelled. The new shares in Old Cape will
      be issued to New Cape which will, as a result, become the holding company of Old Cape
      and the Group.

3.3   Amendments to Old Cape’s Articles of Association
      In some cases, Old Cape Shares may need to be allotted before the Scheme Record Time
      (for example, because of the exercise of rights granted by Old Cape under the Old Cape
      Employee Share Plans) but the timing of their allotment could mean that they are not
      classified as Scheme Shares and are therefore outside the scope of the Scheme. In addition,
      Old Cape Shares may be issued after the Scheme Record Time which would also put them
      outside the scope of the Scheme. It is proposed that the Old Cape Articles be amended in
      such a way as to ensure that: (i) any Old Cape Shares which are issued before the Scheme
      Record Time are allotted subject to the terms of the Scheme and the holders of such shares
      will be bound by the Scheme accordingly; (ii) any Old Cape Shares which are allotted after
      the Scheme Record Time will be immediately transferred to New Cape in exchange for the
      issue or transfer to the relevant allottees of one New Cape Share for every Old Cape Share




                                               130
      transferred. The Old Cape Articles will also provide that if any Old Cape Shares are allotted
      to any person within (ii) above following any variation in the share capital of either Old
      Cape or New Cape after the Scheme Effective Date or such other event as the New Cape
      Directors consider fair and reasonable, the number of New Cape Shares to be issued or
      transferred to that person will be adjusted in an appropriate manner, provided Old Cape’s
      auditors have confirmed the adjustment is fair and reasonable.
      These measures will avoid any person other than New Cape being left with Old Cape Shares
      after cancellation of the trading in Old Cape Shares on AIM and will further ensure that Old
      Cape will remain a wholly-owned subsidiary of New Cape despite issues of Old Cape Shares.

4.    CONDITIONS TO IMPLEMENTATION OF THE SCHEME
4.1   The Scheme
      The implementation of the Scheme is conditional upon:
      4.1.1 the approval of the Scheme by a majority in number, representing at least 75 per
            cent. in value, of the Old Cape Shareholders present and voting, either in person or
            by proxy, at the Court Meeting (or at any adjournment of such meeting);
      4.1.2 written consent to the Scheme and any necessary actions involved in the
            implementation of the Scheme being received by Old Cape from the 2006 Creditor
            Scheme Shareholder by no later than the date and time of the Court Meeting (or such
            later date as Old Cape and the 2006 Creditor Scheme Shareholder may agree);
      4.1.3 the passing of the Resolutions set out in the notice of the General Meeting to
            approve the Scheme and various matters in connection with the Scheme including:
            (A) the cancellation of the Scheme Shares; (B) the issue and allotment of New Shares;
            (C) the reclassification of one Old Cape Share into a Cape A Ordinary Share;
            (D) changes to the Old Cape Articles; and (E) approval of the New Cape Reduction
            of Capital, at the General Meeting (or any adjournment of such meeting) but not (for
            the avoidance of doubt) Resolution no. 3 to approve the adoption by New Cape of
            the New Cape 2011 Performance Share Plan or Resolution no. 4 to approve the final
            dividend of Old Cape for the financial year ended 31 December 2010;
      4.1.4 the sanction of the Scheme by the High Court and the confirmation by the High
            Court of the Old Cape Reduction of Capital; and
      4.1.5 a copy of the Court Order and Statement of Capital having been delivered to the
            Registrar of Companies in England and Wales.
      4.1.6 AIM Trading Cancellation having become effective in accordance with the AIM Rules
            or the London Stock Exchange having acknowledged to Old Cape or its agent (and
            such acknowledgement not having been withdrawn) that the admission of the Old
            Cape Shares to trading on AIM will be cancelled and either: (a) the admission of the
            New Cape Shares to the premium listing segment of the Official List becoming
            effective in accordance with the Listing Rules and the admission of the New Cape
            Shares to trading on the London Stock Exchange’s Main Market becoming effective in
            accordance with the Admission & Disclosure Standards; or (b) the UKLA having
            acknowledged to New Cape or its agent (and such acknowledgement not having been
            withdrawn) that the application for the admission of the New Cape Shares to the
            premium listing segment of the Official List has been approved and (after satisfaction
            of any conditions to which such approval is expressed to be subject (“listing
            conditions”)) will become effective as soon as a dealing notice has been issued by
            the UKLA and any listing conditions have been satisfied and the London Stock
            Exchange having acknowledged to New Cape or its agent (and such acknowledgement




                                               131
            not having been withdrawn) that the New Cape Shares will be admitted to trading on
            the London Stock Exchange's Main Market.
      The Court Hearing (at which it is proposed that the High Court sanction the Scheme and
      confirm the Old Cape Reduction of Capital) is expected to be held on or around 16 June
      2011. Old Cape Shareholders or creditors who wish to support or oppose the Scheme will be
      informed by advertisement in a newspaper with national distribution in the United Kingdom
      of their right to appear in person, or be represented by Counsel, at the Court Hearing. The
      Court Hearing will be held at The Royal Courts of Justice, The Strand, London WC2A 2LL.
      In addition, the Directors will not take the necessary steps to enable the Scheme to become
      effective unless the above conditions have been satisfied (or waived) and, at the relevant
      time, they consider that it continues to be in Old Cape’s best interests and that of the Old
      Cape Shareholders that the Scheme should be implemented.
      If the Scheme is sanctioned by the High Court and the other conditions to the Scheme are
      satisfied or waived, the Scheme is expected to become effective, and dealings in New Cape
      Shares to be issued pursuant to the Scheme are expected to commence, on 17 June 2011,
      the anticipated Scheme Effective Date.
      If the Scheme has not become effective by 30 September 2011 (or such later date as Old
      Cape and New Cape may agree and the High Court may allow), it will lapse, in which event
      the Scheme will not proceed, Old Cape Shareholders will remain shareholders of Old Cape
      and the Old Cape Shares will continue to be admitted to trading on AIM.
      The Scheme contains a provision for Old Cape and New Cape jointly to consent, on behalf
      of all persons concerned, to any modification of or addition to the Scheme, or to any
      condition that the High Court may think fit to approve or impose. Old Cape has been
      advised that the High Court would be unlikely to approve or impose any modification of,
      or addition or condition to, the Scheme which might be material to the interests of Old
      Cape Shareholders unless Old Cape Shareholders were informed of any such modification,
      addition or condition. It will be a matter for the High Court to decide, in its discretion,
      whether or not further meetings of Old Cape Shareholders should be held. If the High Court
      does approve or impose a modification of, or addition or condition to, the Scheme which,
      in the opinion of the Directors, is such as to require the consent of the Old Cape
      Shareholders, the Directors will not take the necessary steps to enable the Scheme to
      become effective until such consent is obtained.
      Furthermore, Old Cape has agreed with the 2006 Creditor Scheme Shareholder not to vary
      or modify the Scheme without the prior written consent of the 2006 Creditor Scheme
      Shareholder.

4.2   Consent of the 2006 Creditor Scheme Shareholder
      The rights attaching to the 2006 Creditor Scheme Share held by the 2006 Creditor Scheme
      Shareholder include the right to effectively veto, amongst other things, the Scheme. The 2006
      Creditor Scheme Shareholder has given a non-binding indication in writing that it is, on the
      basis of the facts and circumstances known to it at the time of giving such indications,
      minded to consent to the Scheme and any necessary actions involved in the implementation
      of the Scheme, including the creation, issue and, in due course, buy back of the Cape A
      Ordinary Share. In accordance with the rights attaching to the 2006 Creditor Scheme Share,
      the 2006 Creditor Scheme Shareholder is also entitled to vote on Resolution no.1 at the
      General Meeting and its non-binding indication in writing also contains a non-binding
      indication from the 2006 Creditor Scheme Shareholder that it is, again on the basis of the
      facts and circumstances known to it at the time of giving such indication, minded to vote
      in favour of such Resolution at the General Meeting.




                                               132
      The non-binding indication in writing of the 2006 Creditor Scheme Shareholder further
      provides that any formal consent of the 2006 Creditor Scheme Shareholder will, in the event
      that it is given in due course, be subject to receipt by it of the relevant recommendation
      from the 2006 Creditor Scheme Directors, the relevant opinion from Old Cape’s solicitors
      and the relevant certificate from Old Cape (as required under the Old Cape Trust Deed and
      the Old Cape Articles).
      In order to secure the consent of the 2006 Creditor Scheme Shareholder to the Proposals
      and its vote in favour of Resolution no.1 at the General Meeting in light of its duties to
      2006 Creditor Scheme Creditors, a new special voting share (known as the New Cape
      Creditor Scheme Share) in New Cape will, upon the Proposals becoming effective, be issued
      to Law Debenture having substantially the same rights as, and being in addition, to, the 2006
      Creditor Scheme Share and which will afford Law Debenture substantially the same
      protections as those provided by the 2006 Creditor Scheme Share. A summary of the rights
      attaching to the New Cape Creditor Scheme Share is set out at paragraph 8 of Part VII of
      this Prospectus. The differences between the New Cape Creditor Scheme Share and the
      2006 Creditor Scheme Share are principally due to the requirements of the UK Listing
      Authority in order that the New Cape Shares can be admitted to the premium listing
      segment of the Official List and amendments to reflect intervening events since the date the
      2006 Creditor Scheme Share was issued and the fact that New Cape is a company
      incorporated in Jersey and is subject to Jersey law (whereas Old Cape is a company
      incorporated in England and Wales and is subject to English law).
      In particular, in order to satisfy the requirements of the UK Listing Authority as referred to
      above, where a resolution (on which the New Cape Creditor Scheme Shareholder has voting
      rights) relates to a matter that under the Listing Rules requires the approval of the
      shareholders of New Cape or, where a resolution is proposed by the New Cape Creditor
      Scheme Shareholder to be moved at any general meeting of New Cape, such resolution will
      require both the initial approval of all shareholders entitled to vote (including the New Cape
      Creditor Scheme Shareholder) and a duplicate separate resolution of the New Cape
      Shareholders (not including the New Cape Creditor Scheme Shareholder) passed at the same
      general meeting, in order to be passed. Both resolutions will be stated to be conditional
      upon the passing of the other.

5.     NEW CAPE REDUCTION OF CAPITAL
New Cape is proposing to undertake the New Cape Reduction of Capital shortly after the Scheme
Effective Date which will create a reserve of profit in the accounts of New Cape. Distributions
paid out of this reserve should then be regarded as a dividend on receipt by UK shareholders.
Pursuant to the New Cape Reduction of Capital, it is proposed that the entire amount standing to
the credit of New Cape’s share premium account be cancelled after the Scheme has become
effective. This cancellation will create a reserve of profit that will be available to New Cape to be
distributed as dividends or applied towards any other lawful purpose. The Board does not intend
to make any distributions from this reserve other than in accordance with the dividend policy set
out in paragraph 11 below.
The New Cape Reduction of Capital is conditional upon:
5.1   the passing of a special resolution at the General Meeting to approve the Scheme and the
      New Cape Reduction of Capital;
5.2   the Scheme becoming effective in accordance with its terms;
5.3   the Jersey Court confirming the New Cape Reduction of Capital; and
5.4   the Jersey Registrar of Companies registering the act of court and approved minute of the
      Jersey Court.




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In order to obtain the sanction of the Jersey Court to the New Cape Reduction of Capital, New
Cape will need to satisfy the Jersey Court that its creditors are not prejudiced. New Cape will put
into place appropriate arrangements (if required) to satisfy the Court’s requirements in this respect.
Subject to the Scheme becoming effective on 17 June 2011, the New Cape Reduction of Capital
is expected to become effective on 1 July 2011.

6.    ADMISSION AND DEALINGS
Application will be made to the UK Listing Authority for all of the New Cape Shares (up to
118,300,355 New Cape Shares) of 25 pence each to be admitted to the premium listing segment
of the Official List and to the London Stock Exchange for such shares to be admitted to trading
on the London Stock Exchange’s main market for listed securities. The ISIN number of the New
Cape Shares will be JE00B5SJJD95.
The last day of dealings in Old Cape Shares is expected to be on 16 June 2011. The last date for
registration of transfers of Old Cape Shares is expected to be 16 June 2011.
At the Scheme Effective Date, share certificates for the Old Cape Shares in Certificated form will
cease to be valid and, with respect to the Old Cape Shares held in Uncertificated form, Euroclear
will be instructed to cancel the entitlements of the relevant Old Cape Shareholders in respect of
those Old Cape Shares. Admission of the New Cape Shares to the Official List is expected to
become effective, and dealings in the New Cape Shares is expected to commence, at 8.00 a.m. on
17 June 2011. These dates may be deferred if it is necessary to adjourn any meeting required to
approve the Scheme or if there is any delay in obtaining the High Court’s sanction of the Scheme.
In the event of a delay, the application for the Old Cape Shares to be delisted will be deferred, so
that the listing will not be cancelled until immediately before the Scheme takes effect.
No New Cape Shares have been marketed to, nor are any available for purchase or exchange, in
whole or in part, by the public in the United Kingdom or elsewhere in connection with the
admission to the Official List.
New Cape Shares can be held in Certificated or Uncertificated form. It is expected that certificates
for New Cape Shares in Certificated form will be dispatched within ten Business Days after the
Scheme Effective Date.
Pending the despatch of certificates for New Cape Shares, transfers of New Cape Shares in
Certificated form will be certified against the share register of New Cape. Temporary documents
of title have not been, and will not be, issued in respect of New Cape Shares in Certificated form.
It is expected that New Cape Shares in Uncertificated form will be credited to CREST accounts
on 17 June 2011.
All documents, certificates or other communications sent by or to any shareholders will be sent
at their own risk and may be sent by post.
All instructions given to Old Cape in relation to notices and other communications in force
immediately prior to the Scheme Effective Date will be, unless and until revoked or varied, deemed
as from the Scheme Effective Date to be valid and effective instructions to New Cape in relation
to the corresponding holdings of New Cape Shares.

7.    DIVIDEND POLICY
For details of New Cape’s dividend policy, please see paragraph 11 in Part I of this Prospectus.
The New Cape Shares will be issued credited as fully paid and will rank pari passu in all respects
with each other and will rank in full for all dividends and other distributions thereafter declared,
made or paid in respect of the New Cape Shares.




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8.    TIMETABLE
Please refer to the section of this Prospectus headed ‘Expected Timetable of Principal Events’.

9.     THE GROUP EMPLOYEE SHARE PLANS
Depending on the terms of the relevant Old Cape Employee Share Plan participants will either be
given the opportunity to exchange their options and awards relating to Old Cape Shares for
equivalent rights relating to New Cape Shares or such exchange will occur automatically. The
replacement options and awards will be treated as having been granted at the same time as the
old rights which they replace and they will become exercisable or vest on similar terms subject
to the rules of the relevant Old Cape Employee Share Plan. If participants exercise their existing
options after the Scheme Record Time, any Old Cape Shares acquired by participants will be
automatically acquired by New Cape for an equal number of New Cape Shares pursuant to a
proposed amendment to the Old Cape Articles.
Details of the impact of the Scheme on participation in the Old Cape Employee Share Plans will
be sent separately to the participants.

9.1   Existing options and awards
      The following is a general summary of the impact of the Scheme on subsisting options and
      awards granted under the Old Cape Employee Share Plans. Further details of the Old Cape
      Employee Share Plans are at paragraph 13 of Part VIII.

      9.1.1 Old Cape 2006 Sharesave Plan
            Under the rules of this Plan, the Board is required to notify all participants forthwith
            following sanction of the Scheme by the High Court, and participants may either
            exercise early or elect to release their options over Old Cape Shares in consideration
            of the grants of new options over equivalent numbers of New Cape Shares.
            Participants are entitled to exercise their options (and acquire Old Cape Shares)
            within 6 months from the date on which the Scheme is sanctioned by the High
            Court. The number of Old Cape Shares that may be acquired on the exercise of these
            options will be restricted to the number which can be purchased with the proceeds
            of a participant’s monthly savings contract as at the date of exercise.
            Participants who elect to release their options over Old Cape Shares in consideration
            of the grants of new options over equivalent numbers of New Cape Shares, must
            make such elections within 6 months from the date on which the Scheme is
            sanctioned by the High Court. They may continue to make their monthly savings
            contributions and exercise the replacement options (subject to the terms of the
            savings contract) at the normal exercise date.

      9.1.2 Old Cape 2004 Employee Incentive Plan
            Under the rules of this Plan, the Board is required to notify all participants following
            sanction of the Scheme by the High Court, following which participants may exercise
            their options within one month of such notification, but to the extent that participants
            do not exercise their options within such one month period, their options will lapse
            at the end of such period. The rules of the 2004 Employee Incentive Plan have been
            amended to give participants will be given the opportunity to elect to exercise early
            or to exchange their existing options for equivalent options over New Cape Shares
            conditionally on the Scheme being sanctioned by the High Court.

      9.1.3 Old Cape 2007 Performance Share Plan
            On the basis that the implementation of the Scheme is an ‘internal reorganisation’ for
            the purposes of the relevant rule of this Plan and that Old Cape has determined that




                                                135
             such rule shall apply, awards under this Plan will not vest on the Scheme being
             sanctioned by the High Court, but will be automatically released in consideration of
             the grants of new awards over equivalent numbers of New Cape Shares.
             If participants exercise their existing options after the Scheme Record Time, any Old
             Cape Shares acquired by participants will be automatically acquired by New Cape for
             an equal number of New Cape Shares pursuant to a proposed amendment to the Old
             Cape Articles.
      No further options or awards will be granted under the Old Cape Employee Share Plans
      after the Scheme becomes effective.
      In relation to the Old Cape 2007 Performance Share Plan, Old Cape has entered into a Share
      Supply Deed (as summarised in paragraph 19.9 in Part VIII (‘Additional Information’) with
      Sanne Trust Company Limited (in its capacity as trustee of the Old Cape employee benefit
      trust) pursuant to which the Company is obliged to supply shares to the EBT Trustee to
      satisfy awards that are granted to beneficiaries under the Old Cape 2007 Performance Share
      Plan. New Cape has entered into a new share supply deed with the EBT Trustee on similar
      terms to the existing Share Supply Deed (as summarised at paragraph 19.10 in Part VIII).

9.2   New employee share plan
      In order to continue to provide share based incentives to employees within the Group, the
      Directors expect that New Cape will operate the New Cape 2011 Performance Share Plan
      which will, other than the fact that it relates to New Cape Shares, be broadly similar to the
      corresponding Old Cape 2007 Performance Share Plan currently operated by Old Cape.
      The New Cape 2011 Performance Share Plan will however, in order to bring the employee
      incentives offered by the Group into line with market practice and to enable it to compete
      against other international energy and mineral resources industrial services companies,
      contain increased individual participation limits and will include a dividend equivalence
      mechanism in respect of vested awards.
      New Cape will adopt the New Cape 2011 Performance Share Plan conditional upon the Old
      Cape Shareholders approving its adoption by New Cape at the General Meeting to be held
      on 25 May 2011 and subject to the Scheme becoming effective. Details of the New Cape
      2011 Performance Share Plan are set out in paragraph 13.2 of Part VIII (‘Additional
      Information’).

10. GROUP PENSIONS
Old Cape operates a defined benefit scheme and a defined contribution scheme within the UK
and provides pensions for employees of overseas companies in the Group in accordance with local
requirements and practices.
The UK defined benefit scheme is closed to future accrual of benefits save that employees’
benefits increase broadly in line with the greater of salary and inflation. The Proposals will not
result in any changes to the provision of retirement benefits. It is intended that the same group
employers will continue to operate and participate in the pension schemes. No changes to the
provision of retirement benefits will occur as a result of the Proposals. It is not intended that New
Cape will participate in the UK pension schemes, but it may offer retirement benefits to its
employees in its own jurisdiction.

11. OVERSEAS SHAREHOLDERS
Overseas Shareholders may be affected by the laws of other jurisdictions in relation to the Scheme.
Overseas Shareholders should inform themselves about and observe all applicable legal
requirements.




                                                136
It is the responsibility of any person into whose possession this Prospectus comes to satisfy
themselves as to the full observance of the laws of the relevant jurisdiction in connection with
the allotment and issue of New Cape Shares following the Scheme becoming effective, including
the obtaining of any governmental, exchange control or other consents which may be required
and/or compliance with other necessary formalities which are required to be observed and the
payment of any issue, transfer or other taxes or levies due in such jurisdiction.
If, in respect of any Overseas Shareholder, New Cape is advised that the allotment and issue of
New Cape Shares would or might infringe the laws of any jurisdiction outside Jersey or the United
Kingdom, or would or might require New Cape to obtain any governmental or other consent or
effect any registration, filing or other formality, New Cape may determine that no New Cape Shares
shall be allotted and issued to such shareholder but instead those New Cape Shares shall be
allotted and issued to a nominee appointed by New Cape as trustee for such shareholder, on terms
that they shall be sold on behalf of such shareholder as soon as reasonably practicable after the
Scheme becomes effective, with the net proceeds of sale being remitted to the Overseas
Shareholder concerned at the risk of such shareholder. Alternatively, New Cape may determine that
the New Cape Shares shall be issued to that Overseas Shareholder and sold, with the net proceeds
of sale being remitted to the Overseas Shareholder at the Overseas Shareholder’s risk.
This Prospectus has been prepared for the purposes of complying with English and Jersey law and
the Prospectus Rules and the information disclosed may not be the same as that which would
have been disclosed if this Prospectus had been prepared in accordance with the laws of
jurisdictions outside the United Kingdom or Jersey.
THIS PROSPECTUS DOES NOT CONSTITUTE AN INVITATION OR OFFER TO SELL OR THE
SOLICITATION OF AN INVITATION OR OFFER TO BUY ANY SECURITY, NOR SHALL THERE
BE ANY SALE, ISSUANCE, SUBSCRIPTION, PURCHASE, EXCHANGE OR TRANSFER OF THE
SECURITIES REFERRED TO IN THIS PROSPECTUS IN ANY JURISDICTION IN
CONTRAVENTION OF APPLICABLE LAW.
Overseas Shareholders should consult their own independent legal, financial and tax advisers with
respect to the legal, financial and tax consequences of the Scheme in their particular
circumstances.




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                                            PART VI

                                         TAXATION

The following section is a summary guide only to certain aspects of tax in the UK,
Singapore and Jersey. This is not a complete analysis of the potential tax effects of the
Proposals nor will it relate to the specific tax position of all New Cape Shareholders in
all jurisdictions. This summary does not purport to be a legal opinion. New Cape
Shareholders are advised to consult their own tax advisers as to the effects of the
Proposals in their own jurisdictions.
This summary assumes the Proposals (including but not limited to the New Cape
Reduction of Capital and the Reorganisation) have been effected in full, and that New
Cape will be treated as tax resident in Singapore. New Cape Shareholders should note
that the New Cape Reduction of Capital requires the sanction of the Jersey Court, which
sanction is expected to be sought on 30 June 2011. New Cape will also to be treated as
tax-resident in Jersey which means it will be dual resident for tax purposes, although
as further described under the heading ‘Jersey Taxation’ below this is not expected to
result in any tax liability in Jersey.

1.     UK TAXATION
The following summary is intended as a general guide only and relates only to certain
limited aspects of UK tax consequences of the Scheme for Shareholders and of holding
and disposing of New Cape Shares. It is based on current UK tax law and the current
practice of HMRC, both of which are subject to change, possibly with retrospective
effect. The summary applies only to Shareholders who are resident and, if individuals,
ordinarily resident and domiciled in the UK for taxation purposes, who hold their Old
Cape Shares and New Cape Shares as an investment (other than under a personal equity
plan or an individual savings account), who are the absolute beneficial owners of their
Old Cape Shares and their New Cape Shares, who have not (and are not deemed to
have) acquired their Old Cape Shares and their New Cape Shares by virtue of an office
or employment (whether current, historic or prospective) and are not officers or
employees of any member of the Group. In addition, these comments may not apply to
certain classes of New Cape Shareholders such as dealers in securities, collective
investment schemes and insurance companies.
If you are in any doubt about your tax position, you should consult your own
professional adviser without delay.

1.1   UK tax consequences of the cancellation of Old Cape Shares and issue of New
      Cape Shares
      Capital gains tax and corporation tax on chargeable gains (“CGT”)
      For the purposes of UK CGT, the cancellation of the Old Cape Shares and the issue of New
      Cape Shares should be treated as a scheme of reconstruction. UK resident Shareholders who
      do not hold (either alone or together with connected persons) more than 5 per cent. of, or
      of any class of, shares in or debentures of Old Cape should obtain rollover relief in respect
      of the cancellation of Old Cape Shares and the issue to them of the New Cape Shares. This
      means that the New Cape Shares issued to a Shareholder should be treated as the same
      asset, and as having been acquired at the same time and for the same consideration, as his
      Old Cape Shares from which they are derived.
      Shareholders who hold (alone, or together with connected persons) more than 5 per cent.
      of, or of any class of, shares in or debentures of Old Cape will be eligible for the above




                                               138
      treatment only if the Scheme is effected for bona fide commercial reasons and does not
      form part of a scheme or arrangements of which the main purpose, or one of the main
      purposes, is avoidance of a liability to capital gains tax or corporation tax. If these
      conditions are not met, then such an Old Cape Shareholder will be treated as receiving New
      Cape Shares in consideration for the cancellation of his Old Cape Shares and as having made
      a disposal of his Old Cape Shares which may, depending on individual circumstances, give
      rise to a chargeable gain or allowable loss for CGT purposes. No application has been made
      to HMRC under section 138 of the Taxation of Chargeable Gains Act 1992 that these
      conditions will be met.

      New Cape Reduction of Capital
      The New Cape Reduction of Capital should not have any UK tax consequences for New
      Cape Shareholders. It should be treated as a reorganisation of the share capital of New Cape
      and, accordingly, will not result in a disposal by any New Cape Shareholders of any of their
      New Cape Shares.

      UK stamp duty and stamp duty reserve tax (“SDRT”) consequences of the Scheme
      No stamp duty or SDRT will be payable by Shareholders as a result of the cancellation of
      Old Cape Shares and issue of New Cape Shares under the Scheme.

1.2   UK taxation consequences of disposing of New Cape Shares in the future
      A disposal of New Cape Shares by a UK tax resident New Cape Shareholder may, depending
      on individual circumstances, give rise to a chargeable gain or allowable loss for UK tax
      purposes.
      A disposal of New Cape Shares by a New Cape Shareholder who is not resident in the UK
      for tax purposes but who carries on a trade, profession or vocation in the UK through a
      branch, agency or permanent establishment and has used, held or acquired the New Cape
      Shares for the purposes of such trade, profession or vocation or such branch, agency or
      permanent establishment may, depending on individual circumstances, give rise to a
      chargeable gain or allowable loss for UK tax purposes.
      A New Cape Shareholder who is an individual and who is temporarily non-resident in the
      UK for a period of less than five complete tax years may, under anti-avoidance legislation,
      still be liable to UK taxation on their return to the UK on a chargeable gain realised on the
      disposal or part disposal of New Cape Shares during the period when he is non-resident.
      For corporate shareholders only, indexation allowance on the relevant proportion of the
      original allowable cost should be taken into account for the purposes of calculating a
      chargeable gain (but not an allowable loss) arising on a disposal or part disposal of its New
      Cape Shares.

1.3   UK taxation of dividends
      Dividends paid on the New Cape Shares
      Individual New Cape Shareholders
      Dividends paid out of reserves created by way of the New Cape Reduction of Capital should
      comprise dividends for UK tax purposes and for UK resident individual New Cape
      Shareholders these dividends should be subject to income tax.

      New Cape Shareholders who are individuals who own less than a 10 per cent.
      shareholding in New Cape
      A New Cape Shareholder who is an individual resident in the UK for tax purposes will, if
      he owns less than 10 per cent. of the issued share capital in New Cape, be entitled to a
      tax credit equal to one-ninth of the dividend received from New Cape. Such an individual




                                               139
      will be taxed on the total of the dividend before deduction of Singaporean tax withheld (if
      any) and the related tax credit (the “gross dividend”), which will be regarded as the top
      slice of the individual’s income.
      The tax credit will be treated as discharging the individual’s liability to UK income tax in
      respect of the gross dividend, unless and except to the extent that the gross dividend falls
      above the threshold for the higher rate of income tax, in which case the individual will, to
      that extent, pay UK income tax on the gross dividend at the dividend upper rate of 32.5 per
      cent. less the related tax credit. So, for example, a dividend of £80 will carry a tax credit of
      £8.89 and the UK income tax payable on the dividend by an individual liable to income tax
      at the higher rate would be 32.5 per cent. of £88.89, namely £28.89, less the tax credit of
      £8.89, leaving a net tax charge of £20.
      To the extent the gross dividend falls above the individual’s threshold for the additional rate
      of income tax (50 per cent. rate), the individual will pay UK income tax on the gross
      dividend at the new 42.5 per cent. dividend additional rate less the related tax credit. In
      this situation, a dividend of £80 will continue to carry a tax credit of £8.89 and the UK
      income tax payable on the dividend by an individual liable to income tax rate at the
      additional rate would be 42.5 per cent., of £88.89, namely £37.78, less the tax credit of
      £8.89, leaving a net tax charge of £28.89.

      New Cape Shareholders who are individuals who own a 10 per cent. or greater
      shareholding in New Cape
      In certain circumstances individuals who own a 10 per cent. or greater shareholding in a
      company do not qualify for the 10 per cent. tax credit. However, as New Cape should not
      be an offshore fund, and is a company resident in a territory with which the UK has a
      double tax agreement which includes a non discrimination article, any individuals holding a
      10 per cent. or greater shareholding in New Cape should also qualify for the 10 per cent.
      dividend tax credit.

      Corporate New Cape shareholders
      Distributions paid on or after 1 July 2009 and received by a New Cape Shareholder within
      the charge to UK corporation tax are subject to the dividend exemption rules in Part 9A
      Corporation Tax Act 2009. Under the dividend exemption rules, any such New Cape
      Shareholder should generally not be subject to corporation tax on dividends paid by New
      Cape, including those dividends paid out of the reserves created by way of the New Cape
      Reduction of Capital (see paragraph 5 of Part V (‘The Proposals’).
      If you are in any doubt about your tax position, you should consult your own professional
      adviser without delay.

1.4   Transactions in securities
      Shareholders should note that Old Cape has been advised that Shareholders should not
      suffer a counter-acting tax assessment under the “transactions in securities” rules under
      section 733 of the Corporation Tax Act 2010 in relation to corporation taxpayers and the
      provisions of Chapter I, Part 13 of the Income Tax Act 2007 in relation to income taxpayers
      by reference to the Scheme. However, no clearance has been sought from HMRC to the
      effect that the provisions of section 733 of the Corporation Tax Act 2010 and Chapter I,
      Part 13 of the Income Tax Act 2007 will not be applied.

1.5   UK stamp duty and SDRT on transfers of New Cape Shares
      In practice, UK stamp duty should generally not need to be paid on an instrument
      transferring New Cape Shares, provided that such transfer instruments are executed and
      retained outside of the UK.




                                                140
        No UK SDRT will be payable in respect of any agreement to transfer New Cape Shares.
        The statements in this paragraph summarise the current position on stamp duty and SDRT
        and are intended as a general guide only. They assume that the New Cape Shares will not
        be registered in a register kept in the UK by or on behalf of New Cape. New Cape has
        confirmed it does not intend to keep such a register in the UK.

2.     SINGAPOREAN TAXATION
The following paragraphs summarise the position on Singaporean tax for New Cape
Shareholders. This is a general summary of certain tax consequences of the ownership
of the New Cape Shares. These discussions are based, as applicable, on the tax laws,
regulations, decrees, rulings, income tax conventions (treaties), administrative practice
and judicial decisions of Singapore as in effect on the date of this Prospectus which are
subject to change (or subject to changes in interpretation), possibly with retrospective
effect. This is not a complete analysis of the potential tax effects relevant to owning
New Cape Shares. Nor does the following summary take into account or discuss the tax
laws of any jurisdiction other than Singapore. It also does not take into account
investors’ individual circumstances. This summary does not purport to be a legal
opinion or to address all tax aspects that may be relevant to a holder of New Cape
Shares. Investors are advised to consult their own tax advisors as to the tax
consequences in Singapore or elsewhere, of the acquisition, ownership and disposition
of the New Cape Shares. Tax consequences may differ according to the provisions of
different double taxation treaties and the investor’s particular circumstances. The
statements and discussion of taxes in Singapore set out below are of a general nature
and do not relate to persons in the business of buying and selling shares or other
securities.

Taxation of New Cape
Both resident and non-resident Singapore companies, subject to certain exceptions, are subject to
tax on income accruing in or derived from Singapore and on foreign-sourced income received or
deemed received in Singapore.
A company is generally regarded as a tax resident in Singapore if the control and management of
its business is exercised in Singapore.
Under Singapore tax law, foreign-sourced income in the form of dividends, branch profits and
service income received or deemed received in Singapore by a Singapore resident company shall
be exempt from tax in Singapore provided the following conditions are met:
(i)     such income is subject to tax of a similar character to income tax under the law of the
        jurisdiction from which such income is received;
(ii)    at the time such income is received in Singapore by a Singapore resident company, the
        highest rate of tax of a similar character to income tax levied on any gains or profits from
        any trade or business carried on in the jurisdiction from which such income is received is
        at least 15 per cent.; and
(iii)   the Comptroller of Income Tax is satisfied that the tax exemption would be beneficial to
        the Singapore resident recipient of the foreign income.
The corporate tax rate in Singapore is currently 17 per cent. with partial exemption on three
quarters of the first S$10,000 and one-half of the next S$290,000 of a company’s normal
chargeable income.




                                                 141
Taxation of Shareholders
Dividend Distributions
Singapore adopted the one-tier corporate tax system with effect from 1 January 2003. Under the
one-tier corporate tax system, the Singapore income tax payable on normal chargeable income by
Singapore tax resident companies would constitute a final Singapore income tax.
Dividends payable by companies under the one-tier corporate system would be tax exempt from
Singapore income tax in the hands of its shareholders. Such dividends are referred to as tax
exempt (one-tier) dividends.
It is intended for New Cape to be a tax resident in Singapore. To the extent that New Cape is a
tax resident of Singapore, it will be under the one-tier corporate tax system. As such, when New
Cape distributes dividends, these dividends will be one-tier tax exempt dividends and such
dividends would not be taxable in Singapore. There is also no Singapore withholding tax on
dividends paid to non-Singapore tax resident shareholders
New Cape Shareholders that are not resident in Singapore for tax purposes are advised to consult
their own tax advisors in respect of the tax laws of their respective countries of residence and
the applicability of any Avoidance of Double Taxation Agreement that their country of residence
may have with Singapore.

Gain on disposal of New Cape Shares
Singapore currently does not impose tax on capital gains. However, there are no specific laws or
regulations, which deal with the characterisation of capital gains. In general, certain gains may be
construed to be revenue in nature and subject to income tax where they are derived from
activities which the Inland Revenue Authority of Singapore regards as constituting a trade or
business carried on in Singapore.
Generally, gains arising from the disposal of New Cape Shares would not be taxable in Singapore
unless the seller is deemed to be dealing or trading in shares in Singapore, in which case, the
disposal profits would be taxable as trading income in the hands of the seller.
New Cape Shareholders should consult their tax advisors as to the tax consequences on a disposal
of New Cape Shares.

Stamp duty
No stamp duty is payable in Singapore on the issue of New Cape Shares.
Presently, conveyance, assignment or transfer on sale of any property shall not be subject to
Singapore stamp duty except where it relates to stocks and shares in Singapore incorporated
companies, and foreign companies maintained in a share register kept in Singapore, and immovable
properties situated in Singapore and interest therein.
Based on the assumption that the share register of New Cape would be maintained outside
Singapore, stamp duty would not be applicable on the conveyance, assignment or transfer on sale
of the New Cape Shares.

Goods and Services Tax (“GST”)
The issue or transfer of ownership of an equity security in Singapore is exempt from GST. Hence,
no GST is chargeable on the issue of New Cape Shares even if New Cape is registered for GST.
The dividends received from New Cape would fall outside the scope of Singapore GST. In other
words, no GST needs to be accounted for by the New Cape Shareholders even if they are
registered for GST.




                                                142
The subsequent disposal of New Cape Shares by a New Cape Shareholder who belongs in and is
GST-registered in Singapore is also exempt from GST if the buyer is a person who belongs in
Singapore. Any GST incurred by the GST-registered New Cape Shareholder in connection with this
disposal is in principle not recoverable as an input tax credit. However, if the New Cape Shares
are disposed of by a New Cape Shareholder to a person who belongs outside Singapore, such a
disposal would attract GST at a zero rate. Any GST incurred in connection with this disposal
should be recoverable by the New Cape Shareholder, subject to normal input tax recovery rules.
GST at the prevailing rate, currently at 7 per cent., would be applicable to services such as
brokerage, handling and clearing services rendered by a GST-registered person to a person who
belongs in Singapore in connection with his purchase, sale or holding of New Cape Shares.
However, if similar services are rendered to a person who belongs outside Singapore, GST at a zero
rate would generally apply.

3.    JERSEY TAXATION
The following summary of the anticipated treatment of New Cape and holders of New
Cape Shares (other than residents of Jersey) is based on Jersey taxation law and practice
as they are understood to apply at the date of this Prospectus and is subject to changes
in such taxation law and practice. It does not constitute legal or tax advice and does not
address all aspects of Jersey tax law and practice (including such tax law and practice
as they apply to any land or building situated in Jersey). Prospective investors in New
Cape Shares should consult their professional advisers on the implications of acquiring,
holding, selling or otherwise disposing of New Cape Shares under the laws of any
jurisdiction in which they may be liable to taxation.

Taxation of New Cape
New Cape is regarded as resident for tax purposes in Jersey and on the basis that New Cape is
neither a financial services company nor a utility company for the purposes of the Income Tax
(Jersey) Law 1961, as amended, New Cape is subject to income tax in Jersey at a rate of zero per
cent. Dividends on New Cape Shares may be paid by New Cape without withholding or deduction
for or on account of Jersey income tax and holders of New Cape Shares (other than residents of
Jersey) will not be subject to any tax in Jersey in respect of the holding, sale or other disposition
of such New Cape Shares.

Stamp duty
In Jersey, no stamp duty is levied on the issue or transfer of the New Cape Shares except that
stamp duty is payable on Jersey grants of probate and letters of administration, which will generally
be required to transfer New Cape Shares on the death of a holder of such New Cape Shares. In
the case of a grant of probate or letters of administration, stamp duty is levied according to the
size of the estate (wherever situate in respect of a holder of New Cape Shares domiciled in Jersey,
or situate in Jersey in respect of a holder of New Cape Shares domiciled outside Jersey) and is
payable on a sliding scale at a rate of up to 0.75 per cent. of such estate.
Jersey does not otherwise levy taxes upon capital, inheritances, capital gains or gifts nor are there
other estate duties.
If you are in any doubt as to your tax position you should consult your professional
tax adviser.




                                                143
                                            PART VII

               2006 CREDITOR SCHEME OF ARRANGEMENT

1.      BACKGROUND
The Group was originally founded to mine and process asbestos and to sell asbestos-related
products. From 1913, the Group operated a number of factories processing and manufacturing
asbestos products in the UK. Principally through its subsidiaries, the Group operated mines and,
latterly, a factory manufacturing asbestos products in South Africa.
As the health risks associated with asbestos became more widely known, the Group closed a
number of its UK factories in the 1960s and 1970s. The Group ceased manufacturing asbestos
products in the 1980s and, in September 2002 sold all of its manufacturing operations with the
exception of two small operations in Dalton-in-Furness and Abu Dhabi which support the Group’s
contracting business.
By 1945 the Group had begun to diversify into the provision of industrial services. Today the
Group is a leading international provider of industrial support services to the energy sector and
is recognised for its health and safety procedures and record.
The Group’s historical use of asbestos in its industrial activities has meant that a number of people
have been exposed to asbestos and its associated health risks. Whilst the large majority of the UK
employees of the relevant group companies have not been affected, unfortunately a number of
employees, contractors and others who have come into contact with those companies have been
and will in the future be diagnosed with asbestos related conditions and may in the future bring
a claim for compensation against one or more group company.
Due to the uncertainty as to the frequency, level and financial consequences of any future claims
on the continued solvency of the relevant group companies and the negative impact of such
uncertainty on the business of the Group, in 2005 the board decided to seek to put in place a
means of ring-fencing and providing long term financing for the majority of future of all future
asbestos-related claims likely to be successfully made against the Group. The original proposals for
the 2006 Creditor Scheme were announced in June 2005, however following feedback from
various interested parties, an actuarial review of the future liabilities of various Group companies
was undertaken. The 2006 Creditor Scheme was approved by creditors in May 2006 and was
subsequently sanctioned by the High Court, on 14 June 2006 and became effective and binding
upon Old Cape and 12 of its wholly owned subsidiaries:
Cape Building Products Limited
Cape Calsil Systems Limited
Cape Contracts International Limited
Cape Durasteel Limited
Cape East Limited
Cape Industrial Services Limited
Cape Industries Limited
Cape Insulation Limited
Cape Specialist Coatings Limited
Predart Limited
Somewatch Limited
Somewin Limited




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2.     KEY FEATURES OF THE 2006 CREDITOR SCHEME
The detailed terms of the 2006 Creditor Scheme are set out in the 2006 Creditor Scheme itself (a
copy of which has been filed with the Registrar of Companies) the Old Cape Articles and the CCS
Articles and a number of other ancillary agreements. The effect of the 2006 Creditor Scheme as a
whole can be summarised as follows:
2.1   While 2006 Scheme Creditors retain their rights against 2006 Creditor Scheme Companies,
      and may bring proceedings against 2006 Creditor Scheme Companies for declaratory relief
      to determine whether they have a claim and, if so, of what amount, their rights, subject as
      provided in sub paragraphs 2.10 and 2.12 below are only enforceable against CCS under the
      terms of the 2006 Creditor Scheme Guarantee.
2.2   CCS was incorporated when the 2006 Creditor Scheme became effective to hold the 2006
      Creditor Scheme Fund and its directors include two directors who are independent of the
      Group.
2.3   CCS was funded in the first instance with £40 million. This initial level of funding
      represented not less than the estimate of the independent actuary (Towers Watson (then
      known as Tillinghast)) of the amounts payable by the 2006 Creditor Scheme Companies in
      respect of 2006 Creditor Scheme Claims not met by insurance recoveries over at least the
      following eight financial years (commencing on 1 January 2006) together with the running
      costs of the 2006 Creditor Scheme for the next three financial years. It should be
      emphasised that the sum of £40 million was not calculated by reference to an estimate of
      the likely amount of 2006 Creditor Scheme Claims, it simply represented the aggregate
      amount of funds that Old Cape was able to raise from its shareholders and the level of debt
      that Old Cape would be able to reasonably maintain for the purposes of the 2006 Creditor
      Scheme. The use of these funds is restricted to the payment of Established Creditor Scheme
      Claims and 2006 Scheme Creditor costs.
2.4   Every three years an assessment is carried out by an independent actuary of the projected
      2006 Creditor Scheme Claims against 2006 Creditor Scheme Companies payable by CCS over
      the following nine years, by reference to which the funding requirements of the 2006
      Creditor Scheme are established (the “Funding Requirement”). Two such assessments have
      been carried out in 2007 and 2010 and it was concluded in both instances that it was not
      necessary for the Old Cape to make any top up payments to the 2006 Creditor Scheme at
      either time.
2.5   In the event that an assessment reveals a shortfall between the 2006 Creditor Scheme Assets
      and the Funding Requirement, Old Cape is required to top up CCS’s funding over the
      following three years provided that sufficient cash is available. Old Cape’s obligation is
      limited to 70 per cent. of the Existing Group’s consolidated adjusted operational cash flow
      (including, for example, adjustments to take account of acquisitions, an element of capital
      expenditure and repayment of borrowing facilities).
2.6   Should Old Cape not be able to meet its top up obligation in any one year, it will be
      required to make good the shortfall in the next year, again subject to sufficient cash being
      available.
2.7   Alongside the Funding Requirement there is a further funding requirement which is assessed
      by an independent actuary every year by reference to projected 2006 Creditor Scheme
      Claims against 2006 Creditor Scheme Companies payable by CCS over the next six years
      together with the running costs of CCS for three years (the “Scheme Funding
      Requirement”).
2.8   If at any time the ratio of the 2006 Creditor Scheme Assets to the Scheme Funding
      Requirement (the “Scheme Funding Percentage”) falls below 60 per cent., CCS has the




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      ability to reduce the percentage (the “Payment Percentage”) of each established claim which
      it pays to 2006 Scheme Creditors until such time as the Scheme Funding Percentage is
      restored to 60 per cent.
2.9   From 2008 onwards, Old Cape has been permitted to pay dividends provided that at the
      time of payment: (i) the Scheme Funding Percentage in relation to the last preceding
      financial year was certified to be not less than 110 per cent.; (ii) the directors of Old Cape
      certify that they anticipate that the Scheme Funding Percentage for the current and
      following financial year will be not less than 110 per cent.; and (iii) the Payment Percentage
      has not at any time within the previous 40 business days been below 100 per cent. Any
      distribution which Old Cape proposes to make to its shareholders may not, without the
      consent of the 2006 Creditor Scheme Shareholder, exceed the greater of: (i) 50 per cent. of;
      the consolidated operating profits of the Existing Group for the last preceding financial year
      and (ii) the aggregate of any permitted dividends made in the preceding financial year. This
      restriction therefore places a cap on the amount of dividends that Old Cape may pay in any
      one year.
2.10 Special classes of shares in each of CCS and Old Cape were established (the “2006 Creditor
     Scheme Shares”) which are held by an independent third party, the 2006 Creditor Scheme
     Shareholder, on trust for 2006 Scheme Creditors. The 2006 Creditor Scheme Shares have
     special rights which are designed to enable the 2006 Creditor Scheme Shareholder to
     protect the interests of 2006 Scheme Creditors.
2.11 In the case of certain 2006 Scheme Creditors (“Recourse Scheme Creditors”), who are those
     2006 Scheme Creditors whose claims are in whole or in part the subject of a contract of
     insurance (“Recourse Scheme Claims”) their rights to enforce their Recourse Scheme Claims
     against a relevant 2006 Creditor Scheme Company will revive in certain circumstances. These
     circumstances are where the relevant 2006 Creditor Scheme Company is insolvent or where
     there has been a specified reduction in the Payment Percentage and if the 2006 Scheme
     Creditor was able to bring about the insolvency of the relevant 2006 Creditor Scheme
     Company they would be able to recover greater compensation from the FSCS or, in certain
     circumstances, from a solvent insurer than is available from CCS at that time under the 2006
     Creditor Scheme. There will be a specified reduction if either: (i) the Payment Percentage
     has been reduced below 100 per cent. but above 50 per cent. and the 2006 Scheme
     Creditor has not been paid in full after 12 months; or (ii) the Payment Percentage is reduced
     to 50 per cent. or below.
2.12 Each 2006 Creditor Scheme Company is required to hold on trust for any Scheme Creditor
     concerned the proceeds of any policy of insurance (or any compensation received from the
     FSCS) referable to that 2006 Creditor Scheme Claim.
2.13 The restriction described in sub paragraph 2.1 above will not apply to proceedings to
     enforce the right conferred under sub-paragraph 2.11 above.
2.14 There are provisions contained in two reimbursement agreements which preserve certain
     rights of proof by CCS and Old Cape respectively in any insolvency of Old Cape or any of
     the other 2006 Creditor Scheme Companies.
2.15 The 2006 Creditor Scheme will continue until it is terminated in accordance with its terms.
     The 2006 Creditor Scheme will terminate upon the third anniversary of the last 2006
     Creditor Scheme Claim to settle or determine provided that upon such date: (i) no new
     2006 Creditor Scheme Claims have been commenced or threatened since the last 2006
     Creditor Scheme Claim was settled or determined; and (ii) no amounts remain payable to
     2006 Scheme Creditors by CCS under the 2006 Creditor Scheme Guarantee.




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3.     CLAIMS OUTSIDE THE 2006 CREDITOR SCHEME
The 2006 Creditor Scheme covers 13 Group companies and as such does not, nor was it intended
to, address all potential asbestos related claims which may be made against the Group.
Those Existing Group companies which were not included in the 2006 Creditor Scheme do not
enjoy the protection of the 2006 Creditor Scheme and to the extent that any such companies have
historically been involved in any asbestos related activities remain liable for any asbestos related
claims. In certain circumstances those companies not covered by the 2006 Creditor Scheme may
not be able to meet any such liabilities, however if this is not the case, the directors of the
relevant company may have no alternative to commence or accede to insolvency proceedings.
The Directors believe that 2006 Creditor Scheme Claims will represent the majority of all future
asbestos related claims likely to be made against the Group.

4.    MATERIAL AGREEMENTS IN CONNECTION WITH THE 2006 CREDITOR SCHEME
The following contracts, not being contracts entered into in the ordinary course of business, have
been entered into by the Old Cape and/or its subsidiaries in connection with the 2006 Creditor
Scheme and do or may contain provisions under which the Old Cape or any of its subsidiaries
have an obligation or entitlement which is material to the Group as at the date of this Prospectus.
4.1   A guarantee dated 14 March 2006 entered into between CCS and the 2006 Creditor Scheme
      Companies (the “2006 Creditor Scheme Guarantee”), pursuant to which CCS undertook to
      make payment of 2006 Creditor Scheme Claims to 2006 Scheme Creditors of 2006 Creditor
      Scheme Companies where there has been established (whether by settlement or court order
      (subject to special provisions regarding interim orders)) an obligation of the 2006 Creditor
      2006 Creditor Scheme Company to pay an ascertained sum (other than judgment interest).
      This undertaking applies to the extent that: (i) the 2006 Creditor Scheme Company is not
      holding the proceeds of any insurance or any payment from the FSCS on trust for the 2006
      Scheme Creditor; (ii) the 2006 Creditor Scheme Company’s rights against its insurers have
      not been transferred to the 2006 Scheme Creditor pursuant to the 1930 Act; and (iii) the
      2006 Creditor Scheme Company’s liability in respect of that 2006 Creditor Scheme Claim
      has not otherwise been discharged, for example by an insurer or the FSCS making payment
      direct to the 2006 Scheme Creditor. CCS will make payment of such 2006 Creditor Scheme
      Claims in full (that is the Payment Percentage will be 100 per cent.) when the Scheme
      Funding Percentage is 60 per cent. or greater. Where the Scheme Funding Percentage is
      below 60 per cent., the 2006 Creditor Scheme Directors may set a Payment Percentage
      below 100 per cent., for so long as the Scheme Funding Percentage remains below 60 per
      cent. Where a Payment Percentage below 100 per cent. has been set, interest will accrue on
      the unpaid portion of 2006 Creditor Scheme Claims payable by CCS at the annual rate of
      0.5 per cent. above Barclays Bank plc’s base rate.
      For the purpose of setting or revising any Payment Percentage, the 2006 Creditor Scheme
      Directors shall obtain and consider such financial and/or actuarial and/or legal and/or other
      information and advice as they may consider appropriate, which may include the financial
      position of all or any Existing Group companies and the interests of 2006 Scheme Creditors
      generally. In setting any Payment Percentage below 100 per cent. the 2006 Creditor Scheme
      Directors are obliged to have regard to and consider the likely quantum of all unpaid and
      future 2006 Creditor Scheme Claims at the date of their determination.
      Unless the 2006 Creditor Scheme Directors reasonably believe that further funds will be
      advanced to CCS by Old Cape such to restore the Scheme Funding Percentage to at least
      60 per cent., any Payment Percentage set by the 2006 Creditor Scheme Directors is to be
      determined on a “run-off” basis such that in the opinion of the 2006 Creditor Scheme
      Directors the 2006 Creditor Scheme Assets should be sufficient to ensure that all unpaid




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      2006 Scheme Creditors (including prospective creditors) receive payment of the same
      proportion of their 2006 Creditor Scheme Claims.
      The 2006 Creditor Scheme Directors are entitled, at any time, to require that a further
      independent actuarial review of the value of the 2006 Creditor Scheme Claims is undertaken
      in order to be able to ascertain the current level of funding and to determine the Payment
      Percentage. Old Cape’s funding obligation will not be affected by this review.
      CCS will make payment of 2006 Creditor Scheme Claims payable by it within 20 business
      days of a 2006 Scheme Creditor’s claim becoming established in accordance with the 2006
      Creditor Scheme. Where a Payment Percentage below 100 per cent. was in force at the time
      that a 2006 Creditor Scheme Claim became established and such Payment Percentage is
      subsequently revised upwards, CCS will make payment of the difference between the
      original Payment Percentage of the 2006 Creditor Scheme Claim and the revised Payment
      Percentage of the 2006 Creditor Scheme Claim (together with accrued interest on such
      amount) within 20 business days following the increase in the Payment Percentage.
      In certain circumstances CCS may be obliged to pay more than one 2006 Creditor Scheme
      Claim arising out of or otherwise connected to the exposure of one person to asbestos.
      Where CCS is so obliged, and the Payment Percentage is below 100 per cent., CCS will make
      payment of the appropriate percentage of the claim of the 2006 Scheme Creditor who first
      establishes his 2006 Creditor Scheme Claim as an Established Scheme Claim. Unless and until
      the Payment Percentage is increased, CCS will not make any further payment in respect of
      that injury, because to do so would result in payment of more than the current Payment
      Percentage which would be unfair to other 2006 Scheme Creditors. On any increase of the
      Payment Percentage, CCS will apportion the further payment between the 2006 Scheme
      Creditors concerned in such manner as the 2006 Creditor Scheme Directors shall consider
      to be fair and reasonable.
      Where CCS has discharged any 2006 Creditor Scheme Company’s liability in respect of a
      2006 Creditor Scheme Claim and the 2006 Creditor Scheme Company subsequently makes
      recovery from its insurer or the FSCS of any amount referable to the payment CCS has
      made, the 2006 Creditor Scheme Company will agree to hold such proceeds on trust for
      CCS.
4.2   A funding agreement dated 14 March 2006 entered into between Old Cape and CCS (the
      “Funding Agreement”) pursuant to which Old Cape agreed to make a loan to CCS of
      £40 million, being the initial Scheme funding.
      Every three years CCS is required commission an independent actuarial review of the
      projected 2006 Creditor Scheme Claims against the Included 2006 Creditor Scheme
      Companies for the next nine financial years not covered by insurance. Following the review,
      Old Cape is obliged to make further loans (each loan to be paid in three equal annual
      instalments) to CCS equal to the Funding Requirement less the value of the 2006 Creditor
      Scheme Assets.
      Old Cape’s payment obligation in any financial year will be limited to an amount equal to
      70 per cent. of the Existing Group’s Consolidated Adjusted Operational Cashflow for the
      financial year immediately preceding the financial year in which the proposed payment is
      to be made.
      “Consolidated Adjusted Operational Cashflow” in respect of a financial year is the net cash
      inflow before use of liquid resources and financing adjusted by: (a) adding back the cash
      outflow arising from acquisitions; (b) deducting the capital elements of finance lease rentals;
      (c) adding back CCS net cash outflow/deducting CCS net cash inflow; (d) adding back top
      up payments paid under the Funding Agreement during that year; (e) adding back capital




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      expenditure exceeding 125 per cent. of depreciation; (f) deducting repayments of loans to
      fund CCS; and (g) adding back the effect of any transaction not at fair market value or in
      contravention of the provisions of the Old Cape Creditor Scheme Share,
      Old Cape will pay an annual claims payment fee to CCS equal to 5 per cent. of the
      aggregate amount payable by Old Cape to CCS under the CCS Reimbursement Agreement
      in the preceding financial year.
      The terms on which all loans under the Funding Agreement will be advanced to CCS are
      that such loans and any interest thereon will only be repayable upon the 2006 Creditor
      Scheme terminating in accordance with its terms. Upon the 2006 Creditor Scheme
      terminating, CCS’s obligation to repay such loans will be limited to the extent that it then
      has sufficient assets to make such repayment.
      The loans under the Funding Agreement will be deemed to be satisfied by CCS to the extent
      any payments are due and payable by Old Cape to CCS under the CCS Reimbursement
      Agreement.
      The purposes of these agreements are to create payment obligations which will not be
      settled in cash but will be reflected in the internal accounting treatment of the settlement
      of 2006 Creditor Scheme Claims and, in the event of the insolvency of an Included 2006
      Creditor Scheme Company, to enable CCS or Old Cape as the case may be, to prove in the
      insolvency of the relevant Included 2006 Creditor Scheme Company.
4.3   A reimbursement agreement dated 14 March 2006 entered into between Old Cape and CCS
      (the “CCS Reimbursement Agreement”) Old Cape agreed to pay to CCS an amount of each
      2006 Creditor Scheme Claim that settles or is determined and which CCS has undertaken
      to pay under the 2006 Creditor Scheme Guarantee in discharge of an Included 2006
      Creditor Scheme Company’s liability in respect of that 2006 Creditor Scheme Claim.
      Amounts due under the CCS Reimbursement Agreement will be deemed to be set off against
      and satisfied by reducing the amount of the loan outstanding under the Funding Agreement.
      Under this agreement CCS agrees not to commence insolvency proceedings against Old
      Cape in respect of any amounts due to CCS.
      In the event of Old Cape’s insolvency it will be obliged to pay to CCS an amount equal to
      the future value of all 2006 Creditor Scheme Claims against Scheme Companies.
4.4   A reimbursement agreement dated 14 March 2006 entered into between Old Cape and the
      2006 Creditor Scheme Companies (the “Old Cape Reimbursement Agreement”) pursuant to
      which each 2006 Creditor Scheme Company (other than Old Cape) agreed to pay to Old
      Cape an amount equal to the amount which Old Cape is obliged to pay to CCS under the
      CCS Reimbursement Agreement in respect of each 2006 Creditor Scheme Claim established
      against that 2006 Creditor Scheme Company. Under this agreement Old Cape agrees not to
      commence insolvency proceedings against any 2006 Creditor Scheme Company in respect
      of any amounts due to Old Cape. In addition, each 2006 Creditor Scheme Company
      (including Old Cape) has agreed, save as expressly provided therein, not to seek the
      recovery of any amount from any other 2006 Creditor Scheme Company in respect of, or
      the subject matter of, any claim which (unless excluded from the 2006 Creditor Scheme)
      would have been a Scheme Claim.
      In the event of the insolvency of a 2006 Creditor Scheme Company (other than Old Cape)
      that 2006 Creditor Scheme Company is obliged to pay to Old Cape an amount equal to the
      future value of all 2006 Creditor Scheme Claims against that 2006 Creditor Scheme
      Company.
4.5   A contribution claims agreement dated 14 March 2006 entered into between CCS and the
      2006 Creditor Scheme Companies (the “Contribution Claims Agreement”) pursuant to which




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      each 2006 Creditor Scheme Company agreed to allow CCS to bring in its name any claim
      for contribution which such 2006 Creditor Scheme Company may have against any third
      party, not being a Group company, in respect of a 2006 Creditor Scheme Claim where CCS
      has discharged the obligation of such 2006 Creditor Scheme Company to pay such 2006
      Creditor Scheme Claim (by making payment itself under the 2006 Creditor Scheme
      Guarantee). Under the terms of the agreement each 2006 Creditor Scheme Company has
      permitted CCS to have sole conduct of all proceedings and/or negotiations arising in
      connection with any contribution claim. Each 2006 Creditor Scheme Company has
      undertaken to CCS that it will not make any agreement, settlement or compromise with any
      third party in relation to a contribution claim without the prior written consent of CCS; it
      will consult in good faith with CCS as to the ways in which a contribution claim might be
      prosecuted, settled, compromised or appealed; and it will make available to CCS and its
      advisers and agents all such information and assistance as they may reasonably require.
      Each 2006 Creditor Scheme Company has agreed to assign to CCS such proportion of the
      proceeds of any contribution claims it is entitled to bring as equals the proportion of the
      2006 Creditor Scheme Claim in respect of which the contribution claim arises that was paid
      by CCS. Where any 2006 Creditor Scheme Company recovers any proceeds from a third
      party, it will hold such proportion of such proceeds on trust for CCS. CCS’s rights under
      the agreement are subject to any rights of the 2006 Creditor Scheme Companies’ insurers
      or the FSCS in respect of such matters.
      The agreement does not operate to require any 2006 Creditor Scheme Company to do
      anything, or refrain from doing anything, which would or might prejudice any insurance
      cover to which it or other members of the Group may be entitled.
4.6   A services agreement dated 14 March 2006 entered into between Old Cape and CCS (the
      “Services Agreement”) pursuant to which Old Cape agreed to provide certain services to
      CCS to enable it to perform its obligations under the 2006 Creditor Scheme. Such services
      include claims handling services, accounting and treasury functions and company secretarial
      services. Under the terms of the agreement Old Cape is entitled to charge CCS for the
      provision of certain of these services (not including claims handling services which include
      costs of defending proceedings brought to establish the existence and/or amount of a 2006
      Creditor Scheme Claim) at the cost that Old Cape itself incurs in providing such services.
      Regardless of the Payment Percentage set from time to time under the 2006 Creditor
      Scheme Guarantee, the fees payable by CCS under the agreement will be paid at 100 per
      cent., consistent with the treatment of external costs.
4.7   A trust deed dated 14 March 2006 entered into by Old Cape, CCS and Law Debenture (the
      “Old Cape Trust Deed”), Law Debenture agreed to hold each of the 2006 Creditor Scheme
      Shares on trust for 2006 Scheme Creditors, subject to and on the terms of the Old Cape
      Trust Deed.
      The Old Cape Trust Deed provides that Law Debenture is able to exercise its voting and/or
      consent rights to any matter in its absolute discretion provided that it complies with the
      requirements of the Old Cape Articles, the CCS Articles and the Old Cape Trust Deed. It must
      not exercise any discretion as to whether to give consent or vote in any way which it
      considers to be materially prejudicial to the interests of any of the following categories of
      Scheme Creditor, each taken as a whole, under the 2006 Creditor Scheme;
      (a)   Recourse Scheme Creditors;
      (b)   General 2006 Scheme Creditors;
      (c)   “Earlier” Scheme Creditors (being 2006 Scheme Creditors whose claims are to fall due
            in the first nine financial years considered in the most recent actuarial review




                                               150
      together with any 2006 Scheme Creditors whose claims have become established but
      who have yet to receive full payment from CCS as a result of the Payment Percentage
      being less than 100 per cent.); and
(d)   “Later” (being 2006 Scheme Creditors other than Earlier Scheme Creditors).
Law Debenture will not exercise its voting rights and/or consent rights to approve or
consent to any act, omission or matter unless both of the 2006 Creditor Scheme Directors
(or, if there is only one, the 2006 Creditor Scheme Director) shall first have recommended
in writing that Law Debenture do so. However, Law Debenture is not obliged to follow any
such recommendation and is in its absolute discretion free not to do so and to vote against
or reject such resolution, act, omission or matter.
The Old Cape Trust Deed also provides that Law Debenture shall be entitled to give its
consent to any variation to, or termination of, any of the 2006 Creditor Scheme Guarantee,
the Funding Agreement, the Old Cape Reimbursement Agreement, the CCS Reimbursement
Agreement, the Contribution Claims Agreement and the Services Agreement in its absolute
discretion provided that it complies with the requirements of the Old Cape Articles, the CCS
Articles and the Old Cape Trust Deed. Law Debenture shall only give such consent where:
(a)   both 2006 Creditor Scheme Directors (or, if there is only one, the 2006 Creditor
      Scheme Director) shall have certified in writing to Law Debenture that they have
      consented to such variation or termination and are of the opinion that such variation
      or termination is:
      (i)    in the interests of the 2006 Scheme Creditors taken as a whole; and
      (ii)   not materially prejudicial to the interests of each of the above categories of
             2006 Scheme Creditor (each category taken as a whole); and
(b)   Law Debenture considers that such variation or termination is:
      (i)    in the interests of the 2006 Scheme Creditors taken as a whole; and
      (ii)   not materially prejudicial to the interests of each of the above categories of
             2006 Scheme Creditor (each category taken as a whole).
Law Debenture shall not give any such consent if it is unable to form the view that to give
such consent would not be materially prejudicial to the interests of each of the separate
categories of 2006 Scheme Creditor.
For the purposes of determining whether any action to be taken by it (or not to be taken
by it) is in the interests of the 2006 Scheme Creditors or is not materially prejudicial to the
interests of any category of 2006 Scheme Creditors, Law Debenture shall be entitled (but
not obliged) to rely on any recommendation or certification provided to it by any of the
2006 Creditor Scheme Directors in relation to such action, without taking any further advice
or making any other enquiries. Further, Law Debenture is not required to consult with any
of the 2006 Scheme Creditors or any representative of the 2006 Scheme Creditors.
The 2006 Creditor Scheme Shareholder may only transfer both, and not only one, of the
2006 Creditor Scheme Shares to another provider of similar independent trustee services
which has agreed to hold the 2006 Creditor Scheme Shares on the terms of the Old Cape
Trust Deed. It may also transfer the 2006 Creditor Scheme Shares to another company
within its group, provided that the prior consents of Old Cape, CCS and the 2006 Creditor
Scheme Directors have been obtained.
Under the terms of the Old Cape Trust Deed, the 2006 Creditor Scheme Shareholder is able
to rely on communications, including certificates, from the boards of Old Cape and CCS and




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      the 2006 Creditor Scheme Directors without being liable for so doing and without being
      required to check the accuracy, validity or authorisation of such communication.
      Old Cape is responsible for the 2006 Creditor Scheme Shareholder’s fees and expenses and
      has agreed to indemnify the 2006 Creditor Scheme Shareholder against all liabilities and
      expenses properly incurred by the 2006 Creditor Scheme Shareholder in the proper
      performance of its duties under the Old Cape Trust Deed, the Old Cape Articles and the CCS
      Articles and against all actions, proceedings, costs, claims, damages, expenses and demands
      in respect of any matter relating to the Old Cape Trust Deed, the Old Cape Articles and/or
      the CCS Articles.
      Law Debenture may retire as the 2006 Creditor Scheme Shareholder by giving three months’
      prior written notice to Old Cape and CCS provided that it uses all reasonable endeavours
      to procure that a new scheme shareholder, being a Trust Corporation (as defined therein),
      is appointed and that such new scheme shareholder enters into a deed of adherence
      agreeing to be bound by the terms of the Old Cape Trust Deed.
      The Old Cape Trust Deed contains a confidentiality undertaking given by Law Debenture by
      which it agrees, subject to limited exceptions, not to divulge any information given to it
      pursuant to the Old Cape Trust Deed which is confidential to the Existing Group unless
      prior written approval is given by Old Cape or CCS or unless required by applicable law or
      regulatory authority.
      Provided that, in exercising the powers, authorities and discretions vested in it under the
      Old Cape Trust Deed, the 2006 Creditor Scheme Shareholder shall have acted honestly and
      reasonably, the 2006 Creditor Scheme Shareholder will not be liable for any loss or damage
      resulting from the exercise or non-exercise thereof.

5.     RIGHTS OF THE 2006 CREDITOR SCHEME SHARES
In order to protect the interests of the 2006 Scheme Creditors, and in particular to ensure the
2006 Creditor Scheme Assets are only used to settle 2006 Creditor Scheme Claims and permitted
ancillary costs and to ensure that if at any time the 2006 Creditor Scheme Fund is less than a
specified amount, dividend payments or any other distribution may not be made outside the
Existing Group, the 2006 Creditor Scheme Shares were created and were issued to the 2006
Creditor Scheme Shareholder under the terms of the Old Cape Trust Deed.

5.1   Rights of the Old Cape Creditor Scheme Share
      The Old Cape Scheme Share is held by the 2006 Scheme Shareholder on trust for all 2006
      Scheme Creditors.
      The following is a summary of the rights which are attached to the Old Cape Creditor
      Scheme Share.

      5.1.1 Rights to a distribution and return of capital
            The Old Cape Creditor Scheme Share does not confer on the Old Cape Creditor
            Scheme Shareholder any right to receive a distribution or any right to participate in
            any surplus capital of Old Cape, save that the Old Cape Creditor Scheme Shareholder
            has the right to require Old Cape to redeem the Old Cape Creditor Scheme Share at
            its par value on or at any time after the termination of the 2006 Creditor Scheme, in
            accordance with the procedure specified in the Old Cape Articles.

      5.1.2 Matters requiring the consent of the Old Cape Creditor Scheme Shareholder
            Old Cape cannot, at any time before the termination of the 2006 Creditor Scheme
            (save to the extent that its shareholders have approved the same in a general meeting
            at which the Old Cape Scheme Shareholder is entitled to vote – see Voting Rights




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below) without the prior written consent of the Old Cape Creditor Scheme
Shareholder, engage in any of the activities specified in the Old Cape Articles which
include, but are not limited to, the following:
(a)   making any distribution to shareholders unless:
      (i)     the distribution is made after the Scheme Funding Percentage has been
              certified in respect of the financial year ending 31 December 2007;
      (ii)    at the time of the making of the proposed distribution, the Scheme
              Funding Percentage for the relevant financial year (i.e. the financial year
              immediately preceding the financial year in which Old Cape proposes to
              make the distribution) has been certified in accordance with the terms
              of the Funding Agreement and the 2006 Creditor Scheme Directors have
              not requested an interim actuarial review be conducted under the
              Funding Agreement which has yet to be concluded;
      (iii)   the Scheme Funding Percentage for the relevant financial year is greater
              than 110 per cent.;
      (iv)    at the time of the making of the proposed distribution, the Payment
              Percentage has not at any time in the previous 40 business days been
              less than 100 per cent;
      (v)     the aggregate of any such distributions in a financial year shall not
              exceed the greater of: (i) 50 per cent. of the total consolidated operating
              profit of the Existing Group for the relevant financial year; and (ii) the
              aggregate of all permitted dividends made or paid by the Old Cape in
              the relevant financial year; and
      (vi)    the directors of Old Cape have certified (in a certificate dated not more
              than two months prior to the making of the proposed distribution) that
              in their reasonable opinion the Scheme Funding Percentage for the two
              financial years following the relevant financial year is anticipated to be
              not less than 110 per cent.,
      (any distribution which does not require the prior written consent of the Old
      Cape Creditor Scheme Shareholder by virtue of satisfying the above conditions
      is a “permitted dividend”);
(b)   issuing, allotting or granting any option or right to subscribe for, or otherwise
      disposing of, any share in Old Cape having attached to it any rights which are
      not identical in all respects with those attached to the Ordinary Shares;
(c)   doing anything which would result in CCS ceasing to be a subsidiary of Old
      Cape or disposing of any of the shares in CCS;
(d)   doing any of the following, save for: (i) bona fide transactions with third parties
      on arm’s-length terms at fair market value for the benefit of the Existing Group;
      (ii) those transactions with related parties which are expressly permitted under
      the Old Cape Articles (including transactions between Old Cape and any
      Existing Group company which is a wholly-owned subsidiary or subsidiary
      undertaking of Old Cape or between two or more Existing Group companies
      which are wholly-owned subsidiaries or subsidiary undertakings of Old Cape);
      and (iii) transactions entered into with directors which are permitted under the
      Old Cape Articles:




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            (i)     entering into, granting, increasing or extending any security interest over,
                    or acquiring or disposing of, any asset of any Existing Group company
                    the fair market value of which exceeds the greater of £100,000 and
                    0.25 per cent. of the aggregate value of the Existing Group’s net assets;
            (ii)    entering into, or increasing or extending any liability under, any guarantee
                    or indemnity;
            (ii)    issuing, allotting, granting any options or right to subscribe for, or
                    otherwise disposing of, any share capital in Old Cape;
            (iv)    undertaking any transactions with related parties, save where the Old
                    Cape Creditor Scheme Shareholder has received prior written
                    confirmation from the auditors that, in their opinion, the proposed
                    transaction is a bona fide transaction on arm’s-length terms at fair market
                    value for the benefit of the Existing Group and will not materially
                    prejudice the interests of 2006 Scheme Creditors;
      (e)   winding up Old Cape or making any petition or application regarding the
            appointment of an administrator;
      (f)   changing the accounting conventions, policies and principles, save where the
            Old Cape Creditor Scheme Shareholder has received prior written confirmation
            from the auditors that the interests of the 2006 Scheme Creditors, taken as a
            whole, will not materially be prejudiced; and/or
      (g)   removing the auditors or appointing new auditors.
      The Old Cape Articles also provide that Old Cape must procure that no Existing
      Group company shall do any of the matters listed in paragraphs (c) to (g) above.

5.1.3 Voting Rights
      The Old Cape Creditor Scheme Share carries two votes for each vote which the
      holders of other classes of shares in issue at the time of the meeting at which the
      relevant resolution is proposed are entitled to exercise, on any resolution proposing
      (or any resolution the effect of which if passed would be) at any time before the
      termination of the Scheme to engage in any of a number of activities specified in the
      Old Cape Articles, which include, but are not limited to, the following:
      (a)   to create or issue any class of any share other than Ordinary Shares, to attach
            to any share any voting rights which are not identical in all respects with those
            attaching to the Ordinary Shares or to vary the rights of the Ordinary Shares;
      (b)   to alter or to delete, or in any way derogate from the effect of, any article
            which is relevant to the rights of the Old Cape Creditor Scheme Share;
      (c)   to do any of the following, save to the extent that it is a permitted dividend:
            (i)     make, approve, sanction or ratify any distribution, save for a redemption
                    of any new redeemable shares issued in accordance with the Old Cape
                    Articles;
            (ii)    give Old Cape authority to purchase its own shares;
            (iii)   approve or authorise any reduction of the issued share capital of Old
                    Cape, save where the purpose of the reduction of capital is to remove
                    losses of Old Cape and does not involve a return of value to its
                    shareholders;




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            (d)   to wind up Old Cape or to approve a company voluntary arrangement;
            (e)   to approve or sanction any compromise or arrangement of the Company
                  proposed under the Companies Act;
            (f)   to approve or sanction the giving of financial assistance pursuant to the
                  Companies Act;
            (g)   to approve any increase in the borrowing levels set out under the Old Cape
                  Articles;
            (h)   to remove the auditors or appoint new auditors;
            (i)   ratify anything done by the directors of Old Cape which was beyond their
                  powers or a breach of directors’ duties;
            (j)   to take advantage of the voluntary regime offered by Article 11 of Directive
                  2004/25/EC of the European Parliament and of the Council of 21 April 2004 on
                  Takeover Bids and in any subsequent legislation implementing the Directive in
                  the United Kingdom; or
            (k)   to authorise or grant authority or power to Old Cape, its directors, any Existing
                  Group company or any of the directors of an Existing Group company to do any
                  of the matters set out in, or ratify anything done by Old Cape, its directors, any
                  Existing Group company or any of the directors of an Existing Group company
                  in breach of the matters listed in paragraph 5.1.2 above and this paragraph 5.1.3.

      5.1.4 Notice of and proceedings at general meetings
            The Old Cape Creditor Scheme Shareholder is entitled to receive notice of, and to
            attend (either by representative or by proxy), every general meeting of Old Cape and
            every separate general meeting of the holders of the shares of any class in Old Cape’s
            issued share capital. Old Cape will procure that each such notice, which the Old Cape
            Creditor Scheme Shareholder is entitled to receive, is accompanied by: (i) an opinion
            from the solicitors to Old Cape stating whether, in their opinion, the Old Cape
            Creditor Scheme Shareholder is entitled to vote on any of the resolutions; and (ii) a
            certificate signed by two directors of Old Cape confirming that, since the last general
            meeting, no act or omission which required the prior written consent of the Old
            Cape Creditor Scheme Shareholder under the Old Cape Articles has occurred without
            such consent. Save as provided in the Old Cape Articles (including in respect of those
            matters lasted in paragraph 5.1.3 above), the Old Cape Creditor Scheme Shareholder
            is not entitled to vote at a general meeting. Where the business of a general meeting
            includes any matters requiring the consent of the Old Cape Creditor Scheme
            Shareholder (including those set out in paragraph 5.1.2 above) or any resolutions on
            which the Old Cape Creditor Scheme Shareholder is entitled to vote (including those
            set out in paragraph 5.1.3 above), a quorum will not exist unless the Old Cape
            Creditor Scheme Shareholder is present either by representative or by proxy.
            The Old Cape Creditor Scheme Shareholder, present either by a representative appointed
            in accordance with the Companies Act or by proxy, has the right to demand a poll.

5.2   Rights of the CCS Creditor Scheme Share
      The following is a summary of the rights attaching to the CCS Creditor Scheme Share.

      5.2.1 Rights to a distribution and return of capital
            The CCS Creditor Scheme Share does not confer on the CCS Creditor Scheme
            Shareholder any right to receive a distribution or any right to participate in any




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      surplus capital of CCS, save the right to require CCS to redeem the CCS Creditor
      Scheme Share at its par value on or at any time after the termination of the 2006
      Creditor Scheme, in accordance with the procedure set out in the CCS Articles.

5.2.2 Matters requiring the consent of the CCS Creditor Scheme Shareholder
      CCS will not, at any time before the termination of the 2006 Creditor Scheme,
      without the prior written consent of the CCS Creditor Scheme Shareholder do any of
      the activities listed in the CCS Articles, which include but are not limited to the
      following:
      (a)   make, approve, sanction or ratify the payment of any dividend or the making
            of any other distribution to any shareholders;
(b)   approve the transfer of any ordinary share in CCS;
(c)   carry on any business other than the handling and conduct of 2006 Creditor Scheme
      Claims in the UK and the holding and investment of funds to meet such claims (the
      “Business”), or make any change to the nature of the Business;
(d)   acquire any asset other than in the proper performance of the Business;
(e)   other than in the proper settlement of a 2006 Creditor Scheme Claim, transfer or
      relocate any asset of CCS outside the UK;
(f)   dispose of or transfer any assets of CCS other than in the proper performance of the
      Business;
(g)   enter into, grant, increase or extend any security interest over any assets of CCS;
(h)   form or enter into any partnership, consortium or any other incorporated or
      unincorporated association;
(i)   enter into, increase or extend any liability under any guarantee or indemnity (other
      than in the proper course of the Business);
(j)   be wound up, or make any petition or application regarding the appointment of an
      administrator;
(k)   issue or create any class of share, save for the issue of further ordinary shares to any
      existing holder of ordinary shares;
(l)   change the accounting conventions, policies and principles, save where the CCS
      Creditor Scheme Shareholder has received prior written confirmation from the
      auditors that the interests of the 2006 Scheme Creditors will not be materially
      prejudiced; and/or
(m)   remove the auditors or appoint new auditors or change the actuaries appointed by
      CCS.

5.2.3 Voting Rights
      The CCS Creditor Scheme Share carries two votes for each vote which the holders
      of the ordinary shares in CCS in issue at the time of the meeting at which the
      relevant resolution is proposed are entitled to exercise, on any resolution which, at
      any time before the termination of the Scheme, is proposed as a special resolution or
      proposes any of the matters specified in the CCS Articles which include, but are not
      limited to, the following:
      (a)   to grant authority to allot relevant securities or to grant any option to subscribe
            for or acquire shares in CCS or issue any securities convertible into shares in CCS;




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      (b)    to alter any of CCS’s share capital;
      (c)    to wind up CCS or to approve a company voluntary arrangement;
      (d)    to make, approve, sanction or ratify any distribution to any shareholders;
      (e)    to amend the CCS Articles or the memorandum of association of CCS;
      (f)    to disapply pre-emption rights on an allotment of equity securities;
      (g)    to vary the rights attaching to any shares in CCS;
      (h)    to give CCS authority to purchase its own shares, or to allow CCS to redeem
             its own shares out of capital;
      (i)    to remove the auditors or to appoint new auditors; and/or
      (j)    to authorise or grant authority or power to CCS or the directors of CCS to do
             any of the matters set out in, or ratify anything done by CCS or the directors
             of CCS in breach of, the matters listed in paragraph 5.1.2 above and this
             paragraph 5.1.3.

5.2.4 Notice of and proceedings at general meetings
      The CCS Creditor Scheme Shareholder is entitled to receive notice of, and to attend,
      every general meeting of CCS and every separate general meeting of the holders of
      the shares of any class in CCS’s issued share capital. CCS will procure that each such
      notice which the CCS Creditor Scheme Shareholder is entitled to receive is
      accompanied by: (i) an opinion from the solicitors to CCS stating whether in their
      opinion the CCS Creditor Scheme Shareholder is entitled to vote on any of the
      resolutions; and (ii) a certificate signed by two directors of CCS confirming that, since
      the last general meeting, no act or omission which required the prior written consent
      of the CCS Creditor Scheme Shareholder under the CCS Articles has occurred without
      such consent.
      Save as provided in the CCS Articles (including in respect of those matters listed in
      paragraph 5.1.2 above), the CCS Creditor Scheme Shareholder will not be entitled to
      vote at a general meeting. Where the business of a general meeting includes any
      matters requiring the consent of the CCS Creditor Scheme Shareholder (including
      those set out in paragraph 5.1.2 above) or any resolutions on which the CCS Creditor
      Scheme Shareholder is entitled to vote (including those set out in paragraph 5.1.3
      above), a quorum will not exist unless the CCS Creditor Scheme Shareholder is
      present either by representative or by proxy.
      The CCS Creditor Scheme Shareholder, present either by a representative appointed
      in accordance with the Companies Act or by proxy, has the right to demand a poll.

5.2.5 2006 Creditor Scheme Directors
      The CCS Creditor Scheme Share entitles the CCS Creditor Scheme Shareholder to
      appoint two Scheme Directors to represent the interests of the 2006 Scheme
      Creditors and, by written notice, to the board of CCS to remove any 2006 Creditor
      Scheme Director from office. In the event that there are fewer than two 2006
      Creditor Scheme Directors at any one time, the board of CCS shall, as soon as is
      practical, nominate in writing a candidate whom the board considers to be
      independent of CCS and of any Existing Group company, and whom the board also
      considers would be a suitable representative for the 2006 Scheme Creditors. The
      board of CCS will provide the CCS Creditor Scheme Shareholder with a written
      statement setting out the reasons justifying its opinion as to the independence and




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            suitability of such nominee. The CCS Creditor Scheme Shareholder will then, if
            satisfied as to the independence and suitability of such nominee, approve the
            nomination and appoint the nominee to the board as a 2006 Creditor Scheme
            Director. If the CCS Creditor Scheme Shareholder is not satisfied as to the
            independence and suitability of the nominee, the board of CCS will repeat this
            process until the CCS Creditor Scheme Shareholder is so satisfied. The 2006 Creditor
            Scheme Directors will constitute a minority in the number of directors on the board
            of CCS.
            It is proposed that a majority of the directors of CCS be directors appointed by the
            holder of the ordinary shares in CCS (namely Cape Painting Contractors Limited, a
            wholly-owned subsidiary of Old Cape) in order to ensure that CCS is a member of
            the Group for tax purposes. If this were not so, valuable tax treatment might be lost.
            On any resolution of the board of CCS (i) concerning any matter pertaining to any
            or all of the Funding Agreement, the Services Agreement, the 2006 Creditor Scheme
            Guarantee, the Contribution Claims Agreement, the Old Cape Reimbursement
            Agreement and the CCS Reimbursement Agreement, including, without limitation, the
            decision as to whether to enforce, or the manner or enforcement relating to, the
            rights of CCS under these agreements; and any termination or variation (including,
            without limitation, any modification, forgiveness, forbearance, indulgence, delay, failure
            to enforce, waiver, release, abandonment, compromise or any other variation in or of
            any payment or other obligation of any Existing Group company) of any or all of
            these agreements; (ii) approving the determination, variation or amendment of the
            Payment Percentage and calling for an independent actuarial review of the value of
            2006 Creditor Scheme Claims for such purpose; (iii) approving the determination,
            variation or amendment of the investment criteria upon which the assets of CCS are
            held and invested in order to satisfy its obligations in relation to 2006 Creditor
            Scheme Claims under the 2006 Creditor Scheme Guarantee; or (iv) concerning the
            amendment, variation or termination of the Old Cape Trust Deed, only the 2006
            Creditor Scheme Directors will constitute a quorum and be entitled to vote thereon.
            The CCS Articles also provide that no director of CCS may delegate any of his powers
            in relation to those matters.

6.      EFFECTS OF THE PROPOSALS ON THE 2006 CREDITOR SCHEME
It is intended that the 2006 Creditor Scheme will continue unamended following implementation of
the Proposals. As such, the material contracts detailed in paragraph 4 above will remain in place
without amendment and the 2006 Creditor Scheme Shares in CCS and Old Cape will continue to be
held by the 2006 Creditor Scheme Shareholder. However, in order to secure the consent of the 2006
Creditor Scheme Shareholder to the Proposals in light of its duties to the Scheme Creditors the New
Cape Creditor Scheme Share will, upon the Proposals becoming effective, be issued to the New Cape
Creditor Scheme Shareholder having similar rights to the existing 2006 Creditor Scheme Share in Old
Cape and which will afford the New Cape Creditor Scheme Shareholder substantially the same rights
to those provided by the Old Cape Scheme Share.
As noted in paragraph 4.2 above, the Funding Agreement to which Old Cape is party provides an
effective upper limit on the level of Old Cape’s funding obligation set at 70 per cent. of the
Existing Group’s Consolidated Adjusted Operational Cashflows. It is likely that following
implementation of the Proposals, New Cape may hold certain subsidiaries directly rather than
indirectly through Old Cape. Accordingly, such operations would not be included in the
Consolidated Adjusted Operational Cashflows of the Existing Group which would as a result mean
that the upper limit on Old Cape’s funding obligations to CCS under the Funding Agreement
would be lower than if it were calculated on an Enlarged Group-wide basis.




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New Cape and Old Cape have therefore entered into a further guarantee and funding agreement
(“2011 Guarantee and Funding Agreement”) with CCS (as more fully summarised in paragraph 7.2
below).

7.     NEW MATERIAL AGREEMENTS IN CONNECTION WITH THE 2006 CREDITOR
       SCHEME
The following contracts, not being contracts entered into in the ordinary course of business, have
been entered into by the Company, Old Cape and CCS in connection with the 2006 Creditor
Scheme and do or may contain provisions under which such parties have an obligation or
entitlement which is material to the Group as at the date of this Prospectus.

7.1   New Voting Trust Deed
      New Cape has entered into a new voting trust deed dated 6 May 2011 with the New Cape
      Creditor Scheme Shareholder (the “New Voting Trust Deed”), in relation to the New Cape
      2006 Creditor Scheme Share which is substantially in the same form as the Old Cape Trust
      Deed in relation to the Old Cape Creditor Scheme Share and the CCS Creditor Scheme
      Share.
      Pursuant to the New Voting Trust Deed, the New Cape Creditor Scheme Shareholder has
      agreed, conditional upon the issue of the New Cape Creditor Scheme Share and the Scheme
      becoming effective, to hold the New Cape 2006 Creditor Scheme Share on trust for the
      2006 Creditor Scheme Creditors, subject to and on the terms of the New Voting Trust Deed.
      The New Voting Trust Deed provides that the New Cape Creditor Scheme Shareholder is
      able to exercise its voting and/or consent rights to any matter in its absolute discretion
      provided that it complies with the requirements of the New Cape Articles and the New
      Voting Trust Deed. The New Cape Creditor Scheme Shareholder must not exercise any
      discretion as to whether to give consent or vote in any way which it considers to be
      materially prejudicial to the interests of any of the relevant categories of 2006 Creditor
      Scheme Creditors, each taken as a whole, under the Scheme.
      The New Cape Creditor Scheme Shareholder will not exercise its voting rights and/or
      consent rights to approve or consent to any act, omission or matter unless both of the 2006
      Creditor Scheme Directors (or, if there is only one, the 2006 Creditor Scheme Director) shall
      first have recommended in writing that the New Cape Creditor Scheme Shareholder do so.
      However, the New Cape Creditor Scheme Shareholder is not obliged to follow any such
      recommendation and is in its absolute discretion free not to do so and to vote against or
      reject such resolution, act, omission or matter.
      The New Voting Trust Deed also provides that the New Cape Creditor Scheme Shareholder
      shall be entitled to give its consent to any variation to, or termination of the 2011 Guarantee
      and Funding Agreement in its absolute discretion provided that it complies with the
      requirements of the New Cape Articles and the New Voting Trust Deed. The New Cape
      Creditor Scheme Shareholder shall only give such consent where:
      (i)   both Scheme Directors (or, if there is only one, the Scheme Director) shall have
            certified in writing to the New Cape Creditor Scheme Shareholder that they have
            consented to such variation or termination and are of the opinion that such variation
            or termination is:
            (a)    in the interests of the 2006 Creditor Scheme Creditors taken as a whole; and
            (b)    not materially prejudicial to the interests of each of the relevant categories of
                   2006 Creditor Scheme Creditor (each category taken as a whole); and




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(ii)   the New Cape Creditor Scheme Shareholder considers that such variation or
       termination is:
       (a)   in the interests of the 2006 Creditor Scheme Creditors taken as a whole; and
       (b)   not materially prejudicial to the interests of each of the above categories of
             2006 Creditor Scheme Creditor (each category taken as a whole).
The New Cape Creditor Scheme Shareholder shall not give any such consent if it is unable
to form the view that to give such consent would not be materially prejudicial to the
interests of each of the separate categories of 2006 Creditor Scheme Creditor.
For the purposes of determining whether any action to be taken by it (or not to be taken
by it) is in the interests of the 2006 Creditor Scheme Creditors or is not materially
prejudicial to the interests of any category of 2006 Creditor Scheme Creditor, the New Cape
Creditor Scheme Shareholder shall be entitled (but not obliged) to rely on any
recommendation or certification provided to it by any of the Scheme Directors in relation
to such action, without taking any further advice or making any other enquiries. Further, the
New Cape Creditor Scheme Shareholder is not required to consult with any of the 2006
Creditor Scheme Creditors or any representative of the 2006 Creditor Scheme Creditors.
The New Cape Creditor Scheme Shareholder may only transfer the New Cape 2006 Creditor
Scheme Share, by way of transfer of all its interest in the New Cape Creditor Scheme Share,
the Old Cape Creditor Scheme Share and the CCS Creditor Scheme Share to a new trust
corporation entitled by rules made under the Public Trustee Act 1906 of Great Britain or
entitled pursuant to any other comparable legislation applicable to a trustee in any other
jurisdiction to carry out the functions of a trustee which has agreed to hold the New Cape
Creditor Scheme Share on the terms of the New Voting Trust Deed. It may also transfer the
New Cape Creditor Scheme Share to another company within its group, provided that the
prior consents of New Cape and the Scheme Directors have been obtained. In addition, in
both such circumstances, such a transfer may only be made if the New Cape Creditor
Scheme Share is transferred at the same time and to the same person as the Old Cape
Creditor Scheme Share and the CCS Creditor Scheme Share.
Under the terms of the New Voting Trust Deed, the New Cape Creditor Scheme Shareholder
is able to rely on communications, including certificates, from the New Cape Board and the
Scheme Directors without being liable for so doing and without being required to check
the accuracy, validity or authorisation of such communication.
New Cape is responsible for the New Cape Creditor Scheme Shareholder’s fees and
expenses and will indemnify the New Cape Creditor Scheme Shareholder against all
liabilities and expenses properly incurred by the New Cape Creditor Scheme Shareholder in
the proper performance of its duties under the New Voting Trust Deed and the New Cape
Articles and against all actions, proceedings, costs, claims, damages, expenses and demands
in respect of any matter relating to the New Voting Trust Deed and/or the New Cape
Articles.
The New Cape Creditor Scheme Shareholder may retire as the New Cape Creditor Scheme
Shareholder by giving three months’ prior written notice to New Cape provided that it uses
all reasonable endeavours to procure that a new New Cape Creditor Scheme Shareholder,
being a Trust Corporation (as defined therein), is appointed and that such new New Cape
Creditor Scheme Shareholder enters into a deed of adherence agreeing to be bound by the
terms of the New Voting Trust Deed.
The New Voting Trust Deed contains a confidentiality undertaking given by the New Cape
Creditor Scheme Shareholder by which it agrees, subject to limited exceptions, not to
divulge any information given to it pursuant to the New Voting Trust Deed which is




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      confidential to the New Cape Group unless prior written approval is given by New Cape
      or unless required by applicable law or regulatory authority.
      Provided that, in exercising the powers, authorities and discretions vested in it under the
      New Voting Trust Deed, the New Cape Creditor Scheme Shareholder shall have acted
      honestly and reasonably, the New Cape Creditor Scheme Shareholder will not be liable for
      any loss or damage resulting from the exercise or non-exercise thereof.

7.2   2011 Guarantee and Funding Agreement
      Old Cape, New Cape and CCS have entered into the 2011 Guarantee and Funding
      Agreement, dated 6 May 2011, pursuant to which (subject to the Scheme becoming
      effective) New Cape has agreed to make certain additional funding available to Old Cape in
      connection with Old Cape’s commitments under the Funding Agreement, as well as to
      guarantee all present and future payment obligations of Old Cape and CCS under the
      Funding Agreement.
      Pursuant to the terms of the 2011 Guarantee and Funding Agreement, in the event that Old
      Cape is required to advance any loans to CCS under the Funding Agreement, and the
      payment of such sums is limited in accordance with the terms of the Funding Agreement,
      New Cape shall advance to Old Cape (or if requested to do so by the 2006 Creditor Scheme
      Shareholder, to CCS) an amount, by way of loan, which is equal to the lower of the shortfall
      in respect of the funding required under the Funding Agreement and the difference between
      the funding availability of New Cape under the 2011 Guarantee and Funding Agreement and
      the funding availability permitted under the Funding Agreement. Old Cape has agreed to
      apply amounts advanced to it by New Cape under the 2011 Guarantee and Funding
      Agreement in accordance with the terms of the Funding Agreement.
      In addition, New Cape has agreed to guarantee Old Cape’s obligations under the CCS
      Reimbursement Agreement, the Services Agreement, the Old Cape Reimbursement
      Agreement, the 2006 Creditor Scheme Guarantee and the Contribution Claims Agreement.
      Further, to the extent that Old Cape cannot provide some or all of the services under the
      Services Agreement, New Cape will provide them on the same terms as are set out in the
      Services Agreement, or Old Cape will sub contract the provision of the relevant service to
      New Cape. The 2011 Guarantee and Funding Agreement contains customary representations
      and warranties as to the capacity of the parties.

8.   RIGHTS OF THE NEW CAPE CREDITOR SCHEME SHARE
The New Cape Scheme Share will be held by the 2006 Scheme Shareholder on trust for all 2006
Scheme Creditors.
8.1   The following is a summary of the rights which are attached to the New Cape Creditor
      Scheme Share.

      8.1.1 Rights to a distribution and return of capital
            The New Cape Creditor Scheme Share does not confer on the New Cape Creditor
            Scheme Shareholder any right to receive a distribution or any right to participate in
            any surplus capital of New Cape, save that the New Cape Creditor Scheme
            Shareholder has the right to require New Cape to redeem the New Cape Creditor
            Scheme Share at its par value on or at any time after the termination of the 2006
            Creditor Scheme, in accordance with the procedure specified in the New Cape
            Articles.

      8.1.2 Matters requiring the consent of the New Cape Creditor Scheme Shareholder
            New Cape cannot, at any time before the termination of the 2006 Creditor Scheme
            (save to the extent that its shareholders have approved the same in a general meeting




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at which the New Cape Scheme Shareholder will be entitled to vote – see Voting
Rights below) without the prior written consent of the New Cape Creditor Scheme
Shareholder, engage in any of the activities specified in the New Cape Articles which
include, but are not limited to, the following:
(a)   making any distribution to shareholders unless:
      (i)     at the time of the making of the proposed distribution, the Scheme
              Funding Percentage for the relevant financial year (i.e. the financial year
              immediately preceding the financial year in which New Cape proposes
              to make the distribution) has been certified in accordance with the
              terms of the Funding Agreement and the 2006 Creditor Scheme Directors
              have not requested an interim actuarial review be conducted under the
              Funding Agreement which has yet to be concluded;
      (ii)    the Scheme Funding Percentage for the relevant financial year is greater
              than 110 per cent.;
      (iii)   at the time of the making of the proposed distribution, the Payment
              Percentage has not at any time in the previous 40 business days been
              less than 100 per cent;
      (iv)    the aggregate of any such distributions in a financial year shall not
              exceed the greater of: (i) 50 per cent. of the total consolidated operating
              profit of the Enlarged Group for the relevant financial year; and (ii) the
              aggregate of all permitted dividends made or paid by the Company in
              the relevant financial year; and
      (v)     the directors of New Cape have certified (in a certificate dated not more
              than two months prior to the making of the proposed distribution) that
              in their reasonable opinion the Scheme Funding Percentage for the two
              financial years following the relevant financial year is anticipated to be
              not less than 110 per cent.,
      (any distribution which does not require the prior written consent of the New
      Cape Creditor Scheme Shareholder by virtue of satisfying the above conditions
      is a “permitted dividend”);
      In addition, for so long as the Jersey Companies Law permits distributions made
      by New Cape to be sourced from share premium account and other capital
      accounts, New Cape shall not at any time before the termination of the 2006
      Creditor Scheme, without the prior written consent of the New Cape 2006
      Creditor Scheme Shareholder, make a distribution to which (a) above applies
      unless there are amounts standing to the credit of New Cape’s profit and loss
      account or any other reserve of profit to the extent the same represent realised
      profits (including, without limitation, the reserve of profit to be created pursuant
      to the reduction of capital of New Cape proposed in connection with
      Admission) sufficient to cover such distribution and the amount of such
      distribution is debited from the same in accordance with Jersey Companies Law.
(b)   issuing, allotting or granting any option or right to subscribe for, or otherwise
      disposing of, any share in New Cape having attached to it any rights which are
      not identical in all respects with those attached to the Ordinary Shares;
(c)   doing anything which would result in CCS ceasing to be a subsidiary of New
      Cape or disposing of any of the shares in CCS;




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      (d)   doing any of the following, save for: (i) bona fide transactions with third parties
            on arm’s-length terms at fair market value for the benefit of the Enlarged
            Group; (ii) those transactions with related parties which are expressly permitted
            under the New Cape Articles (including transactions between New Cape and
            any Enlarged Group company which is a wholly-owned subsidiary or subsidiary
            undertaking of New Cape or between two or more Enlarged Group companies
            which are wholly-owned subsidiaries or subsidiary undertakings of New Cape);
            and (iii) transactions entered into with directors which are permitted under the
            New Cape Articles:
            (i)     entering into, granting, increasing or extending any security interest over,
                    or acquiring or disposing of, any asset of any Enlarged Group company
                    the fair market value of which exceeds the greater of £100,000 and
                    0.25 per cent. of the aggregate value of the Enlarged Group’s net assets;
            (ii)    entering into, or increasing or extending any liability under, any guarantee
                    or indemnity;
            (iii)   issuing, allotting, granting any options or right to subscribe for, or
                    otherwise disposing of, any share capital in New Cape;
            (iv)    undertaking any transactions with related parties, save where the New
                    Cape Creditor Scheme Shareholder has received prior written
                    confirmation from the auditors that, in their opinion, the proposed
                    transaction is a bona fide transaction on arm’s-length terms at fair market
                    value for the benefit of the Enlarged Group and will not materially
                    prejudice the interests of the 2006 Scheme Creditors;
      (e)   winding up New Cape or making any petition or application regarding the
            appointment of an administrator;
      (f)   changing the accounting conventions, policies and principles, save where the
            New Cape Creditor Scheme Shareholder has received prior written
            confirmation from the auditors that the interests of the 2006 Scheme Creditors,
            taken as a whole, will not be materially prejudiced; and/or
      (g)   removing the auditors or appointing new auditors.
      The New Cape Articles also provide that New Cape must procure that no Enlarged
      Group company shall do any of the matters listed in paragraphs (c) to (g) above.

8.1.3 Voting Rights
      The New Cape Creditor Scheme Share carries two votes for each vote which the
      holders of other classes of shares in issue at the time of the meeting at which the
      relevant resolution is proposed are entitled to exercise, on any resolution proposing
      (or any resolution the effect of which if passed would be) at any time before the
      termination of the Scheme to engage in any of a number of activities specified in the
      New Cape Articles, which include, but are not limited to, the following:
      (a)   to create or issue any class of any share other than New Cape Shares, to attach
            to any share any voting rights which are not identical in all respects with those
            attaching to the New Cape Shares or to vary the rights of the New Cape Shares;
      (b)   to alter or to delete, or in any way derogate from the effect of, any article
            which is relevant to the rights of the New Cape Creditor Scheme Share;




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(c)   to do any of the following, save to the extent that it is a permitted dividend:
      (i)     make, approve, sanction or ratify any distribution, save for a redemption
              of any new redeemable shares issued in accordance with the New Cape
              Articles;
      (ii)    give New Cape authority to purchase its own shares;
      (iii)   approve or authorise any reduction of the issued share capital of New
              Cape, save where the purpose of the reduction of capital is to remove
              losses of New Cape and does not involve a return of value to its
              shareholders;
(d)   to wind up New Cape or to approve a company voluntary arrangement;
(e)   to approve or sanction any compromise or arrangement proposed under
      article 125 of the Jersey Companies Law;
(f)   to approve or sanction any merger with any other body corporate pursuant to
      Part 18B of the Jersey Companies Law;
(g)   to approve or sanction any continuance in a jurisdiction other than Jersey
      pursuant to Part 18C of the Jersey Companies Law;
(h)   to approve or sanction the giving of any financial assistance pursuant to the
      New Cape Articles;
(i)   to approve any increase in the borrowing levels set out under the New Cape
      Articles;
(j)   to remove the auditors or appoint new auditors;
(k)   ratify anything done by the Directors which was beyond their powers or a
      breach of directors’ duties;
(l)   to the extent that the same is applicable to New Cape, to take advantage of
      the voluntary regime offered by Article 11 of Directive 2004/25/EC of the
      European Parliament and of the Council of 21 April 2004 on Takeover Bids and
      in any subsequent legislation implementing the Directive in the United
      Kingdom; or
(m)   where the prior written consent of the New Cape Creditor Scheme Shareholder
      has not been obtained, to authorise or grant authority or power to New Cape,
      its directors, any Enlarged Group company or any of the directors of an
      Enlarged Group company to do any of the matters set out in, or ratify anything
      done by New Cape, its directors, any Enlarged Group company or any of the
      directors of an Enlarged Group company in breach of the matters listed in
      paragraph 8.1.2 above and this paragraph 8.1.3.
Where a resolution: (i) is to be proposed in respect of which the New Cape Creditor
Scheme Shareholder would be entitled to vote pursuant to the above provisions; or
(ii) the resolution is proposed by the New Cape Creditor Scheme Shareholder to be
moved at any general meeting (either, the “Initial Resolution”) and the relevant matter
to be approved pursuant to the Initial Resolution also requires the approval of
shareholders pursuant to the Listing Rules, in addition to the Initial Resolution (which
must be approved in accordance with the above provisions), the relevant matter shall
be subject to approval by New Cape Shareholders pursuant to a separate resolution
(the “Duplicate Resolution”), which shall be proposed at the same general meeting as




                                    164
      the Initial Resolution. The Initial Resolution and the Duplicate Resolution shall each
      be stated to be conditional upon the passing of the other. The New Cape Creditor
      Scheme Shareholder shall not be entitled to vote on the Duplicate Resolution.

8.1.4 Notice of and proceedings at general meetings
      The New Cape Creditor Scheme Shareholder is entitled to receive notice of, and to
      attend (either by representative or by proxy), every general meeting of New Cape and
      every separate general meeting of the holders of the shares of any class in New
      Cape’s issued share capital. New Cape will procure that each such notice, which the
      New Cape Creditor Scheme Shareholder is entitled to receive, is accompanied by:
      (i) an opinion from the solicitors to New Cape stating whether, in their opinion, the
      New Cape Creditor Scheme Shareholder is entitled to vote on any of the resolutions;
      and (ii) a certificate signed by two directors of New Cape confirming that, since the
      last general meeting, no act or omission which required the prior written consent of
      the New Cape Creditor Scheme Shareholder under the New Cape Articles has
      occurred without such consent. Save as provided in the New Cape Articles (including
      in respect of those matters lasted in paragraph 8.1.3 above), the New Cape Creditor
      Scheme Shareholder is not entitled to vote at a general meeting. Where the business
      of a general meeting includes any matters requiring the consent of the New Cape
      Creditor Scheme Shareholder (including those set out in paragraph 8.1.2 above) or
      any resolutions on which the New Cape Creditor Scheme Shareholder is entitled to
      vote (including those set out in paragraph 8.1.3 above), a quorum will not exist
      unless the New Cape Creditor Scheme Shareholder is present either by representative
      or by proxy.
      The New Cape Creditor Scheme Shareholder, present either by a representative
      appointed in accordance with the Companies Act or by proxy, has the right to
      demand a poll.




                                        165
                                          PART VIII

                           ADDITIONAL INFORMATION

1.     RESPONSIBILITY
The Company and the Directors (whose names appear on page 23 of this Prospectus) accept
responsibility for the information contained in this Prospectus. To the best of the knowledge of
the Company and the Directors (who have taken all reasonable care to ensure that such is the
case), the information contained in this Prospectus is in accordance with the facts and does not
omit anything likely to affect the import of such information.

2.    NEW CAPE CORPORATE DETAILS
2.1   New Cape was incorporated and registered in Jersey on 19 April 2011 under the Jersey
      Companies Law as a public company limited by shares under the name Cape plc with
      registered number 108031.
2.2   The principal legislation under which New Cape operates, and under which the New Cape
      Shares were created, is the Jersey Companies Law and subordinated legislation made under
      the Jersey Companies Law. The New Cape Shares are in registered form and their ISIN code
      will be JE00B5SJJD95.
2.3   The registered office of New Cape is at 47 Esplanade, St. Helier, Jersey JE1 0BD, Channel
      Islands. The telephone number is +44 (0)1534 835600. The principal place of business of
      New Cape is at Straits Trading Building, 9 Battery Road, Singapore 049901. The telephone
      number is +65 6597 0931.
2.4   New Cape has not traded nor prepared any accounts since its incorporation.
      PricewaterhouseCoopers LLP, whose address is The Atrium, 1 Harefield Road, Uxbridge,
      Middlesex UB8 1EX, United Kingdom, are proposed to be the auditors of New Cape and will
      be the only auditors of New Cape since its incorporation. PricewaterhouseCoopers LLP is a
      member of the Institute of Chartered Accountants in England and Wales.
2.5   Implementation of the Scheme will result in New Cape becoming the new holding company
      of the Group. Trading on AIM in the Old Cape Shares, the current holding company of the
      Group, will be cancelled and it is expected that New Cape will be admitted to the premium
      listing segment of the Official List in accordance with the Listing Rules and the New Cape
      Shares admitted to trading on the London Stock Exchange’s main market for listed securities,
      on the Scheme Effective Date. Implementation of the Scheme will not result in a change to
      the business of the Group.

3.    SHARE CAPITAL OF NEW CAPE
3.1   On incorporation, the authorised share capital of New Cape was £50,000,000 divided into
      200,000,000 ordinary shares of 25 pence each. Of such shares, two (being the New Cape
      Subscriber Shares) were subscribed for by the subscribers to the memorandum of
      association of New Cape, being Carey Olsen Nominees Jersey Limited and Carey Olsen
      Corporate Services Jersey Limited as to one Share each, and were paid up in full by those
      subscribers. On 4 May 2011, Carey Olsen Nominees Jersey Limited and Carey Olsen
      Corporate Services Jersey Limited transferred the one New Cape Subscriber Share held by
      each of them respectively to Martin K May and Richard Bingham respectively. The authorised
      share capital of New Cape was subsequently increased to £50,000,001 divided into
      200,000,000 ordinary shares of 25 pence each and one New Cape Creditor Scheme Share
      of £1 by a resolution of the current shareholders in New Cape on 4 May 2011.




                                               166
3.2   Accordingly, as at 12 May 2011, the latest practicable date prior to posting of this
      Prospectus, the authorised and issued share capital of New Cape is and, immediately prior
      to implementation of the Scheme, will be as set out below. The two issued and paid up New
      Cape Shares are the New Cape Subscriber Shares.
                                                                            Issued and      Nominal
                                                   Authorised     Nominal      paid up         value
      Class                                          number         value       number     aggregate
      New Cape Subscriber Shares                          2         £0.25            2        £0.50
      New Cape Shares                           199,999,998         £0.25            –            –
      New Cape Creditor Scheme Share                      1            £1            –            –
3.3   Upon the Scheme Effective Date, the New Cape Subscriber Shares shall cease to be entitled
      to dividends or distributions, shall no longer carry the right to receive notice of, attend or
      vote at any meeting and shall become redeemable at any time thereafter, for their nominal
      amount, at the option of the Board.
3.4   Under the Scheme, New Cape will issue New Cape Shares, credited as fully paid, to Old
      Cape Shareholders on the basis of one New Cape Share for every Old Cape Share held at
      the Scheme Record Time, and the share capital of New Cape will (assuming no exercise of
      rights outstanding under the Old Cape Employee Share Plans prior to the Scheme Effective
      Date and assuming the New Cape Subscriber Shares are redeemed in accordance with their
      terms) upon Admission be as follows:
                                                                            Issued and      Nominal
                                                   Authorised     Nominal      paid up         value
      Class                                          number         value       number     aggregate
      New Cape Shares                           200,000,000         £0.25 117,904,616 £29,476,154
      New Cape Creditor Scheme Share                      1            £1           1          £1
3.5   Following the New Cape Reduction of Capital, the share capital of New Cape will remain
      as above as the New Cape Reduction of Capital involves a cancellation of share premium
      and not of nominal value.
3.6   By resolutions passed on 4 May 2011, the holders of the New Cape Subscriber Shares
      resolved that:
      3.6.1 the New Cape Articles be adopted as the articles of association of the Company in
            substitution of the existing articles of association of the Company;
      3.6.2 the authorised share capital of the Company, which is currently £50,000,000 divided
            into 200,000,000 ordinary shares of 25 pence each, be increased to £50,000,001 by
            the creation of one new scheme share of £1 (the “Scheme Share”), such new
            Scheme Share having the rights and being subject to the restrictions set out in the
            New Cape Articles, and that to give effect to the same, paragraph 4 of the
            memorandum of association of the Company be deleted and there be substituted in
            its place the following new paragraph 4:

              “4.   NUMBER OF SHARES
              The share capital of the Company is £50,000,001 divided into 200,000,000 ordinary
              shares of 25 pence each and one scheme share of £1.”
      3.6.3 subject to and conditional upon: (i) the passing of the special resolutions approving
            the Scheme and New Cape Reduction of Capital as set out in the notice of the
            General Meeting; (ii) the New Cape Shares required to be allotted and issued by New




                                                167
      Cape pursuant to the Scheme having been allotted and issued and registered in the
      names of the persons entitled to such New Cape Shares in New Cape’s register of
      members; and (iii) the Scheme becoming effective, New Cape’s share premium
      account (including the amount arising upon the allotment and issue of the New Cape
      Shares pursuant to the Scheme) on the date on which the Scheme becomes effective
      be cancelled and an equivalent amount be credited to a reserve of profit to be
      available to the Company to be:
      (a)   distributed by New Cape from time to time as dividends in accordance with
            the Jersey Companies Law and the New Cape Articles; or
      (b)   applied by New Cape from time to time toward any other lawful purpose to
            which such a reserve may be applied;
3.6.4 the Directors be generally and unconditionally authorised to exercise all or any of the
      powers of New Cape pursuant to the New Cape Articles to allot Equity Securities (as
      defined in the New Cape Articles):
      (a)   up to an aggregate nominal amount of £29,575,100 as required for the
            purposes of the Scheme;
      (b)   up to an aggregate nominal amount of £1,518,100 as required for the purposes
            of arrangements requiring New Cape to satisfy the entitlements of participants
            in the Old Cape Employee Share Plans who are expected to have entitlements
            to ordinary shares after implementation of the Scheme; and
      (c)   up to an additional aggregate nominal amount of £19,650,770 (representing
            approximately two thirds of Old Cape’s issued ordinary share capital at the
            date of the proposal of the resolution) of which 39,301,538 ordinary shares
            (representing approximately one third of Old Cape’s issued share capital at the
            date of the proposal of the resolution) may only be allotted pursuant to a fully
            pre-emptive rights issue,
      for a period expiring (unless previously renewed, varied or revoked by New Cape in
      general meeting) on the earlier of the conclusion of the Annual General Meeting of
      New Cape to be held in 2011 and the date 15 months after the date of the original
      authority, save that New Cape may before such expiry make an offer or agreement
      which would or might require Equity Securities to be allotted after such expiry and
      the Directors may allot Equity Securities pursuant to such offer or agreement as if the
      authority conferred hereby had not expired;
3.6.5 (subject to and conditional upon the Scheme becoming effective) the Directors be
      empowered pursuant to the New Cape Articles, to allot Equity Securities (as defined
      in the New Cape Articles) wholly for cash pursuant to the authority conferred by the
      resolution described in paragraph 3.6.4 above and/or where such allotment
      constitutes an allotment of Equity Securities by virtue of Articles 5.1 and 5.3 of the
      New Cape Articles as if Article 5.6 of the New Cape Articles did not apply to such
      allotments, provided that this power:
      (a)   shall expire on the earlier of the conclusion of the Annual General Meeting of
            New Cape to be held in 2011 and the date 15 months following the date of
            the original authority, save that New Cape may, before such expiry, make an
            offer or agreement which would or might require Equity Securities to be
            allotted after such expiry and the Directors may allot Equity Securities pursuant
            to any such offer or agreement as if the power conferred hereby had not
            expired; and




                                         168
     (b)   shall be limited to:
           (i)     the allotment of Equity Securities in connection with a rights issue, open
                   offer or pre-emptive offer to holders of ordinary shares in the Company
                   (excluding any ordinary shares held by New Cape as treasury shares) in
                   proportion (as nearly as may be) to their existing holdings of ordinary
                   shares but subject in each case to the Directors having a right to make
                   such exclusions or other arrangements in connection with such offerings
                   as the Directors may deem necessary or expedient:
                   (1)   to deal with Equity Securities representing fractional entitlements;
                   (2)   to deal with ordinary shares represented by depositary receipts;
                         and
                   (3)   to deal with legal or practical problems under the laws of, or
                         requirements of, any recognised regulatory body or any stock
                         exchange in any territory or any matter whatsoever; and
           (ii)    the allotment of Equity Securities wholly for cash otherwise than
                   pursuant to paragraph (b)(i) above up to an aggregate nominal amount
                   of £1,473,800 (representing approximately 5 per cent. of Old Cape’s
                   issued ordinary share capital at the date of the proposal of the
                   resolution); and
3.6.6 (subject to and conditional upon the Scheme becoming effective) the Directors be
      generally and unconditionally authorised:
     (a)   pursuant to Article 57 of the Jersey Companies Law to make market purchases
           of ordinary shares, provided that:
           (i)     the maximum number of ordinary shares authorised to be purchased is
                   11,790,460 (representing approximately 10 per cent. of Old Cape’s
                   issued share capital at the date of the proposal of the resolution);
           (ii)    the minimum price, exclusive of any expenses, which may be paid for an
                   ordinary share is 25 pence;
           (iii)   the maximum price, exclusive of any expenses, which may be paid for
                   an ordinary share shall be the higher of:
                   (1)   an amount equal to 5 per cent. above the average of the middle
                         market quotations for ordinary shares taken from the Official List
                         for the five Business Days immediately preceding the day on
                         which such shares are contracted to be purchased; and
                   (2)   the higher of the price of the last independent trade and the
                         highest current independent bid on the Official List at the time
                         that the purchase is carried out; and
           (iv)    the authority hereby conferred shall expire at the conclusion of the
                   Annual General Meeting of New Cape to be held in 2011 (except that
                   New Cape may make a contract to purchase ordinary shares under this
                   authority before the expiry of this authority, which will or may be
                   executed wholly or partly after the expiry of this authority, and may
                   make purchases of ordinary shares in pursuance of any such contract as
                   if such authority had not expired); and




                                         169
              (b)    pursuant to Article 58A of the Jersey Companies Law, to hold as treasury shares
                     any ordinary shares purchased pursuant to the authority conferred by
                     paragraph (a) above.
        3.6.7 conditional upon the Old Cape Shareholders approving their adoption by New Cape
              at the General Meeting and subject to the Scheme becoming effective, the New Cape
              2011 Performance Share Plan be adopted by New Cape.
3.7     Save as disclosed in paragraph 3.1 of this Part, at the date of this Prospectus:
        3.7.1 there has been no issue of shares or loan capital of New Cape since its incorporation;
              and
        3.7.2 no share or loan capital of New Cape is under option or agreed to be put under
              option.
3.8     At the date of this Prospectus, New Cape has no subsidiaries and accordingly, there has been
        no issue of share or loan capital by any subsidiary undertaking of New Cape for cash or
        other consideration.
3.9     The New Cape Shares will, when issued, be in registered form and will be capable of being
        held in Uncertificated form. No temporary documents of title have been or will be issued in
        respect of the New Cape Shares. The New Cape Shares will rank pari passu for dividends.
3.10 The New Cape Shares have not been marketed and are not available in whole or in part to
     the public otherwise than pursuant to the Scheme.
3.11 No commissions, discounts, brokerages or other special terms have been granted in respect
     of the issue of any share capital of New Cape.

4.     SHARE CAPITAL OF OLD CAPE
Pursuant to the provisions of the Companies Act, Old Cape does not have an authorised share
capital. As at 12 May 2011, being the latest practicable date prior to the publication of this
Prospectus, the issued share capital of Old Cape is and, assuming no options are exercised under
the Old Cape Employee Share Plans between that date and the Scheme Effective Date, upon
implementation of the Scheme the issued share capital of Old Cape is expected to be, as follows:
                                                                                Issued and fully paid
Class                                                                         Number         Value £
Existing Old Cape Shares of 25 pence                                     117,904,616       29,476,154
Existing 2006 Creditor Scheme Share of £1                                          1                1
‘A’ Cape Ordinary Share of 25 pence                                                1             0.25

5.    SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ENGLISH AND JERSEY
      COMPANY LAW AND CONSEQUENT IMPLICATIONS OF NEW CAPE BEING A JERSEY
      INCORPORATED COMPANY
There are a number of differences between the Companies Act (which is the principal English
company law legislation) and the Jersey Companies Law (which is the principal Jersey company
law legislation) which could impact upon the rights of New Cape Shareholders. However, where
it was thought appropriate to confer similar rights on and protections to holders of New Cape
Shares, and where permitted under the Jersey Companies Law, provisions to enshrine (as closely
as possible) rights that are not conferred by Jersey Companies Law but which shareholders in a
company listed on the main market of the London Stock Exchange would normally expect to have
been incorporated into the New Cape Articles (and are marked by an asterisk in this section and
in paragraph 6 of this Part VIII).
The differences between the Companies Act and the Jersey Companies Law include (without
limitation) the following:




                                                  170
5.1   the Jersey Companies Law does not confer statutory pre-emption rights on shareholders
      relating to new share issues*;
5.2   under the Jersey Companies Law the directors do not need the sanction of the shareholders
      to issue and allot shares*;
5.3   the Jersey Companies Law allows for partly paid shares to be allotted by a public company
      even if they are not paid up to at least one quarter of its nominal value;
5.4   under the Companies Act a special resolution requires a three-fourths majority, whereas
      under the Jersey Companies Law the threshold can be set (in the company’s articles) at any
      threshold so long as it is at least a two-thirds majority and in the case of the New Cape
      Articles is being set at a three-fourths majority to be consistent with the Companies Act*;
5.5   any increase in the authorised share capital of a company requires a special resolution under
      the Jersey Companies Law whereas the concept of authorised share capital no longer exists
      under the Companies Act;
5,6   the Jersey Companies Law requires that 14 clear days’ notice of an Annual General Meeting
      is required to be given, where as the Companies Act requires that 21 clear days’ notice be
      given and the New Cape Articles will be set at 14 clear days’ notice in accordance with the
      Jersey Companies Law;
5.7   the circumstances in which the Jersey Companies Law permits a Jersey company to
      indemnify its directors in respect of liabilities incurred by the directors in carrying out their
      duties are limited, in a different manner to English companies under the Companies Act;
5.8   under the Jersey Companies Law, there is no general prohibition on the granting of loans
      by a company to its directors (but directors remain subject to fiduciary duties when
      considering the grant of any such loans) and any costs incurred in defending any
      proceedings which relate to anything done or omitted to be done by that director in
      carrying out his duties may be funded by way of loans;
5.9   the Jersey Companies Law does not require that shareholders approve compensation
      payments made to directors for loss of office, whereas under the Companies Act, a payment
      by a company for loss of office to a director (or a person connected to such director) of a
      company or its holding company must be approved by a resolution of shareholders*;
5.10 unless the articles of association of a public company provide otherwise, proxies are not
     entitled to speak or vote on a show of hands under the Jersey Companies Law*;
5.11 the Jersey Companies Law does not permit the appointment of more than one corporate
     representative by a member in respect of the same shareholding;
5.12 the Jersey Companies Law does not require the directors of a Jersey company to disclose
     to the company their beneficial ownership of any shares in the company (although they
     must disclose to the company the nature and extent of any direct or indirect interest which
     conflicts, or may conflict to a material extent with, a transaction into which the company
     or any of its subsidiaries is proposing to enter);
5.13 the Jersey Companies Law does not grant the directors of a Jersey company a power to
     request information concerning the beneficial ownership of shares*;
5.14 the Jersey Companies Law does not confer on members the right to an independent scrutiny
     of a poll taken, or to be taken, at a general meeting, nor does it confer rights on members
     to require a company to circulate resolutions proposed to be moved by members at the next
     annual general meeting, or to circulate explanatory statements relating to any matter
     regarding a proposed resolution at a general meeting, or rights for a nominee holder of shares
     a right to have information rights granted to the underlying beneficial owner of the share*;




                                                 171
5.15 the Jersey Companies Law provides that members who hold not less than 10 per cent. of
     the total voting rights of the members of the company having the right to vote on such
     resolution shall have the right to requisition a general meeting of the company to consider
     such resolution. The Companies Act provides that members who hold not less than five per
     cent. of the total voting rights of the company in the general meeting shall have the right
     to requisition a general meeting of the company;
5.16 there is no restriction on donations by a company to political organisations under the Jersey
     Companies Law*;
5.17 under the Jersey Companies Law, at a meeting of shareholders, a poll may be demanded in
     respect of any question by: (i) no fewer than five shareholders having the right to vote on
     the question; or (ii) a shareholder or shareholders representing not less than one tenth of the
     total voting rights of all shareholders having the right to vote on the question whereas, in
     addition, under the Companies Act, a shareholder or shareholders representing 10 per cent.
     of the total sum paid up on all shares giving the right to vote may also demand a poll*;
5.18 the Jersey Companies Law includes provisions similar to those under English law relating to
     the protection of shareholders against unfair prejudice. Jersey law, like English law, also
     permits a shareholder to bring a derivative claim in certain circumstances, however it may
     be the case that under Jersey law such a derivative claim cannot be brought in
     circumstances where the shareholder can instead bring a claim under the unfair prejudice
     provisions in the Jersey Companies Law;
5.19 under Jersey law, the two procedures for dissolving a Jersey company are winding up and
     désastre. Concepts such as receivership, administration and voluntary arrangements do not
     exist under Jersey law. The concept of a winding up is broadly similar to that under English
     law, except that under Jersey law, a winding up may only be commenced by the Jersey
     company and not by one of its creditors. If the company is solvent the winding up will be
     a summary winding up. If the company is insolvent, the winding up will be a creditors’
     winding up. A creditor wishing to dissolve a Jersey company would need to seek to have the
     company’s property declared en désastre (literally meaning “in disaster”) by a Jersey court. If
     the company’s property is declared en désastre, all of the powers and property of the
     company (whether present a future and whether situated in Jersey or elsewhere) are vested
     in the Viscount (an officer of the court). The role of the Viscount is similar to that of a
     liquidator. The Viscount’s principal duty is to act for the benefit of the company’s creditors.
     He is not under an obligation to call any creditors’ meetings, although he may do so;
5.20   pursuant to the Jersey Companies Law, a Jersey company may make a distribution from any
       source (other than nominal capital account and capital redemption reserve) where under the
       Companies Act distributions generally may only be made from distributable reserves.
       Accordingly, under the Jersey Companies Law, a distribution can be made from a share premium
       account and/or from a profit and loss account, even where a company has accumulated losses.
       A Jersey company is therefore permitted to make distributions to shareholders without
       reference to distributable reserves. Instead, pursuant to the Jersey Companies Law the directors
       approving the distribution must give the appropriate solvency statement;
5.21 the Jersey Companies Law does not contain provisions similar to Chapter 5 of the
     Disclosure and Transparency Rules requiring persons to disclose certain interests in shares*;
5.22 in the context of takeover offers, the Jersey Companies Law includes provisions similar to
     those existing under the Companies Act in relation to schemes of arrangement, and in
     relation to the compulsory acquisition of shareholders following a tender offer, including the
     voting or acceptance thresholds (as the case may be) required to effect the same. In
     addition, the Jersey Companies Law permits two or more companies (which need not all be
     Jersey incorporated companies) to merge to form one successor company. In the case of any




                                                 172
      company incorporated in Jersey, any such merger is subject to approval by its board of
      directors and to approval by special resolution of the company (and, where applicable, by
      special resolution of each class of shares where there is more than one class of shares in
      issue), in addition to certain other substantive and procedural requirements; and
5.23 whereas the Companies Act prohibits public limited companies from giving financial
     assistance, the Jersey Companies Law does not prohibit the giving of financial assistance by
     a public company. Provision has been made in the New Cape Articles to provide that New
     Cape shall not give any financial assistance unless this is approved by a special resolution
     of New Cape Shareholders*.
This list is intended to be illustrative only and does not purport to be exhaustive or to constitute
legal advice. Any Old Cape Shareholder wishing to obtain further information regarding his rights
as a New Cape Shareholder under Jersey law should consult his own Jersey legal advisers.
Following and subject to Admission, New Cape will be required to comply with the Listing Rules,
(including the Model Code and the rules relating to related party transactions and class
transactions) and the Disclosure and Transparency Rules. In certain of the instances where the
Listing Rules and/or the Disclosure and Transparency Rules apply differently or do not apply to an
overseas company, provision has been made in the New Cape Articles to apply the rules (as closely
as possible) as if New Cape was a company incorporated in England and Wales. For example, the
requirement for any proposed employee share plans and long term incentive plans to be approved
by shareholders under Listing Rule 9.4 has been enshrined in the New Cape Articles, and the New
Cape Articles provide that shareholders must comply with the rules contained in DTR 5 of the
Disclosure and Transparency Rules relating to disclosure of major shareholdings and other
controlling voting rights in New Cape as if it were a company incorporated in England and Wales.
In addition, where it was thought appropriate to confer similar rights on and protections to
holders of New Cape Shares, and where permitted under the Jersey Companies Law, provisions to
enshrine (as closely as possible) rights that are not conferred by the Jersey Companies Law but
which shareholders in a company listed on the main market of the London Stock Exchange would
normally expect have been incorporated into the New Cape Articles, as described in the summary
setting out the key provisions of the New Cape Articles set out in paragraph 6 of this Part. In
relation to those cases referred to above (marked by an asterisk) where the New Cape Articles
seek to replicate the position under the Companies Act as closely as possible, there can be no
guarantee that these provisions will replicate English law exactly and inevitably differences
between English law and Jersey law will remain.
New Cape intends, upon implementation of the Scheme, to comply with the UK Corporate
Governance Code.
The insider dealing legislation set out in the UK Criminal Justice Act 1993, as well as provisions
relating to market abuse set out in FSMA, will apply to New Cape, and dealings in New Cape
Shares, alongside the relevant provisions of Jersey law.
New Cape will be subject to the provisions of the City Code on Takeovers and Mergers.
It is anticipated that shareholder meetings for New Cape will be held outside of the UK, but New
Cape may make arrangements for persons entitled to attend to do so by simultaneous attendance
and participation at a satellite meeting place anywhere in the world.

6.     SUMMARY OF THE NEW CAPE ARTICLES
Under the Jersey Companies Law, the capacity of a Jersey company is not limited by anything
contained in its memorandum or articles of association. Accordingly, the memorandum of association
of a Jersey incorporated company, and hence New Cape, does not contain an objects clause.




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As referred to in paragraph 5 of this Part VIII above, there are a number of differences between
the Jersey Companies Law and the Companies Act which may impact on the rights of holders of
New Cape Shares. As such, where considered appropriate and subject to the Jersey Companies
Law, provisions have been incorporated into the New Cape Articles to enshrine rights that are not
conferred by the Jersey Companies Law but which shareholders in a company listed on the main
market of the London Stock Exchange would normally expect (and are marked by an asterisk in
this section and in paragraph 5 of this Part VIII). Furthermore, some additional changes have been
included in the New Cape Articles to reflect the fact that New Cape will be admitted to trading
on the London Stock Exchange’s main market (and not AIM) and further, the rights attaching to
the New Cape Creditor Scheme Share vary in comparison to the Old Cape Creditor Scheme Share.
In relation to those cases referred to below (marked by an asterisk) where the New Cape Articles
seek to replicate the position under the Companies Act as closely as possible, there can be no
guarantee that these provisions will replicate English law exactly and inevitably differences
between English law and Jersey law will remain.
In all other material respects the New Cape Articles are the same as the Old Cape Articles.
Copies of the Old Cape Articles and the New Cape Articles are also available for inspection as
described in paragraph 27 of this Part VIII.
The New Cape Articles include provisions to the following effect:

6.1   Share rights general
      6.1.1   Voting rights
              New Cape Shares
              Subject to the rights of the New Cape Creditor Scheme Shareholder as described
              below, on a show of hands, every member (other than the New Cape Creditor
              Scheme Shareholder) who is present in person or by proxy shall have one vote and
              on a poll every member (other than the New Cape Creditor Scheme Shareholder)
              present in person or by proxy shall have one vote for every share of which he is
              the holder. A proxy need not be a member of New Cape*.

              New Cape Creditor Scheme Share
              The New Cape Creditor Scheme Shareholder shall not be entitled to any voting
              rights save in certain circumstances as prescribed for in the New Cape Articles,
              including the creation of any new Creditor Scheme Shares or any other class of
              shares apart from the creation or issue of any more ordinary shares. In the event
              that the New Cape Creditor Scheme Shareholder is entitled to vote at a general
              meeting or a class meeting, the New Cape Creditor Scheme Share shall carry two
              votes for each vote which the holders of ordinary shares are entitled to exercise.
              Where a resolution is proposed in respect of which the New Cape Creditor Scheme
              Shareholder would be entitled to vote under the New Cape Articles and the relevant
              matter to be approved also requires the approval of members pursuant to the Listing
              Rules then in addition to that resolution, the relevant matter shall also be subject to
              approval by a second resolution (to be considered at the same general meeting as
              the first resolution) on which only holders of New Cape Shares can vote. The
              resolutions shall each be stated to be conditional upon the passing of the other.
              Further details of the rights attaching to the New Cape Creditor Scheme Share are
              contained in paragraph 8 of Part VII.

              Subscriber shares
              The New Cape Subscriber Shares issued upon the incorporation of New Cape shall,
              with effect from Admission, cease to carry the right to, inter alia, attend or vote at
              any meeting of New Cape.



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6.1.2   Variation of rights
        Subject to the provisions of the Jersey Companies Law, where the share capital of
        New Cape is divided into different classes of shares the special rights attached to
        any class may be varied or abrogated in such manner (if any) either with the
        consent in writing of the holders of at least three-fourths in nominal value of the
        issued shares of that class or with the sanction of a special resolution passed at a
        separate general meeting of the holders of the shares of that class. Further, if there
        is any variation of the rights of the ordinary shares the New Cape Creditor Scheme
        Shares will carry two votes for each vote which the holders of shares of other
        classes are entitled to exercise. To every such separate general meeting (except an
        adjourned meeting), the quorum shall be two persons at least holding or
        representing by proxy one-third in nominal value of the issued shares of that class.
        Further details of the rights attaching to the New Cape Creditor Scheme Share are
        contained in paragraph 8 of Part VII.

6.1.3   Authority to Allot Shares, Pre-Emption Rights and Power to Disapply
        Pre-emption Rights
        Subject to the provisions of the New Cape Articles (including the rights of the New
        Cape Creditor Scheme Shareholder referred to above) all unissued shares for the
        time being in the capital of New Cape are at the disposal of the Board, who may
        allot such shares on any terms and conditions, grant options over them, offer them
        for sale or otherwise dispose of them in any way.
        Pursuant to the New Cape Articles, the Board will require to be authorised by
        ordinary resolution to issue any Equity Securities (as defined in section 560 of the
        Companies Act)*.
        The New Cape Articles contain pre-emption rights which require new Equity
        Securities that are proposed to be allotted wholly for cash to be offered to existing
        holders of ordinary shares in New Cape on a pro rata basis before allotting them to
        other persons, unless a general or specific authorisation or approval has been
        granted by New Cape by special resolution in respect of the proposed allotment. The
        New Cape Articles set out a pre-emption procedure that must be followed in respect
        of a proposed allotment that is wholly for cash. The pre-emption rights do not apply
        to the allotment of any Equity Securities for a consideration that is wholly or partly
        otherwise than in cash, nor in the case of a proposed allotment of Equity Securities
        or options in accordance New Cape’s employee share schemes or pursuant to the
        issue of Equity Securities pursuant to the exercise of such options*.
        There are no rights of pre-emption under the New Cape Articles in respect of
        transfers of issued shares.

6.1.4   Alteration of capital
        Subject to the rights of the New Cape Creditor Scheme Shareholder as described
        below, New Cape may by special resolution consolidate and divide all or any of its
        share capital into shares of a larger amount, sub-divide all or any of its shares into
        shares of a smaller amount, cancel any shares not taken, or agreed to be taken, by any
        person and diminish the amount of its capital by the amount of the shares so cancelled.
        New Cape may, subject to any conditions, authorities and consents required by law,
        by special resolution reduce or cancel its share capital or any capital redemption
        reserve or share premium account.
        Subject to and in accordance with the provisions of the Jersey Companies Law, New
        Cape may purchase its own shares (including any redeemable shares).




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        In the event that New Cape wishes to undertake any of the actions described above,
        the New Cape Articles require a general meeting to be held at which the New Cape
        Creditor Scheme Shareholder shall be entitled to participate in the voting and shall
        have two votes for each vote which the holders of ordinary shares are entitled to
        exercise. Further details of the rights attaching to the New Cape Creditor Scheme
        Share are contained in paragraph 8 of Part VII.

6.1.5   Transfer of shares
        A member may transfer all or any of his New Cape Shares (1) in the case of
        Certificated shares by transfer in writing in any usual form or in any other form
        approved by the Board (2) in the case of Uncertificated shares, in the manner
        provided for in the rules and procedures of the operator of the relevant system and
        in accordance with and subject to the Companies (Uncertificated Securities) (Jersey)
        Order 1999. The instrument of transfer of a Certificated share shall be executed by
        or on behalf of the transferor and, if the share is not fully paid, by or on behalf of
        the transferee. Subject to the below, the New Cape Articles contain no restrictions
        on the free transferability of fully paid shares provided that the transfer is in respect
        of only one class of share and is accompanied by a duly stamped stock transfer form
        and that the provisions in the New Cape Articles relating to the deposit of
        instruments for transfer have been complied with.
        New Cape will not close the register of members in respect of shares in
        Uncertificated without the consent of the operator of the relevant system. The
        register in respect of shares in Certificated form and the register in respect of the
        New Cape Creditor Scheme Share shall remain open at all times during normal
        business hours.
        The Board may, in its absolute discretion and without giving any reason, refuse to
        register any transfer of Certificated shares if: (a) such shares are not fully paid; (b) it
        is in respect of more than one class of shares; (c) it is not duly stamped (if so
        required); and (d) it is not delivered for registration to the office or such other place
        as the Board may from time to time determine, accompanied (except in the case of
        a transfer by a recognised person where a certificate has not been issued) by the
        certificate for the shares to which it relates and such other evidence as the Board
        may reasonably require to show the right of the transferor to make the transfer. The
        Board may also, in its absolute discretion and without giving any reason, refuse to
        register any allotment or transfer of shares which is in favour of a child, bankrupt
        or person of unsound mind or more than four joint allottees or transferees. The
        Board may decline to register a transfer of the certificated shares representing
        0.25 per cent. or more in nominal value of the issued shares of their class if there
        has been a failure to comply with the requirement under the New Cape Articles to
        disclose information in respect of the shares after being requested to do so by New
        Cape in accordance with the disclosure provisions contained in the Articles (unless
        such a transfer is pursuant to an arm’s length sale).

6.1.6   Dividends
        Subject to the provisions of the Jersey Companies Law and the provisions of the
        New Cape Articles (in particular, the provisions relating to the 2006 Creditor
        Scheme, as summarised below), New Cape may by ordinary resolution declare a
        dividend to members. No dividend shall exceed the amount recommended by the
        Directors. For so long as the Jersey Companies Law permits distributions made by
        New Cape to be sourced from share premium account and other capital accounts,
        New Cape shall not at any time before the termination of the 2006 Creditor Scheme,
        without the prior written consent of the New Cape Creditor Scheme Shareholder,




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        make a distribution unless there are amounts standing to the credit of New Cape’s
        profit and loss account or any other reserve or profit sufficient to cover such
        distribution and the amount of such distribution is debited from the same in
        accordance with the Jersey Companies Law. The Directors may from time to time
        declare and pay interim dividends on shares of any class of such amounts and on
        such dates in respect of such periods as appear to the directors to be justified with
        regard to the financial position of New Cape.
        The New Cape Articles provide that New Cape shall not at any time before the
        termination of the 2006 Creditor Scheme, unless members have approved the same
        in a general meeting, without the prior written consent of the New Cape Creditor
        Scheme Shareholder, make any distribution to members unless certain conditions as
        set out in the New Cape Articles have been satisfied. These conditions are
        summarised in paragraph 5.1.2 of Part VII.
        Subject to the rights of any persons, if any, holding shares with special dividend
        rights, all dividends shall be apportioned and paid proportionately to the amounts
        paid up on the shares during any portion or portions of the period in respect of
        which the dividend is paid. No amount paid up on a share in advance of a call shall
        be regarded as paid on shares for this purpose.
        All dividends unclaimed for a period of 10 years from the date on which such
        dividend was declared or became due for payment shall be forfeited and shall revert
        to New Cape.
        There is no fixed date on which an entitlement to a dividend in respect of the
        ordinary shares arises.
        The New Cape Creditor Scheme Share shall have no right to receive any dividend.

6.1.7   Return of capital
        Subject to any other special rights, or subject to such conditions or restrictions to
        which any shares in the capital of New Cape may be issued, on a winding-up the
        liquidator can, with the approval of a special resolution and any other sanction required
        by law, divide among the members in kind the whole or any part of the assets of New
        Cape. A liquidator may set such value as he considers fair on any one or more class or
        classes of property, and may determine, on the basis of such valuation, how such
        division shall be carried out as between members or classes of members.
        The New Cape Creditor Scheme Share confers on the holder thereof, the right on a
        return of assets on a liquidation or other return of capital our of the assets available
        for distribution a sum not exceeding the amount paid upon the New Cape Creditor
        Scheme Share. Further details of the rights attaching to the New Cape Creditor
        Scheme Share are contained in paragraph 8 of Part VII.

6.1.8   Disclosure of shareholdings*
        The Disclosure and Transparency Rules as applied pursuant to the New Cape Articles
        require members to notify New Cape if the voting rights attached to shares held by
        them (subject to some exceptions) reach, exceed or fall below 3 per cent. and each
        1 per cent. threshold thereafter up to 100 per cent. Pursuant to the New Cape
        Articles, New Cape may also send a disclosure notice to any person whom it knows
        or has reasonable cause to believe to be interested in its shares, requiring such
        person to confirm whether he has such an interest and, if so, provide details of that
        interest. Under the New Cape Articles, if a person fails to provide the information
        requested in the notice within a specified period or provides information that is
        false in a material particular, the Board may serve a restriction notice on the member




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              holding the relevant shares stating, amongst other things, that the member may not
              attend or vote at any general meeting or class meeting in respect of some or all of
              his shares or (in certain circumstances) transfer those shares.

      6.1.9   Circulation of members’ resolutions*
              Members of New Cape may require New Cape to circulate a notice of a resolution
              to members. For this purpose, the members must represent: (i) at least five per cent.
              of the total voting rights of all members who have a right to vote on the relevant
              resolution; or (ii) not less than 100 in number who have a right to vote on such
              resolution and hold an average of at least £100, per member, of paid up shares in
              New Cape. Similarly, if so requested New Cape shall circulate to members a
              statement of not more than 1,000 words with respect to a matter referred to in a
              proposed resolution to be dealt with at a particular meeting or other business to be
              dealt with at that meeting.

      6.1.10 Information rights*
             A member has the right to nominate another person, on whose behalf he holds
             shares, to enjoy the same information rights as defined and stipulated in sections 146
             to 149 of the Companies Act (with certain exceptions).

      6.1.11 Power to require website publication of audit concerns*
             If so requested by members, New Cape shall publish on its website a statement
             setting out any matter relating to the audit of its accounts or any circumstances
             connected with an auditor of New Cape ceasing to hold office. For this purpose, the
             members must represent: (i) at least five per cent. of the total voting rights of all
             members who have a right to vote at the relevant general meeting; or (ii) not less
             than 100 in number who have a right to vote at such meeting and hold an average
             of at least £100, per member, of paid up shares in New Cape.

      6.1.12 Independent report on poll*
             Members may require the Board to obtain an independent report on any poll taken,
             or to be taken, at a general meeting of New Cape in accordance with the of the
             Companies Act (with certain exceptions).

      6.1.13 Limit on Borrowing Powers
             Unless otherwise determined by an ordinary resolution, the Board is required to
             restrict the borrowings of New Cape and, in so far as it is able, exercise all voting
             and other rights or powers of control exercisable by New Cape in relation to its
             subsidiary undertakings so as to procure that the aggregate principal amount
             outstanding in respect of all borrowings of the Group (exclusive of intra group
             borrowing and after deducting cash deposited) shall not, at any time exceed
             £450 million. This limit is subject to any annual increase in line with any increase in
             the General Index of Retail Prices over the corresponding period.

6.2   General meetings
      An annual general meeting of New Cape shall be held in each year in accordance with the
      requirements of the Jersey Companies Law and in addition to any other meetings which may
      be held in that year and at such time and place as may be determined by the Board.
      The Board may convene a general meeting whenever they think fit and at such times and
      places as it shall determine.
      General meetings shall also be convened on a requisition of the members of New Cape as
      provided for by the Jersey Companies Law or, if the directors fail to convene a general




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      meeting such meeting may be convened by requisitionists as provided in the Jersey
      Companies Law.
      All general meetings can only be held if members have been given at least 14 clear days’
      notice. Meetings may be called on shorter notice provided that the necessary specified
      consents are obtained.
      Notice of a general meeting must be sent to all of New Cape’s members (subject to certain
      exceptions for holders of partly-paid shares, if any), the directors and the auditors. The notice
      calling a general meeting must specify the date, time and place and general nature of the
      business to be considered at the meeting. A notice calling a meeting must state whether the
      meeting is an annual general meeting or a general meeting. A member may attend and/or
      vote at general meetings or class meetings in person or by proxy. The New Cape Articles
      contain provisions for the appointment of proxies, including electronic communication of
      appointments and cut off times for appointments prior to general meetings. Even if a
      director is not a member, he is entitled to attend and speak at any general meeting or class
      meeting. A quorum for a general meeting is two people (including members present in
      person or by proxy) entitled to vote at the meeting provided that any meeting which
      business includes one or more of the resolutions in relation to which the New Cape
      Creditor Scheme Shareholder has an interest (as summarised in paragraph 8 of Part VII) or
      includes any resolution to approve any one or more such matters then a quorum shall not
      be present for any purpose unless the New Cape Creditor Scheme Shareholder is present
      thereat either by a representative appointed in accordance with the Jersey Companies Law
      or by proxy.
      If a quorum is not present within 30 minutes of the time set for the general meeting (or
      such longer interval as the chairman in his absolute discretion thinks fit), the meeting shall
      be adjourned to such later time and date as the chairman of the meeting may determine,
      unless the meeting was called at the request of the members in which case it shall be
      dissolved. New Cape shall give not less than 10 clear days’ notice of any such adjourned
      meeting. If a special resolution is to be considered at a general meeting, the notice of the
      meeting shall specify the intention to propose the resolution as such.
      As permitted by the Jersey Companies Law, the New Cape Articles provide that a special
      resolution requires to be passed by three-fourths of the members who (being entitled to do
      so) vote in person, or by proxy, at a general meeting of the Company (or at a separate
      meeting of a class of members of the Company (as the case may be))*.
      For further details of the rights attaching to the New Cape Creditor Scheme Share, please
      see paragraph 8 of Part VII of this Prospectus.

6.3   Directors
      6.3.1   Appointment of directors
              New Cape must have at least three Directors on the Board (not counting alternate
              directors). There is no maximum number of directors. Subject to the New Cape
              Articles, members (by ordinary resolution) or the Board can appoint any person
              willing to be a director either to fill a vacancy or as an additional director. Where
              the appointment is made by the Board, the director must retire at the next annual
              general meeting and can then be put forward by the Board for reappointment by
              members in accordance with the New Cape Articles.

      6.3.2   Eligibility of new directors
              A person will only be eligible for appointment as a director of the Board if: (i) he
              is a director who has retired by rotation; or (ii) he is recommended by the Board;
              or (iii) a member who is entitled to vote at the general meeting has given New Cape




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        a written notice at least seven days (but not more than 21 days) before the date for
        which the meeting is called of his intention to propose someone (other than
        himself) as a director. The notice must include all the details of that person which
        would be required to be included in the register of directors, and be accompanied
        by a written confirmation from the proposed director confirming his willingness to
        be appointed as a director.

6.3.3   No share qualification
        Directors do not need to be shareholders in New Cape.

6.3.4   Retirement of directors by rotation
        At each annual general meeting, one third of the Directors on the Board must retire
        or, if the number of directors is not divisible by three, the number of directors
        nearest to one third shall retire from office but: (a) if any directors will have been
        a director for three years or more since he was last appointed (or re-appointed) at
        the date fixed for the annual general meeting, he must retire; and (b) if there is only
        one director, he must retire. A director who retires at an annual general meeting may
        be re-appointed if he is willing to act as a director. Subject to the New Cape Articles,
        the directors to retire by rotation will firstly be those directors who wish to retire
        without re-appointment, and secondly those who have served the longest as a
        director since their last appointment or re-appointment. If directors were last
        re-appointed directors on the same day, they can agree among themselves who is to
        retire. If they cannot agree, then they must draw lots to decide.

6.3.5   Remuneration of non-executive directors
        The total fees paid to Non-Executive Directors (other than amounts payable under
        any other article) must not exceed £500,000 a year or any other sum agreed by
        ordinary resolution at a general meeting.
        If a Director performs any other service which in the Board’s opinion is beyond the
        scope of his role as a Director, the Board can decide to pay him additional
        remuneration. This can take the form of a salary, commission or anything else the
        Board decides. The salary or remuneration paid to any Director appointed to hold
        any employment or executive office in accordance with the New Cape Articles shall
        be such as the Board may from time to time determine, and may either be a fixed
        sum of money or may altogether or in part be governed by business done or profits
        made or otherwise determined by the Board.
        Pursuant to the New Cape Articles, the provisions contained in sections 215 to 221 of
        the Companies Act in relation to payments made to directors (or a person connected
        to such directors) for loss of office and the circumstances in which such payments
        would require the approval of members broadly apply to New Cape, and New Cape
        shall comply with such provisions as if it were a company incorporated in the UK*.

6.3.6   Appointment of executive directors
        The Board can appoint from time to time one or more of its body to hold any
        employment or executive office for such period and on such terms as the Board
        may determine and the Board may revoke or terminate any such appointment.

6.3.7   Permitted interests of directors
        Subject to the provisions of the Jersey Companies Law, as long as a director has
        disclosed the nature and extent of his interest to the Board, a director can: (a) be a
        party to, or otherwise have an interest in, any transaction or arrangement with New
        Cape or in which New Cape has a direct or indirect interest; (b) act by himself or




                                          180
             through his firm in a paid professional role for New Cape (other than as auditor); and
             (c) be a director, officer or employee of or a party to a transaction or arrangement
             with, or otherwise interested in, any body corporate in which New Cape has any
             interest whether direct or indirect. A director who has, and is permitted to have, any
             interest referred to in the above paragraph can keep any remuneration or other
             benefit which he derives as a result of having that interest as if he were not a
             director. Any disclosure may be made at a meeting of the Board, by notice in writing
             or by general notice or otherwise in accordance with the Jersey Companies Law. The
             Board may authorise directors’ actual and potential conflicts of interests, provided
             that any director concerned does not vote or count towards the quorum at the
             meeting where the matter is considered. Where a director’s relationship with another
             person has been authorised and such relationship gives rise to an actual or potential
             conflict of interest, the director will not be in breach of the general duties he owes
             to New Cape if he absents himself from meetings, or makes arrangements not to
             receive documents and information, relating to the actual or potential conflict of
             interest for so long as he reasonably believes that the same subsists.

6.4   Indemnity of officers
      As long as New Cape complies with the provisions of the Jersey Companies Law relating
      to the indemnification of officers, it will indemnify every director or other officer of New
      Cape (other than any person (whether an officer or not) engaged by New Cape as auditor)
      out of the assets of New Cape against any liability incurred by him for negligence, default,
      breach of duty, breach of trust or otherwise in relation to the affairs of New Cape. This
      provision does not affect any indemnity which a director or officer is otherwise entitled to.

6.5   Other
      New Cape is to comply with the provisions of Listing Rules 9.4.1 to 9.4.3 in relation to its
      adoption of employee share plans/schemes or long term incentive plans, which require such
      schemes or plans to be approved by members in a general meeting*.
      New Cape may not make a political donation to a political party or other political
      organisation, or to an independent election candidate, or incur any political expenditure,
      unless such donation or expenditure is authorised by an ordinary resolution in accordance
      with the New Cape Articles and is passed before the donation is made or the expenditure
      incurred*.

7.    MANDATORY BIDS AND COMPULSORY ACQUISITION RULES RELATING TO NEW
      CAPE SHARES
7.1   Mandatory bids
      The Takeover Code will apply to New Cape as it currently does to Old Cape. Under the City
      Code, if an acquisition of an interest in New Cape Shares were to increase the aggregate
      holding of an acquirer and its “concert parties” to an interest in New Cape Shares carrying
      30 per cent., or more of the voting rights in New Cape, the acquirer and, depending upon
      the circumstance, its concert parties, would be required (except with the consent of the
      UK Takeover Panel) to make an offer in cash (or accompanied by a cash alternative) for the
      outstanding New Cape Shares at a price not less than the highest price paid for any interest
      in the New Cape Shares by the acquirer or its concert parties during the 12 months prior
      to the announcement of the offer. A similar obligation to make such a mandatory offer
      would also arise on the acquisition of New Cape Shares by a person (together with its
      concert parties) interested in New Cape Shares carrying between 30 per cent. and 50 per
      cent. of the voting rights in New Cape if the effect of such acquisition were to increase the
      percentage of shares carrying voting rights in which he is interested.




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7.2   Squeeze-out and sell-out
      The Jersey Companies Law provides that where a person (the “Offeror”) makes a takeover
      offer to acquire all of the shares (or all of the shares of any class) in a Jersey company
      (other than any shares already held by the Offeror at the date of the offer), if the Offeror
      has by virtue of acceptances of the offer acquired or contracted to acquire not less than
      90 per cent. in nominal value of the shares (or class of shares) to which the offer relates,
      the Offeror may (subject to the requirements of the Jersey Companies Law), by notice to
      the holders of the shares (or class of shares) to which the offer relates which the Offeror
      has not already acquired or contracted to acquire, compulsorily acquire those shares. A
      holder of any shares who receives a notice of compulsory acquisition may (within six weeks
      from the date on which such notice was given) apply to the Jersey Court for an order that
      the Offeror not be entitled and bound to purchase the holder’s shares or that the Offeror
      purchase the holder’s shares on terms different of those of the offer.
      Where before the end of the period within which the takeover offer can be accepted, the
      Offeror has by virtue of acceptances of the offer acquired or contracted to acquire not less
      than 90 per cent. in nominal value of all of the shares (or all of the shares of a particular
      class) of the Jersey company, the holder of any such shares (or class of shares) who has not
      accepted the offer may, by written notice to the Offeror, require the Offeror to acquire the
      holder’s shares. The Offeror shall (subject to the requirements of the Jersey Companies Law)
      be entitled and bound to acquire the holder’s shares on the terms of the offer or on such
      other terms as may be agreed. Where a holder gives the Offeror a notice of compulsory
      acquisition, each of the Offeror and the holder of the shares is entitled to apply to the
      Jersey Court for an order that the terms on which the Offeror is entitled and bound to
      acquire the holder’s shares shall be such as the court thinks fit.

8.    DIRECTORS’ INTERESTS IN THE GROUP
8.1   On the Scheme becoming effective, assuming that no further Old Cape Shares have been
      purchased by them or issued after 12 May 2011 (being the latest practicable date prior to
      the publication of this Prospectus), the Directors will have the following beneficial interests
      in New Cape Shares by virtue of the effect of the Scheme on their Old Cape Shares. These
      figures do not include any interests the Directors may have as a result of their participation
      in the Old Cape Employee Share Plans.
                                                                                                      Percentage
                                                                                                       of issued
                                                                Number of          Number of      ordinary share
                                                                 Old Cape           New Cape           capital of
      Director                                                      Shares             Shares          New Cape
      Tim Eggar                                                     8,000                8,000            0.007
      Martin K. May*                                              600,000              600,000            0.509
      Richard Bingham                                              99,437               99,437            0.084
      David McManus                                                35,000               35,000            0.030
      Michael Merton                                                   nil                  nil              nil
      * Note: 107,500 of these shares are owned by Janice May, Martin K. May’s wife.

      The Directors have a beneficial interest in approximately 0.63 per cent. of the issued
      ordinary share capital of Old Cape in existence as at 12 May 2011, the latest practicable
      date prior to publication of this Prospectus.




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8.2   In addition to their having an interest in Old Cape Shares as detailed in paragraph 8.1
      above, as at 12 May 2011 (being that latest possible date prior to the publication of this
      Prospectus) the Directors hold the following Share Awards granted pursuant to the Old Cape
      Performance Share Plan:
                                                             Number of                 Earliest    Latest
                                            Date of           Ordinary    Exercise     Vesting    Vesting
      Name of Director                       Grant               Shares      Price       Date       Date
      Martin K. May                        30.04.09             703,835         –    30.04.12*         –
                                           17.03.10             243,455         –    17.03.13*         –
                                           13.04.11             273,718         –    13.04.14*         –
      Richard Bingham                      30.04.09             357,593         –    30.04.12*         –
                                           17.03.10             123,691         –    17.03.13*         –
                                           13.04.11             130,208         –    13.04.14*         –
      * Subject to satisfaction of certain performance conditions,

8.3   The interests in this paragraph 8 (which include interests of the Directors held as a result
      of their participation in the Old Cape Employee Share Plans) based upon the interests of
      the Directors of Old Cape in Old Cape Shares that: (a) have been notified by the relevant
      Director to Old Cape pursuant to Chapter 3 of the Disclosure and Transparency Rules before
      12 May 2011 (the latest practicable date prior to publication of this Prospectus); or (b) are
      interests of a connected person (within the meaning of the Disclosure and Transparency
      Rules) of a Director which have been notified to Old Cape by each connected person
      (within the meaning of the Disclosure and Transparency Rules) pursuant to Chapter 3 of the
      Disclosure and Transparency Rules.
8.4   Save as set out above, no Director of Old Cape (nor any person connected with them) has
      any interests (beneficial or non-beneficial) in the share capital of Old Cape. Save as set out
      above, no Director (nor any person connected with them) holds any interest in any other
      securities of the Group.
8.5   Neither New Cape nor Old Cape has entered into any material transactions with related
      parties in the period from 31 December 2010 to the date of this Prospectus and none of
      the Directors has or has had any interest in any transaction which is or was unusual in its
      nature or conditions or significant to the business of New Cape or Old Cape which was
      effected by New Cape or any member of the Group during Old Cape’s current or
      immediately preceding financial year, or which was effected during an earlier financial year
      and remains in any respect outstanding or unperformed.
8.6   Save as disclosed in this Part, none of the Directors had a beneficial interest in any contract
      to which Old Cape or a subsidiary of either of them was a party during the current financial
      year.
8.7   There are no outstanding loans or guarantees granted or provided by New Cape or Old
      Cape or any of their respective subsidiaries for the benefit of any of the Directors.

9.     DIRECTORS’ CONFLICTS OF INTERESTS
No Director has any potential conflicts of interest between any of his duties to New Cape and his
private interests or other duties.




                                                          183
10. OTHER DIRECTORSHIPS AND PARTNERSHIPS
The details of those companies and partnerships other than Old Cape or within the Group of
which the Directors are currently directors or partners, or have been directors or partners at any
time during the five years prior to the date of this Prospectus, are as follows:
                         Current Directorships/Partnerships   Past Directorships/Partnerships
Tim Eggar                Trent Consulting Limited             Expro International Group plc
                         Russo-British Chamber of             RockWell Petroleum Inc(2)
                           Commerce                           Anglo Asian Mining plc
                         3 Legs Resources plc                 Harrison Lovegrove & Co Ltd
                         Nitol Solar Ltd                      Indago Petroleum plc(1)
                         Shiplake Court Limited               IP Maestrale Energy Italy 1 LLP
                         TAG Energy Solutions Ltd             IP Maestrale Energy Italy 3 LLP
                         Soyuz Neftegaz                       The Second Scotts Atlantic Distributors
                                                                LLP(1)
                                                              De Boer Structures Holding BV
                                                              (1) In members’ voluntary liquidation.
                                                              (2) See 11.3.2 below re RockWell Petroleum Inc.


Martin K. May            None                                 Alberon Designs Limited(4)
                                                              Caldwell & Davies Limited(2)(5)
                                                              Chardon Developments Limited(4)
                                                              Charles F. Hunter (Leisure) Limited(5)
                                                              Connolly Hides Limited(3)(4)
                                                              Connolly Leather Limited(3)
                                                              Connolly Limited
                                                              C.S. Wiggins & Sons Limited(5)
                                                              Duskwave Property Limited(5)
                                                              Emptico Limited(5)
                                                              Gudgeon Construction Limited(5)
                                                              H.B. Sale (Holdings) Limited(4)
                                                              H.B.S. Trophies Limited(4)
                                                              Howard (106) Limited(4)
                                                              J.J. Williamson & Sons (Canterbury)
                                                                  Limited
                                                              Kent International Airport (Holdings)
                                                                  Limited(5)
                                                              Kent International Airport Limited(5)
                                                              Kent International Business Park
                                                                  Limited(4)(5)
                                                              Kent International Travel Limited(5)
                                                              Landside A/S(5)
                                                              London City Racecourse Limited(5)
                                                              London Manston Airport Plc(4)(5)
                                                              M & J Associates (1953) Limited
                                                              Manston Car Parks Limited(4)(5)
                                                              Norham Investments Limited(2)(5)
                                                              Norham Multi Leisure Limited(2)(5)
                                                              Planestation Airline Investments Limited(5)
                                                              Planestation Group plc(1)(5)
                                                              Planestation Limited(4)(5)
                                                              Pool Garrett Builders Limited(5)
                                                              Project Ventures Limited(5)
                                                              Selltime Limited(5)
                                                              Tomorrows Leisure Limited(2)(5)




                                                   184
                  Current Directorships/Partnerships   Past Directorships/Partnerships
Martin K. May                                          Wessex Builders Guild Limited(5)
(continued)                                            Wiggins Castle Wharf Limited(2)(5)
                                                       Wiggins Cathedral View Limited(5)
                                                       Wiggins City Clubs Limited(5)
                                                       Wiggins Estates Limited(5)
                                                       Wiggins Fairfield Limited(1)(5)
                                                       Wiggins Investments Limited(5)
                                                       Wiggins Leisure Limited(5)
                                                       Wiggins Management Services
                                                        Limited(1)(5)
                                                       Wiggins Property Developments
                                                        Limited(4)(5)
                                                       Wiggins St Johns Limited(5)
                                                       (1) In administration.
                                                       (2) In creditors’ voluntary liquidation.
                                                       (3) Entered into administration on 15 April 2002
                                                           and emerged from administration on
                                                           10 November 2006.
                                                       (4) Dissolved.
                                                       (5) See 11.4 below re Planestation Group plc and
                                                           subsidiaries.

Richard Bingham   None                                 Caldwell & Davies Limited(2)(5)
                                                       Charles F. Hunter (Leisure) Limited(5)
                                                       C.S. Wiggins & Sons Limited(5)
                                                       Duskwave Property Limited(5)
                                                       Emptico Limited(5)
                                                       Gudgeon Construction Limited(5)
                                                       Kent International Airport (Holdings)
                                                         Limited(5)
                                                       Kent International Airport Limited(5)
                                                       Kent International Business Park
                                                         Limited(4)(5)
                                                       Kent International Travel Limited(5)
                                                       London City Racecourse Limited(5)
                                                       London Manston Airport Plc(1)
                                                       Manston Car Parks Limited(4)(5)
                                                       Norham Investments Limited(2)(5)
                                                       Norham Multi Leisure Limited(2)(5)
                                                       Planestation Airline Investments Limited(5)
                                                       Planestation Group plc(1)(5)
                                                       Planestation Limited(4)(5)
                                                       Pool Garrett Builders Limited(5)
                                                       Project Ventures Limited(5)
                                                       RKB Associates Limited
                                                       Selltime Limited(5)
                                                       Tomorrows Leisure Limited(2)(5)
                                                       Wessex Builders Guild Limited(5)
                                                       Wiggins Castle Wharf Limited(5)
                                                       Wiggins Cathedral View Limited(5)
                                                       Wiggins City Clubs Limited(5)
                                                       Wiggins Estates Limited(5)
                                                       Wiggins Fairfield Limited(1)(5)
                                                       Wiggins Investments Limited(5)
                                                       Wiggins Leisure Limited(5)
                                                       Wiggins Management Services
                                                         Limited(1)(5)




                                            185
                         Current Directorships/Partnerships   Past Directorships/Partnerships
Richard Bingham                                               Wiggins Property Developments
(continued)                                                    Limited(4)(5)
                                                              Wiggins St Johns Limited(5)
                                                              (1) In administration.
                                                              (2) In creditors’ voluntary liquidation.
                                                              (3) Entered into administration on 15 April 2002
                                                                  and emerged from administration on
                                                                  10 November 2006.
                                                              (4) Dissolved.
                                                              (5) See 11.6 below re Planestation Group plc and
                                                                  subsidiaries.

David McManus            Pioneer Natural Resources
                           UK Limited
                         Rockhopper Exploration plc

Michael Merton           BlackRock Commodities                Austral Development Limited
                           Securities Income Company          Quadrem International Holdings Ltd
                           Limited                            Rio Tinto Indonesia Limited
                         BlackRock Commodities                Rio Tinto Indonesian Finance
                           Income Investment Trust plc          Limited
                         Rio Tinto Pension Fund Trustees      Rio Tinto Indonesian Investments
                           Limited                              Limited
                         The HALO Trust                       Western Properties Limited
                         J Sainsbury Pension Scheme           59-75 (Odd) Onslow Square
                           Trustees Limited                     Freehold Limited
                         J Sainsbury Common Investment
                           Fund Limited
                         J Sainsbury Trustees Limited

11. OTHER INFORMATION RELATING TO THE NEW CAPE DIRECTORS
11.1 Details of the Directors, their business addresses and their functions are set out in Part IV –
     ‘Directors, Corporate Governance and Employees’. The Directors comprise all of the
     members of the administrative, supervisory or management bodies of New Cape.
11.2 At 12 May 2011 (being the latest practicable date prior to the publication of this
     Prospectus), none of the Directors:
      11.2.1 except as set out in paragraph 10 of this Part VIII (‘Other directorships and
             partnerships’), has been a member of the administrative, management or supervisory
             bodies or partner at any time in the previous five years of any company or
             partnership, or is still a member of the administrative, management or supervisory
             bodies or partner of any company or partnership;
      11.2.2 has any convictions in relation to fraudulent offences incurred during the previous
             five years;
      11.2.3 has been associated with any bankruptcies, receiverships or liquidations whilst acting
             as director during the previous five years, other than as set out at paragraph 11.4
             and 11.5 below;
      11.2.4 has been subject to any official public incrimination and/or sanction by a statutory
             or regulatory authority (including, where relevant, designated professional bodies) or
             been disqualified by a court from acting as a member of the administrative,
             management or supervisory bodies of an issuer or from acting in the management
             or conduct of the affairs of any issuer during the previous five years; or
      11.2.5 has any family relationship with any other Director.




                                                   186
11.3 Mr Eggar has been involved in the following companies:
       11.3.1 Mr Eggar was a director of Indago Petroleum Limited. Following the sale of its
              remaining exploration licence interest in Oman to RAK, the company was put into
              members’ voluntary liquidation so as to return funds to shareholders.
       11.3.2 Mr Eggar was a director of RockWell Petroleum Inc, a Canadian incorporated junior oil
              and gas company, when it entered voluntary Companies’ Creditors Arrangement Act
              protection in December 2008. On 19 August 2009 the company filed a Plan of
              Arrangement with the Court of Queen’s Bench of Alberta, Calgary. A Creditor’s meeting
              was convened and a Sanction Order was subsequently filed with the aforementioned
              court on 23 September 2009. The company subsequently emerged from bankruptcy
              protection in September 2009. Tim Eggar ceased to act as a non-executive director of
              RockWell Petroleum Inc. in December 2009.
       11.3.3 Mr Eggar was a member of The Second Scotts Atlantic Distributors LLP, which was put
              into members’ voluntary liquidation so as to return funds to members.
11.4   Mr May is a former director of Planestation Group Plc (in liquidation) (formerly Wiggins Group
       Plc) (“Planestation Group”) and various of its subsidiaries. Mr May joined Planestation Group in
       March 2004 and on 26 July 2005 Planestation Group and its subsidiaries were put into
       administration. The administration ended on 25 July 2006 on which date the company went
       into creditors’ voluntary liquidation. The liquidation is currently ongoing. It is envisaged that the
       secured creditor will be repaid in full and it is anticipated that unsecured creditors will receive
       a dividend of approximately 10 pence in the pound. There are no preferential creditors.
       Landside A/S (formerly Planestation Denmark A/S) was placed into bankruptcy in Denmark on
       15 September 2004. Martin May was a director of this company on that date. Planestation
       Group plc has settled certain claims against Landside A/S pursuant to a settlement agreement.
11.5 Mr May is also a former director of the following companies:
       (a)    Connolly Leather Limited was placed into administrative receivership on 15 April
              2002. Martin May was a director of this company on that date. The total shortfall as
              to creditors as set out in the relevant statement of affairs was £24,563.
       (b)    Connolly Hides Limited was placed into administrative receivership on 15 April 2002.
              Martin May was a director of this company on that date. The total shortfall as to
              creditors as set out in the relevant statement of affairs was £14,361.
       (c)    Alberon Designs Limited was placed into administrative receivership on 4 August
              1999. Martin May was a director of the company on that date. The total shortfall to
              creditors as set out in the relevant statement of affairs was £12,089,178.
       (d)    Howard (106) Limited was placed into administrative receivership on 14 October
              1998. Martin May was a director of the company on that date. The total shortfall to
              creditors as set out in the relevant statement of affairs was £6,321,873.
       (e)    HBS Trophies Limited was placed into administrative receivership on 4 October 1999.
              Martin May was a director of the company on that date. The total shortfall to creditors
              as set out in the relevant statement of affairs was £6,463,950.
       (f)    H. B. Sale (Holdings) Limited was placed into LPA receivership on 8 October 1999.
              Martin May was a director of this company on that date.
11.6   Mr Bingham is a former director of Planestation Group and various of its subsidiaries.
       Mr Bingham joined Planestation Group plc in January 2005 in order to assist with the
       implementation of a fundamental restructuring at the behest of institutional shareholders and
       creditors. On 26 July 2005 Planestation Group and its subsidiaries were put into administration.




                                                    187
      The administration ended on 25 July 2006 on which date the company went into creditors’
      voluntary liquidation. The liquidation is currently ongoing. It is envisaged that the secured
      creditor will be repaid in full and it is anticipated that unsecured creditors will receive a
      dividend of approximately 10 pence in the pound. There are no preferential creditors.

12.   DIRECTORS’ REMUNERATION, SERVICE AGREEMENTS, EMPLOYMENT CONTRACTS
      AND LETTERS OF APPOINTMENT
12.1 Executive Directors
     Both of the Executive Directors are currently employed by Old Cape pursuant to service
     agreements with Old Cape, details of which are set out below and which will be terminated
     upon the Scheme becoming effective. Each of the Executive Directors has entered a new
     service agreement dated 4 May 2011 with New Cape which takes effect from the Scheme
     Effective Date, the terms of which are the same as their existing service agreements (save for
     in the case of Mr May New Cape being the employing company, with his performance related
     bonus being limited to 125 per cent. of annual basic salary (or such higher percentage as the
     Board may determine) with equivalent “Change of Control” bonus provisions to those
     referred to below and including general updates to reflect changes in applicable law and to
     include provisions which are appropriate for directors of a company listed on the Main
     Market. In the case of Richard Bingham, the terms of his new service agreement are the same
     (save for New Cape being the employing company, with his performance related bonus being
     limited to 100 per cent. of annual basic salary (or such higher percentage as the Board may
     determine)), and including general updates to reflect changes in applicable law and provisions
     appropriate for directors of a company listed on the Main Market. After the Scheme Effective
     Date, Mr May and Mr Bingham will be the only Directors of Old Cape.
      The overall remuneration of Executive Directors will remain unchanged.
      The remuneration (including salary and other benefits) payable under the Executive
      Directors’ employment contracts with Old Cape in respect of the financial year ending
      31 December 2010 was as follows:
                                                                              Benefits in
      Name                         Salary/Fee            Bonus      Pension         Kind         Total
      Martin K May                 £465,000           £581,250     £69,750      £19,673 £1,135,673
      Richard Bingham              £315,000           £315,000     £47,250      £12,098  £689,348
      With effect from 1 January 2011 Mr May’s and Mr. Bingham’s annual salaries were increased
      to £488,000 and £325,000 respectively.
      Details of the Executive Directors’ employment contracts with Old Cape are as follows:
      Martin K May has entered into a service agreement with Old Cape as its Chief Executive dated
      23 October 2006 (as amended pursuant to a side letter dated 16 May 2008), with an effective
      date of 1 July 2006 and shall continue to be employed, subject to termination upon 12 months’
      notice by either party. The agreement provides for an annual salary of £465,000 (increased to
      £488,000 with effect from 1 January 2011) plus a performance related bonus, a car allowance
      of £18,000 per annum, membership of a private medical scheme, permanent health insurance,
      personal accident travel insurance and life assurance cover. Mr May is also entitled to a cash
      bonus in the event of a ‘change of control’ of Old Cape (as a result of a general takeover offer
      or a scheme of arrangement) equal to the aggregate amount by which the value of a notional
      500,000 Old Cape Shares at the ‘exit price’ exceeds £2.30 per Old Cape Share (less income
      tax and national insurance required to be deducted by Old Cape from such payment). As the
      Scheme will not result in a realisation of value for Old Cape Shareholders generally, no such
      cash bonus will be payable to Mr May on or by virtue of the Scheme becoming effective. Under




                                                188
     the agreement Mr May may elect for an amount equal to 15 per cent. of his base salary to be
     paid into a personal pension scheme. Mr May is entitled to 30 days holiday.
     Richard Bingham has entered into a service agreement with the Company as the Group
     finance director dated 21 May 2008, with a commencement date of 1 June 2008 and shall
     continue to be employed, subject to termination upon not less than 12 months’ notice by
     either party. The agreement provides for an annual salary of £315,000 (increased to £325,000
     with effect from 1 January 2011) plus a bonus payment, a car allowance of £11,000, medical
     expenses insurance, income protection insurance, death in service insurance personal
     accident and travel insurance. Under the service agreement Mr Bingham may either join the
     Group’s staff Stakeholder Pension Scheme where the Company will contribute an amount
     equal to 15 per cent. of Mr Bingham’s base salary each month or he may elect for the
     Company to contribute up to 15 per cent. of his base salary to be paid into a personal
     pension scheme. Mr Bingham is entitled to 30 days holiday.
     Each of Mr May and Mr Bingham have entered into a letter of termination in respect of
     their existing service agreements with Old Cape, terminating their employment (but not
     directorships) of Old Cape, such terminations to take effect from the Scheme Effective Date.
     The maximum potential bonus payable to Executive Directors in 2010 by Old Cape was
     capped at 125 per cent. of salary for Martin K May and 100 per cent. of salary for Richard
     Bingham. Performance measures, all of which were equally weighted, were based on the
     achievement of adjusted Earnings Per Share (EPS) targets, cash flow targets and personal
     objectives.
     The bonuses paid by Old Cape to Martin K May and Richard Bingham were 125 per cent.
     and 100 per cent. of basic salary respectively.
     The use of the above targets is seen as supporting the delivery of the Company’s strategic
     goals. In light of this, the Board has agreed that similar measures are used in 2011, with the
     same bonus opportunities also applying in New Cape. However, should the New Cape 2011
     Performance Share Plan (with the inclusion of the higher individual participation limits and a
     dividend equivalence mechanism) be approved at the General Meeting of Old Cape convened
     for 25 May 2011, a claw-back provision will be introduced into the annual bonus plan that
     will enable any excess bonus earned in respect of a misstatement of financial results to be
     reclaimed by the Company at the Remuneration Committee’s discretion. The ability to
     claw-back bonus will operate for two years following the payment of bonus in any year.

12.2 Non-Executive Directors
     All Non-Executive Directors have letters of appointment with Old Cape which set out the
     specific terms of engagement, details of which are set out below:
     The services of Tim Eggar as Non-Executive Director and Chairman are provided under the
     terms of a letter of appointment with Old Cape dated 24 February 2011 commencing on
     1 May 2011 subject to termination by either party upon at least one month’s prior written
     notice, at an initial fee of £150,000 per annum for his appointment as a Non-Executive
     Director (or he may elect to receive a fixed proportion of the net value (after tax) of the
     agreed fees in Old Cape Shares at the prevailing market value with the balance paid in fees).
     The services of David McManus as a Non-Executive Director are provided under the terms
     of a letter of appointment with Old Cape dated 4 October 2004 as varied on 27 June 2008.
     His appointment is for an initial period of 12 months commencing 1 November 2004
     subject to renewal for further periods as agreed between Mr McManus and the Board (but
     operated on the basis of continuing until terminated by either party on one month’s notice,
     at a fee of £40,000 per annum for his appointment as a Non-Executive Director, £5,000 per
     annum for his membership of the Nominations Committee, £5,000 per annum for his




                                               189
      membership of the Audit Committee and £10,000 for his appointment as chairman of the
      Remuneration Committee.
      The services of Michael Merton as a Non-Executive Director are provided under the terms of
      a letter of appointment with Old Cape dated 21 December 2010 for an initial period of three
      years commencing on 10 January 2011 subject to termination upon at least one month’s
      prior written notice by either party. Mr Merton receives a fee of £35,000 per annum for his
      appointment as a Non-Executive Director, £5,000 for per annum for his membership of the
      Remuneration Committee, £5,000 per annum for his membership of the Nominations
      Committee and £10,000 for his appointment as chairman of the Audit Committee.
      Each Non-Executive Director has also entered into a letter of appointment with New Cape
      dated 4 May 2011, which takes effect from the Scheme Effective Date, the terms of which
      are substantially the same as the terms of appointment with Old Cape, save for general
      updates to reflect changes in applicable law and provisions which are appropriate for
      directors of a company on the Main Market. Each letter of appointment can be terminated
      by either party on one months’ written notice.
      On the Scheme becoming effective, the Non-Executive Directors’ appointments as Directors
      of Old Cape will be terminated. Until the Scheme Effective Date, the Non-Executive
      Directors will not be entitled to any additional fees for their services as directors of New
      Cape. With effect from the Scheme Effective Date (when their appointments as Directors of
      Old Cape terminate), the Non-Executive Directors will be entitled to be paid the fees set
      out above from New Cape.
      The aggregate emoluments of each of the Non-Executive Directors of Old Cape (including
      benefits in kind) for the financial accounting period ending 31 December 2010 were as follows:
                                                                               Benefits
      Name                               Fee           Bonus      Pension      in Kind         Total
      Tim Eggar                           –                –            –            –            –
      David McManus                 £60,000                –            –            –      £60,000
      Michael Merton                      –                –            –            –            –
      Fees are benchmarked against comparable companies in the sector and are determined by
      the Board. No increase was made to fees for the period commencing 1 January 2011. The
      non-executive Directors do not participate in any of the Old Cape Employee Share Plans or
      New Cape 2011 Performance Share Plan nor is any pension payable in respect of their
      services as Non-Executive Directors.
      Each Non-Executive Director is entitled to reimbursement of reasonable expenses incurred
      in the course of his duties.
      Save as set out above, none of the Non-Executive Directors is entitled to any benefit upon
      the termination of his appointment.

12.3 Indemnities
     Each of the Directors have entered into stand-alone Deeds of Indemnity with Old Cape in
     respect of proceedings which may be brought by third parties as directors of Old Cape and
     its subsidiaries. The indemnities do not provide indemnification in the event that a director
     is proved to have acted fraudulently or dishonestly.
      Each of the Directors will enter into new stand-alone deeds of indemnity and guarantee with
      New Cape. The Directors’ existing deeds of indemnity with Old Cape will cease to have
      effect on an ongoing basis, except in the case of Martin K May and Richard Bingham whose
      current deeds of indemnity with Old Cape will continue. The Deeds of Indemnity and
      Guarantee with New Cape will indemnify each of the Directors in respect of proceedings
      which may be brought by third parties against the Directors in respect of their actions as




                                                190
      directors of New Cape and other subsidiaries of New Cape (which are not covered by the
      Old Cape deeds of indemnity and as permitted by the laws of the jurisdiction in which the
      relevant subsidiary is incorporated) and contain a guarantee in respect of the Directors’
      respective existing deeds of indemnity with Old Cape whereby New Cape guarantees all of
      Old Cape’s obligations under or pursuant to the existing deeds of indemnity.

12.4 General
     The total amount set aside or accrued by Old Cape or its subsidiaries to provide pension,
     retirement or similar benefits for the Directors for the financial year ended 31 December
     2010 was £nil (such payments are not accrued but are paid monthly as summarised in
     paragraph 12.1 above).
      Save for the options and awards under the Old Cape Employee Share Plans disclosed in
      paragraph 8 of this Part VIII, details of the amount of remuneration paid (including any
      contingent or deferred compensation), and benefits in kind granted to the Directors for
      services in all capacities to the Group by any person for the financial year ended
      31 December 2010 are set out in this paragraph 12 above.
      There will be no variation to the total emoluments receivable by the Directors as a result
      of the Scheme becoming effective.
      There is no arrangement under which any of the Directors has agreed to waive future Old
      Cape or New Cape emoluments nor have there been any such waivers during the financial
      year immediately preceding the date of this Prospectus.
      Other than as set out in this paragraph 12, none of the service contracts or appointment
      letters of members of the administrative, management, or supervisory bodies of Old Cape, New
      Cape or any of Old Cape’s subsidiaries provide for benefits upon termination of employment.

13.   GROUP EMPLOYEE SHARE PLANS
13.1 Old Cape Employee Share Plans
     As at 12 May 2011 (being the latest practicable date prior                to the publication of this
     Prospectus), inclusive of the options and awards granted                  to Directors disclosed in
     paragraph 8 of this Part VIII, employees and former employees             of the Group hold options
     and awards under the Old Cape Employee Share Plans over the               following Old Cape Shares:
                                                  Number of
                                                    Old Cape
      Old Cape Employee         Compensation    Shares under   Expiration period      Normal Vesting
      Share Plan                type            option/award   from date of issue     Period
      Old Cape 2007             Share awards     4,501,534     N/A                    3 years subject to
      Performance Share Plan                                                          performance criteria
      Old Cape 2006             Share options      640,936     6 months following     6 months after the
      Sharesave Plan                                           the date on which      earliest date on
                                                               a bonus is payable     which a bonus is
                                                               under the savings      payable under the
                                                               contract               savings contract
      Old Cape 2004             Share options      367,500     10 years from the      3 years subject to
      Employee Incentive Plan                                  date of grant          the achievement of
                                                                                      objective conditions

      Details of the impact of the Scheme on subsisting options and awards granted under the
      Old Cape Employee Share Plans are set out in paragraph 9.1 of Part V of this Prospectus
      (‘The Proposals’). No further options or awards will be granted under the Old Cape
      Employee Share Plans after the Scheme becomes effective. Details of the Old Cape Employee
      Share Plans are as follows:




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13.1.1 Old Cape 2004 Employee Incentive Plan
       This plan is an unapproved discretionary share option plan for which the approval
       of HMRC has not been obtained.
       Options to acquire Old Cape Shares may be granted at the discretion of the Board
       (after consultation with the remuneration committee) to selected employees or
       executive directors of the Group. Options are not transferable or assignable (other
       than to a personal representative in the event that an option holder dies).
       Options may be granted at an exercise price determined by the Board (after
       consultation with the remuneration committee). Such price must be greater than the
       nominal value of an Old Cape Share for an option to subscribe for Old Cape Shares.
       Options may be granted at anytime within ten years of the adoption of the plan,
       unless the Board is restricted from doing so by statute, order or regulation.
       The exercise of an option granted under the plan may be subject to the
       achievement of objective conditions to be determined by the Board (after
       consultation with the remuneration committee). Unless otherwise determined by the
       Board, an option may not normally be exercised before the third anniversary of the
       date of grant. No option may be exercised on or after the tenth anniversary of the
       date of grant.
       In certain circumstances an option may be exercised earlier than its normal exercise
       date (for example on termination of employment because of death, injury, disability,
       redundancy or retirement or on a take-over or voluntary winding-up of the
       Company). An option will cease to be exercisable if an option holder ceases to be
       an employee of the Group in other circumstances, unless otherwise agreed by the
       Board (taking account of the recommendations of the remuneration committee).
       The maximum number of Old Cape Shares that may be subject to options under the
       plan is 5,284,188. Any options granted under the plan which have already been
       exercised are included in this limit, but option shares that have lapsed are excluded
       from this limit.
       The number of Old Cape Shares subject to an option and/or the exercise price per
       Old Cape Share and/or the maximum limit on the number of Old Cape Shares
       available to be used in the plan may be adjusted in such manner as the auditors
       consider to be fair and reasonable upon the occurrence of any capitalisation issue
       or offer by way of rights (including an open offer) or upon any sub-division,
       reduction or consolidation or other variation in the capital of the Company.
       The plan shall be administered by the Board. The Board may amend the plan, subject
       to obtaining the written consent of subsisting option holder(s) in certain
       circumstances.
       The Board may at anytime (without prejudice to the subsisting rights of option
       holders) suspend or terminate the operation of the plan.
       There will be no income tax or national insurance contributions (“NICs”) due when
       options are granted. However, unapproved options are afforded no special tax
       treatment and in the event that income tax under PAYE and NICs (employee’s and
       employer’s) have to be accounted for, exercise of the options is conditional upon
       the option holder entering into arrangements which are acceptable to the Company
       to meet the liability to income tax and employee’s NICs.
       Options granted under the plan are not pensionable.




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13.1.2 Old Cape 2006 Sharesave Plan
       This plan is an employee share option scheme approved by HMRC under the
       Income Tax (Earnings and Pensions) Act 2003 (Section 516 and Schedule 3). Under
       this plan the employee uses the proceeds of a savings arrangement which is
       approved by HMRC to fund the exercise price of an option over Old Cape Shares
       in the Company. The plan operates within a prescribed legislative framework.
       The Board must invite all qualifying employees and full-time directors of the Group
       who have worked for the Group for a qualifying period of service (which shall be
       stipulated by the Board, but must not be more than five years) and who are
       chargeable to tax in respect of their office or employment as a UK-resident taxpayer
       to participate in the plan, unless such persons are ineligible to participate because
       they have a “material interest” for the purpose of the plan. The Board may also decide
       to invite other employees and directors of the Group to participate in the plan.
       Invitations to participate must be made to each qualifying participant on similar terms
       and persons who accept the invitation must participate in the plan on similar terms.
       Options may normally only be granted, and invitations may only be made, within
       42 days after the announcement of the Company’s results for any period (unless the
       board is restricted from granting options or issuing invitations during such period,
       in which case the period shall be 42 days after the restriction is lifted). However,
       options may be granted outside of this period if the Board considers that there are
       exceptional circumstances to justify this. Options may not be granted more than ten
       years after the date on which the plan was adopted without authorisation from the
       Company in general meeting.
       Options shall be granted to participants who validly accept the invitation to
       participate in the plan provided that they enter into a savings contract which is
       approved by HMRC. The participant will make monthly contributions of between £5
       and £250 (or such other minimum and maximum limit as may be prescribed in the
       relevant legislation) under this contract.
       Options are not transferable or assignable (other than to a personal representative
       in the event that a participant dies).
       The Board must state the exercise price for an option at the time of grant, such
       price being not less than the greater of the nominal value of an Old Cape Share or
       eighty per cent. of the market value of an Old Cape Share on the day that the
       invitation to participate was made.
       The number of Old Cape Shares subject to each option is calculated by reference
       to the largest number of Old Cape Shares which can be subscribed for with the
       proceeds of the savings contract (including any bonus and interest) at the earliest
       date on which a bonus can be paid under the contract. The Board may specify a
       maximum number of Old Cape Shares over which options may be granted in
       response to all acceptances made on any occasion and in certain circumstances
       applications for options may have to be scaled down due to this limit or because of
       the ten per cent. dilution limit in the plan.
       The maximum number of Old Cape Shares issued or issuable under the plan (when
       added to the number of shares issued or issuable under any other employee share
       incentive plan adopted by the Company) during the period of ten years shall not
       exceed ten per cent. of the Old Cape Share capital of Old Cape in issue from time
       to time. Options which have lapsed or been surrendered are excluded from this limit.
       Options may normally only be exercised whilst the participant is an employee or
       director of the Group and within the period of six months after the earliest date on




                                         193
       which a bonus is payable under the savings contract, unless the participant has a
       “material interest” for the purpose of the plan. The exercise price of an option must
       be paid for out of the repayments (including any bonus or interest) under the
       savings contract. Options may also be exercised in other circumstances prescribed
       by the plan including, for example, where a participant dies or ceases to be an
       employee or director of the Group by reason of injury, disability, redundancy or
       retirement or in the event of a takeover or winding-up of Old Cape.
       In the event of certain corporate transactions (for example a change of control of
       Old Cape) a participant may, by agreement with the acquiring company, release a
       subsisting option for a new option which satisfies the prescribed conditions set out
       in the plan and relates to shares in the acquiring company (or some other company
       which in relation to the acquiring company is permitted to grant the replacement
       option).
       The number of Old Cape Shares subject to an option and/or the exercise price per
       Old Cape Share may be adjusted in such manner as the Board shall determine upon
       the occurrence of any variation of the share capital of Old Cape by way of
       capitalisation, rights issue, sub-division, consolidation or reduction, provided that no
       adjustment is made in certain circumstances (including, for example, without the
       prior confirmation from the auditors that the variation is in their opinion fair and
       reasonable (except in the case of a capitalisation issue) or without the prior
       approval of HMRC whilst the plan is approved).
       The plan shall be administered by the Board. The Board may amend the plan, subject
       to the need in certain circumstances for the prior consent of HMRC, subsisting
       participants or Old Cape in general meeting. No alteration to certain provisions of
       the plan (including the definition of “qualifying employees”, the limitations on the
       maximum amount of shares subject to the plan or the maximum entitlement of any
       one participant under the plan, or the provisions relating to adjustments made in the
       event of a variation of share capital) can be made without the prior approval of
       shareholders of Old Cape in general meeting (save for any amendment which is to
       comply with or take account of any legislation/change of legislation or any
       requirement of HMRC for the approval of the plan or is to obtain or maintain
       favourable tax treatment for participants, potential participants or for Old Cape).
       The plan is tax-favoured. No income tax should be due where an option is exercised
       in accordance with the plan whilst the option and the plan maintain HMRC
       approval, unless the option is exercised in certain circumstances within three years
       of being granted.
       No participation, rights or benefits under the plan shall be taken into account for
       the purposes of calculating the amount of benefits payable to any pension fund.

13.1.3 Old Cape 2007 Performance Share Plan
       This plan is an unapproved discretionary plan for which the approval of HMRC has
       not been obtained. The plan allows for the conditional award of Old Cape Shares at
       no cost to the participant and the grant of either nil cost or nominal value options.
       Awards may be granted at the discretion of the Board or the trustee of an employee
       benefit trust (acting on the recommendation of or with the consent of the Board)
       (together the “Grantor”) to selected employees or executive directors of the Group
       (other than employees of subsidiaries which the Grantor has determined to exclude
       for the purpose of the plan). Awards are not transferable or assignable, other than to
       a personal representative in the event that an option holder dies or with the consent
       of the Grantor.




                                          194
Awards may normally only be granted within 42 days after the announcement of Old
Cape’s results for any period or after the date that an employee or director becomes
eligible to participate in the plan (unless the Grantor is restricted from granting
awards during such period, in which case the period shall be 42 days after the
restriction is lifted). However, options may be granted outside of this period if, for
example, the Grantor considers that there are exceptional circumstances to justify
this or changes to relevant legislation relating to employees’ share schemes is
proposed or has been made.
Awards are made upon the terms set out in the plan and such other additional terms
as the Grantor shall determine. An award made under the plan may be subject to
the achievement of a performance target and/or such other condition(s) on vesting
or exercise as the Grantor may determine. Unless otherwise determined by the
Grantor, awards will normally vest on the later of the third anniversary of the date
of grant or such date as the Grantor specifies following its determination that the
performance target has been met. No option may normally be exercised after the
fifth anniversary of the date of grant.
In certain circumstances an option may be exercised earlier than its normal exercise
date for a prescribed period of time (for example on termination of employment
because of death, illness, injury, disability, redundancy, or on a take-over or the
voluntary winding-up of Old Cape). In determining whether or not an award shall
vest earlier the Grantor will have regard to the period of time which has elapsed
since the date of grant of the award and the extent to which the performance target
has been satisfied. Where a participant ceases to be an employee of the Group in
other circumstances, vested awards may normally be exercised within a prescribed
period of time (unless the participant leaves by reason of summary dismissal), but
unvested awards will lapse unless otherwise determined by the Grantor.
The maximum number of new Old Cape Shares in respect of which the Grantor
can grant awards under the plan or under any other employees’ share scheme
adopted by Old Cape during the period of ten financial year of Old Cape shall not
exceed ten per cent. of the Old Cape’s share capital of Old Cape in issue from
time to time. Options or any other types of award granted to acquire newly issued
Old Cape Shares are included in this limit from the date of grant, but awards
where shares are issued otherwise than pursuant to an option or other type of
award to acquire Old Cape Shares are only included in this limit at the time of
issue. Awards which have lapsed are excluded from this limit. The Grantor may
adjust the number of Old Cape Shares already in issue for the purpose of the plan
to reflect any variation of share capital of Old Cape in such manner as it
determines is fair and reasonable.
A participant cannot be granted awards which would at the time of grant cause the
aggregate market value of Old Cape Shares which they may acquire under awards
granted to them under the plan in any financial year of Old Cape to exceed one
hundred per cent. of the participant’s base salary (unless the Grantor determines
that exceptional circumstances exist to justify a higher award of up to 200 per cent.
of the participant’s base salary). Any additional awards made to a participant to
ensure that they are not materially disadvantaged by agreeing to bear any employer’s
NICs arising in respect of an award are excluded from this individual limit.
In the event of certain corporate transactions (for example a change of control of
Old Cape) a participant may, by agreement with the acquiring company, release a
subsisting award for a new award which is determined by the Grantor to be




                                  195
            equivalent to the original award but relates to shares in a different company (for
            example the company which has obtained control of Old Cape).
            The number of Old Cape Shares subject to an award may be adjusted in such
            manner as the Grantor shall determine upon the occurrence of any capitalisation
            issue, demerger, offer or invitation made by way of rights issue, sub-division,
            reduction or other variation in the capital of the Company or any other exceptional
            event which in the reasonable opinion of the Grantor justifies such an adjustment.
            The plan shall be administered by the Board. The Board may amend the plan, subject
            to the need in certain circumstances for the prior consent of trustees or a
            proportion of subsisting participants. No alteration to the material advantage of
            participants shall be made to the persons to whom awards may be granted under
            the plan, the limitations on the number of Old Cape Shares which may be issued
            under the plan, the individual limits on participation in the plan, the principal terms
            governing the vesting of awards (and the exercise of options) or the rights of
            participants in the event of any adjustment made, for example, pursuant to a
            variation of share capital without the prior approval of shareholders of Old Cape in
            general meeting (save for any amendment which relates solely to performance
            targets or to any minor amendments which is to benefit the administration of the
            plan, is to take account of a change of legislation or is to obtain or maintain
            favourable tax, exchange control or regulatory treatment for participants or for a
            member of the Group).
            The plan will terminate on the tenth anniversary of its approval or at any earlier
            time by resolution of the Board or Old Cape in general meeting (without prejudice
            to the subsisting rights of participants).
            Awards made under the plan are afforded no special tax treatment. In the event that
            income tax under PAYE and NICs (employee’s and employer’s) have to be accounted
            for in relation to an award suitable arrangements must be made for the participant to
            meet the liability to income tax and employee’s NICs and, in certain circumstances,
            employer’s NICs. Any payment made to a participant under the cash equivalence
            mechanism shall be paid net of any tax, NICs, social security or other levy which the
            Grantor reasonably determines should be deducted from such payment.
            Awards shall not (except as may be required by taxation law) form part of the
            emoluments of individuals or count as wages or remuneration for pension purposes.

13.2 New Cape 2011 Performance Share Plan
     The following is a summary of the main provisions of the New Cape 2011 Performance
     Share Plan which was adopted by New Cape on 4 May 2011 conditional upon the Old Cape
     Shareholders approving its adoption by New Cape at the General Meeting, and subject to
     the Scheme becoming effective.
     It is expected that New Cape will only operate the New Cape 2011 Performance Share Plan
     going forward for employees.
     The following terms are the main provisions of the New Cape 2011 Performance Share Plan:

     Grant
     Awards as conditional shares or a nil (or nominal) cost option may be granted at the
     discretion of the New Cape Board or the trustee of an employee benefit trust acting on the
     recommendation of the New Cape Board (together the “Grantor”). Awards may also be
     expressed as a right to a cash sum calculated by reference to a notional number of New
     Cape Shares or the Grantor may decide when a conditional award vests or a vested option




                                              196
is exercised for the award or option to be satisfied by a payment in cash of an amount of
equivalent value.
The Grantor may grant an award or option to selected employees or executive directors of
the New Cape Group (other than employees of subsidiaries which the Board has determined
to exclude for the purpose of the New Cape 2011 Performance Share Plan).
It is anticipated that the award or option granted to executive directors will be subject to
appropriate clawback provisions.

Individual limits
No option or award may be granted under the New Cape 2011 Performance Share Plan
which would, at the time that they are granted, cause the aggregate number of the New Cape
Shares which an employee can acquire in any year to exceed 175 per cent. of his base salary
divided by the average closing price for New Cape Shares for the 12 month period ending
on the month end prior to which New Cape grants an option or award.

Dividend equivalence
Payment may be made on vesting of an amount equal to the value of dividends that were
paid during the vesting period on the number of New Cape Shares which have vested.
Alternatively, New Cape Shares of equivalent value may be added to an award.

Dilution limits
No option or award may be granted under the New Cape 2011 Performance Share Plan if
it would cause the number of New Cape Shares and Old Cape Shares that have been issued
or may be issued pursuant to awards or options granted in the preceding 10 years under
the New Cape 2011 Performance Share Plan and the Old Cape Employee Share Plans to
exceed 10 per cent. of New Cape’s issued ordinary share capital at the proposed date of
grant.
The limit does not include options or awards which have lapsed and does not relate to New
Cape Shares purchased in the market unless they are held in treasury.

Performance Target
An award or option made under the New Cape 2011 Performance Share Plan may be subject
to the achievement of a performance target and/or such other conditions on vesting or
exercise as the Grantor may determine. In relation to the first round of awards to executive
directors, it is anticipated that average annual growth of earnings per share of New Cape
(“EPS”) over the performance period will have to exceed the retail price index (“RPI”) by
5 per cent. (compounded annually) for 30 per cent. of an award to vest. If the average annual
growth of EPS over the performance period is between 5 per cent. and 12 per cent. over
RPI (compounded annually) over the performance period between 30 per cent. and 100 per
cent. of the award will vest on a straight line basis. No vesting will occur if the average
annual growth of EPS over the performance period is less than 5 per cent. over RPI
(compounded annually). The performance period will normally be a single fixed period of
three years and typically commence on the first day of the financial year in which the award
is granted. Unless otherwise determined by the New Cape Board, an award or option will
normally vest on the later of the third anniversary of the date of grant or such date as the
Grantor specifies following its determination that the performance target has been met. No
option may normally be exercised after the fifth anniversary of the date of grant.

Timing of grants
Awards and options under the New Cape 2011 Performance Share Plan may normally only
be granted within 42 days after the announcement of New Cape’s results for any period,




                                         197
     although they may be granted at other times if the Remuneration Committee of New Cape
     considers that there are exceptional circumstances justifying a grant.

     Exercise
     In certain circumstances a conditional award shall vest and an option may be exercised
     earlier than its normal exercise date for a prescribed period of time (for example, on
     termination of employment because of death, illness, injury, disability, redundancy, take-over,
     internal reorganisation, or the voluntary winding-up of the Company). In determining
     whether or not a conditional award shall vest and an option will be exercisable earlier the
     Grantor will have regard to the period of time which has elapsed since the date of grant
     and the extent to which the performance target has been satisfied. Where a participant
     ceases to be an employee of the Group in other circumstances, conditional awards shall vest
     and options may normally be exercised within a prescribed period of time (unless the
     participant leaves by reason of summary dismissal), but unvested options will lapse unless
     otherwise determined by the Grantor.

     Replacement Award or Option
     In the event of certain corporate transactions (for example a change of control of the
     Company) a participant may, by agreement with the acquiring company, release a subsisting
     award or option for a new award or option which is determined by the Grantor to be
     equivalent to the original award or option but relates to shares in a different company (for
     example the company which has obtained control of the Company).

     Variation of share capital
     Options and awards under the New Cape 2011 Performance Share Plan may be adjusted if
     there is a variation in New Cape’s share capital (including a rights issue or any sub-division
     or consolidation of the share capital) or in the event of a demerger, or payment of a special
     dividend or similar event which materially affects the market price of the New Cape Shares.

     Amendments
     The Board or, where appropriate the Remuneration Committee of New Cape, may amend
     the New Cape 2011 Performance Share Plan provided that the prior approval of New Cape
     Shareholders in general meeting is obtained to any amendments which materially advantage
     participants and which relate to eligibility, the number of New Cape Shares that may be
     issued under the relevant scheme, the individual limit on participation, the principal terms
     on the vesting of options or awards, the rights attaching to the New Cape Shares or the
     adjustment of options or awards. New Cape Shareholders’ approval is not required for minor
     amendments to benefit the administration of a scheme to take account of a change in
     legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment
     for participants or New Cape.

     Other provisions
     Options and awards granted under the New Cape 2011 Performance Share Plan are personal
     to the participant and may not be transferred except on death. They are not pensionable.
     The New Cape Shares allotted or transferred on vesting of an award will rank equally with
     other New Cape Shares then in issue.
     The New Cape 2011 Performance Share Plan may be terminated at any time but any
     termination will not affect participants’ subsisting rights.

13.3 Employee benefit trust
     Old Cape has established an employee benefit trust (“EBT”) which is resident and
     administered in Jersey, to satisfy awards granted under the Performance Share Plan. The




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      trustee of the EBT is Sanne Trust Company Limited (the “EBT Trustee”) which is resident
      in Jersey. Any Old Cape Shares held by the EBT at the Scheme Record Time on behalf of
      some or all of the employees of the Group will be replaced with New Cape Shares upon
      the Scheme becoming effective and will continue to be held in the EBT subject to the same
      terms and conditions as the Old Cape Shares that they replace and will be used to satisfy
      options and awards which have been exchanged for options and awards which relate to
      New Cape Shares. As at 12 May 2011 (being the latest practicable date prior to the
      publication of this Prospectus), the EBT holds no Old Cape Shares.
      Old Cape has entered into a Share Supply Deed (as summarised in paragraph 19.9 in
      Part VIII (‘Additional information’) with the EBT Trustee pursuant to which the Company is
      obliged to supply shares to the EBT Trustee to satisfy awards that are granted to
      beneficiaries under the Old Cape 2007 Performance Share Plan. New Cape has entered into
      a new share supply deed with the EBT Trustee on similar terms to the existing Share Supply
      Deed (as summarised in paragraph 19.10 in Part VIII).

14. GROUP PENSIONS
Old Cape operates a defined benefit scheme and a defined contribution scheme within the UK
and provides pensions for employees of overseas companies in the Group in accordance with local
requirements and practices.
The UK defined benefit scheme is closed to future accrual of benefits save that employees’
benefits increase broadly in line with the greater of salary and inflation.
The Proposals will not result in any changes to the provision of retirement benefits. It is intended
that the same group employers will continue to operate and participate in the pension schemes.
No changes to the provision of retirement benefits will occur as a result of the Proposals. It is not
intended that New Cape will participate in the UK pension schemes, but it may offer retirement
benefits to its employees in its own jurisdiction.
The Proposals will not result in any changes to the provision of retirement benefits. It is intended
that the same group employers will continue to operate and participate in the pension schemes.
No changes to the provision of retirement benefits will occur as a result of the Proposals.

15. INTERESTS OF MAJOR SHAREHOLDERS
15.1 As at 12 May 2011 (being the latest practicable date prior to the publication of this
     Prospectus), in so far as it is known to Old Cape, the name of each person, other than a
     Director who, directly or indirectly, has a notifiable interest in 3 per cent. or more of Old Cape’s
     issued ordinary share capital, and the amount of such person’s interest, are set forth below:
                                                                                   Percentage of            Percentage
                                                                                voting rights in             of issued
                                                                     Number of    respect of Old         share capital
                                                                      Old Cape     Cape Shares(1)        of New Cape
      Name of Shareholder                                                Shares               (%)                   (%)
      M&G Investment Management                                     15,225,976               12.91              12.91
      BlackRock Investment Management
         (UK) Limited(2)                                            11,100,617                 9.41              9.41
      Deutsche Bank AG (as principal)                                7,831,797                 6.64              6.64
      Four Capital Partners                                          4,645,397                 4.05              4.05
      J.P. Morgan Asset Management Holdings Inc.                     4,613,870                 3.91              3.91
      Acadian Asset Management                                       3,570,232                 3.03              3.03
      (1) Assuming that the 2006 Creditor Scheme Shareholder does not have voting rights on the relevant resolution.
      (2) BlackRock Investment Management (UK) Limited has also notified an interest in CFDs over a further 7,753,495
          Old Cape Shares, which together with the 11,100,617 Old Cape Shares referred to above, results in an interest
          of 18,854,112 voting rights (15.99 per cent.) of Old Cape Shares.




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15.2 The rules relating to the disclosure of interests in shares are contained in the Handbook and
     the Companies Act (these rules implement the EU Transparency Obligations Directive
     (No. 2004/109/ EC)). The major shareholding notification requirements are set out in the
     Disclosure and Transparency Rules. DTR5 requires Shareholders (or those with rights to
     acquire shares) to simultaneously inform the Company and the FSA of changes in major
     holdings in the Company’s Shares. The Company then has an obligation to disseminate this
     information to the wider market (by the end of the trading day following receipt of the
     information). This notification requirement will be triggered by direct or indirect
     Shareholders of the Company if:
      15.2.1 they have a notifiable interest in holdings of 3 per cent. or above of the Company’s
             total voting rights and capital in issue; and
      15.2.2 their holdings change to reach, exceed or fall below every 1 per cent. above 3 per
             cent. of the Company’s total voting rights and capital in issue.
              To assist holders in calculating their percentage holdings, the Company is required,
              under DTR5.6.1, to disclose, at the end of each calendar month during which an
              increase or decrease has occurred, the total number of voting rights and capital for
              its Shares, and the total number of voting rights for its Shares held in treasury.
              Under DTR5.5.1R, if the Company acquires or disposes of its own shares, it is
              required to make public the percentage of voting rights attributable to those shares
              where the acquisition or disposal reaches, exceeds or falls below 5 per cent. or
              10 per cent. of the total voting rights. This notification must be made within four
              trading days after the transaction.
              Where Shareholders have combined holdings (for example of direct and indirect
              holdings of financial instruments) they are required to notify the Company and the
              FSA if there is a notifiable change in one or more categories of voting rights, even
              if their overall percentage level of voting rights remains the same. In addition, the
              holder of financial instruments is required to aggregate and, if necessary, notify all
              instruments relating to the Company to the FSA and to the Company. The Company
              may issue a Part 22 Notice (“Part 22 Notice”) pursuant to Section 793 of the
              Companies Act 2006 whereby it requires a person that the Company knows is, or
              has reasonable cause to believe is or was during the preceding three years,
              interested in Shares to confirm whether or not that is correct. If that person does
              or did hold an interest in shares, the Company may request in the Part 22 Notice
              that the person provide certain information as set out in the Companies Act 2006.
              The Takeover Code also contains strict disclosure requirements with regard to
              dealings in the securities of an offeror or offeree company on all parties to a
              takeover and to their respective associates during the course of an offer period.
15.3 None of the Shareholders listed in paragraph 15.1 above will have voting rights that are
     different to those of any other holder of Old Cape Shares or New Cape Shares (as the case
     may be).
15.4 The Group is not aware of any person who, following implementation of the Proposals,
     directly or indirectly, acting jointly or with others or acting alone, could exercise control (as
     defined in the Prospectus Rules) over New Cape.

16. CORPORATE STRUCTURE AND SUBSIDIARIES
With effect from implementation of the Scheme, New Cape will own 100 per cent. of the issued
ordinary share capital of Old Cape and New Cape will be the holding company of the Group. The
following table shows the principal subsidiaries of Old Cape (which will thereby become the
principal subsidiaries of New Cape), being those which New Cape considers likely to have a




                                                 200
significant effect on the assessment of the assets and liabilities and the financial position and/or
the profits and losses of the Group. Unless otherwise indicated, each of the companies listed below
is 100 per cent. owned within the Group and the Group also controls 100 per cent. of the voting
power of each entity.
                                                                                        Proportion of
                                        Date of              Country of            interest ultimately
Subsidiary undertakings                 incorporation        incorporation     held by the Company
Cape Industrial Services Limited        20/03/1997           England                            100%
DBI Industrial Services Limited         15/04/1996           England                            100%
DBI Offshore Services Limited           11/11/1999           England                            100%
Cape East Limited LLC                   03/06/1979           Abu Dhabi                           49%
RB Hilton Saudi Arabia Limited          07/09/1981           Saudi Arabia                       100%
Cape East WLL                           28/01/1995           Qatar                               49%
Cape East Pte Limited                   10/05/1990           Singapore                          100%
Concept Hire Limited                    25/09/1991           Australia                          100%
PCH Group Limited                       24/01/1985           Australia                          100%
Total Corrosion Control Pty Limited     31/08/1981           Australia                          100%

17.   CAPITALISATION AND INDEBTEDNESS
17.1 Capitalisation and indebtedness of the Group
     The following table sets out the unaudited total current debt and total non-current debt of
     the Group as at 28 February 2011 and capitalisation of the Group as at 28 February 2011.
     The capitalisation information has been extracted from the audited consolidated financial
     statements of the Group for the year ended 31 December 2010:
                                                                                       Unaudited at
                                                                                        28 February
                                                                                               2011
                                                                                                £m
      Total current debt
      Guaranteed                                                                                    –
      Secured                                                                                    27.6
      Unguaranteed/Unsecured                                                                        –
                                                                                            555
                                                                                             27.6
                                                                                            555
      Total non-current debt (excluding current portion of long-term debt)
      Guaranteed                                                                                   –
      Secured                                                                                  112.1
      Unguaranteed/Unsecured                                                                       –
                                                                                            555
                                                                                             112.1
                                                                                            555
      Shareholders’ equity
      Share capital                                                                              40.0
      Other reserve                                                                               1.0
                                                                                            555
      Total                                                                                  41.0
                                                                                            aaa
      There has been no material change in the capitalisation of the Group since the latest
      published financial information as at 31 December 2010.
      Other reserve consists solely of the special reserve as disclosed in the latest published
      financial information as at 31 December 2010. 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.




                                                201
      The following table sets out the unaudited net financial indebtedness of the Group as at
      28 February 2011:
                                                                                      Unaudited at
                                                                                       28 February
                                                                                              2011
                                                                                               £m
      Cash                                                                                    63.8
      Cash equivalent – restricted cash                                                       31.3
      Trading securities                                                                         –
                                                                                          555
      Liquidity                                                                            95.1
                                                                                          555
      Current bank debt                                                                       21.9
      Current portion of non-current debt                                                        –
      Other current financial debt                                                             5.7
                                                                                          555
      Current financial debt                                                                27.6
                                                                                          555
      Net current financial funds                                                           67.5
                                                                                          555
      Non-current bank loans                                                                 108.8
      Financial derivatives                                                                    3.8
      Otner non-current loans                                                                  3.3
                                                                                          555
      Non-current financial debt                                                            115.9
                                                                                          555
      Net financial indebtedness                                                             48.4
                                                                                          aaa
      In addition to the above, the Group has contingent liabilities of £41.7 million in the form
      of performance bonds as significant contracts.
      Save as disclosed above and excluding intra-group indebtedness and guarantees, no member
      of the Group had at the close of business on 28 February 2011 any outstanding loan capital
      (including loan capital created but unissued), term loans or any other borrowings or
      indebtedness in the nature of borrowings, including indirect indebtedness, bank overdrafts,
      liabilities under acceptances (other than normal trade bills) or acceptance credits, hire
      purchase commitments, obligations under finance leases.
      As at 28 February 2011 the Group had net indebtedness of £48.4 million.

17.2 Capitalisation and indebtedness of New Cape
     As at 12 May 2011, New Cape’s capitalisation was 50 pence.
      As at 12 May 2011, New Cape had no outstanding indebtedness and its net financial
      indebtedness at that date was nil.

18. SIGNIFICANT CHANGES
Apart from the refinancing shown on page 112, there has been no significant change in the
financial or trading position of the Group since 31 December 2010, the date to which the
Historical Financial Information in Part B of Part II of the Group was prepared.
Since its incorporation on 19 April 2011, New Cape has not traded aside from commitments
entered into in relation to the Proposals and there has been no significant change in the financial
or trading position of New Cape.

19. MATERIAL CONTRACTS
Set out below is a summary of: (a) each material contract, other than contracts entered into in the
ordinary course of business, to which New Cape or any member of the Group is a party, which




                                               202
has been entered into within the two years immediately preceding the date of this Prospectus; and
(b) any other contract (not being a contract entered into in the ordinary course of business)
entered into by New Cape or any member of the Group which contains a provision under which
New Cape or any member of the Group has any obligation or entitlement which is material to
the Group as at the date of this Prospectus.

19.1 Facilities Agreement                                                                               Annex I 10.3

     The Facilities Agreement dated 5 January 2011 was entered into between (1) Old Cape and
     certain other subsidiaries as original borrowers; (2) Old Cape and certain other subsidiaries
     as original guarantors; (3) Lloyds TSB Bank plc (“Lloyds”), Barclays Corporate, HSBC Bank plc
     (“HSBC”) and Clydesdale Bank PLC (“Clydesdale”) as arrangers; (4) Lloyds as coordinator;
     (5) Barclays Bank plc, Lloyds, HSBC and Clydesdale as original lenders; and (6) Lloyds as
     agent (the “Agent”), pursuant to which the original lenders have made available to the Cape
     borrowers multicurrency revolving credit facilities totalling £200 million and Australian
     $30 million to refinance the facilities outlined in paragraph 19.3 below and for the general
     corporate purposes of the Cape borrowers (the “Facilities”).
      Facilities A and C are multicurrency facilities of up to £150 million and £50 million
      respectively with a base currency of Sterling and may be used by way of ancillary facilities
      including overdraft, cheque clearing, guarantee, bonding or documentary or standby letter of
      credit facilities. Facility B is a multicurrency facility of Australian $30 million with a base
      currency of Australian Dollars. The optional currencies under the facilities are Euro and
      US Dollars.
      The facilities are repayable on the date being 54 months after the date of the Facilities
      Agreement.
      On ‘change of control’ of Old Cape (other than where control is gained pursuant to the
      interposition of the Company between Old Cape and its shareholders under the Scheme and
      the Company is listed on a recognised stock exchange as prescribed in the definition of
      Permitted Reorganisation in the Facilities Agreement) or of the Company following the
      implementation of the Scheme, a lender will not be obliged to fund a utilisation under the
      Facilities Agreement or a utilisation of an ancillary facility, and the Agent and Old Cape or
      the Company (as applicable) shall enter into negotiations for a period of up to 30 days to
      agree the changes (if any) that may be required to be made to the Facilities as a
      consequence of the change of control. If after the 30 day period, Old Cape or the Company
      (as applicable) and all the lenders have not agreed to continue the Facilities and the changes
      to the Facilities, a lender may cancel its loan commitments and its participations in all
      outstanding loans and other utilisations together with accrued interest, and all other amounts
      accrued under the Finance Documents (as defined in the Facilities Agreement) shall become
      immediately due and payable.
      Interest is payable at the end of each interest period, and where an interest period exceeds
      six months, at six monthly intervals, at the rate of margin plus LIBOR or (in relation to any
      loan in Euro) EURIBOR and mandatory cost (if any). Margin shall be determined by reference
      to the ratio of net borrowings to EBITDA as set out in the most recently delivered compliance
      certificate under the Facilities Agreement on the basis of the following margin ratchet:
                                                                                    Margin (per cent.
      Ratio of net borrowings to EBITDA                                                 per annum)
      Less than or   equal to 1.00 to 1                                                         1.50
      Greater than   1.00 to 1 but less than or equal to 1.50 to 1                              1.75
      Greater than   1.50 to 1 but less than or equal to 2.00 to 1                              2.00
      Greater than   2.00 to 1 but less than or equal to 2.50 to 1                              2.25
      Greater than   2.50 to 1                                                                  2.50




                                                203
      Cross guarantees have been or are to be given by Old Cape, the Company and companies
      within the Group whose total gross assets, total pre-tax profit and/or total revenues account
      for more than 5 per cent. or more of the consolidated total gross assets, consolidated pre-tax
      profit and/or consolidated total revenues of the Group.
      The Facilities Agreement contains certain covenants and events of default which are
      customary in agreements of this type, upon the happening of which the principal monies
      and accrued interest become immediately due and payable. These include cross default of
      any indebtedness exceeding £5 million in aggregate.

19.2 Accession of the Company to the Facilities Agreement
     On 5 May 2011, the Company and Old Cape executed and delivered as a deed an accession
     letter (the “Deed of Accession”) to the Agent. Under the terms of the Deed of Accession,
     the Company agreed to become a guarantor under the Facilities Agreement and to be bound
     by the terms of the Facilities Agreement with effect from the Effective Date of the Scheme.
      In the event that the Scheme does not become effective, the Deed of Accession will be of
      no further effect, and the Company will not become a guarantor under the Facilities
      Agreement or be bound by the terms of the Facilities Agreement.
      The Company and Old Cape also entered into a deed of amendment of the Facilities
      Agreement dated 13 May 2011 which will amend the Facilities Agreement should the
      Scheme become effective. If the Scheme were to become effective, the Facilities Agreement
      would be amended such that New Cape as the ultimate holding company of the Enlarged
      Group will assume certain rights and obligations of Old Cape as the Company (as defined
      in the Facilities Agreement) under the Facilities Agreement, including acting as agent of each
      of the Obligors (as defined in the Facilities Agreement) and providing information in
      compliance with the information covenants contained in the Facilities Agreement.

19.3 Repayment of 2007 facilities agreement
     On 3 September 2007, Old Cape entered into a five year committed banking facility
     originally totalling £240 million with Barclays Bank Plc. The facility comprised a number of
     tranches, some of which were applied towards the consideration for the Australian
     acquistions. These facilities were refinanced by the Facilities Agreement described in
     paragraph 19.1 above.

19.4 Sale and leaseback transaction
     Each of Old Cape’s subsidiaries Cape Industrial Services Limited (“CISL”) and DBI Industrial
     Services Limited (“DBIISL”) respectively entered on 9 December 2010 into a separate sale
     agreement with a subsidiary of Société Générale, SG Leasing (June) Limited (“SGLJL”) to sell
     certain tangible fixed assets of the Old Group (the “Sold and Leased Assets”) to SGLJL for
     an aggregate amount of £15.87 million, being their fair market value. Following completion
     of the sale, the Sold and Leased Assets were leased back to CISL and DBIISL by SGLJL
     pursuant to separate lease agreements each dated 9 December 2010 between SGLJL and
     each of CISL and DBIISL respectively.
      At the time of entry into the sale agreements, option agreements were also entered into
      between Old Cape and SGLJL whereby Old Cape had call options over the Sold and Leased
      Assets of CISL and DBIISL respectively and SGLJL had a put option requiring CISL or DBIISL
      as applicable to reacquire the Sold and Leased Assets at a certain time. The Sold and Leased
      Assets were reacquired by CISL and DBIISL on 30 December 2010 pursuant to the exercise
      of the put options by SGLJL at an aggregate price of £15.83 million, being a price equal to
      their fair market value at the exercise date.




                                                204
      This sale and leaseback transaction was secured by: (a) separate guarantees dated
      9 December 2010 granted by Old Cape in favour of SGLJL guaranteeing the payment and
      performance obligations of CISL and DBIISL respectively; and (b) a deposit agreement and
      deed of assignment dated 9 December 2010 between SGLJL, CISL and Société Générale,
      London Branch, whereby CISL assigned as security in favour of SGLJL all amounts deposited
      to the credit of an account held with Société Générale, London Branch.
      Throughout the period between SGLJL leasing the Sold and Leased Assets to CISL and
      DBIISL and the reacquisition of the Sold and Leased Assets on 30 December 2010, the Sold
      and Leased Assets continued to be included within the Group’s tangible fixed assets at their
      net book value and following the payment under the option agreements no further balances
      are owed to SGLJL.

19.5 Property sale and leaseback
     In July 2008, the Group completed a sale and leaseback of certain key UK and Australian
     properties whereby on 10 July 2008, a facility agreement was entered into between Cape
     Property Holdco Limited and Clydesdale Bank plc (trading as Yorkshire Bank) providing a
     term loan of up to £8 million repayable on 10 July 2012 (the “Clydesdale Facility
     Agreement”). At the time that the Clydesdale Facility Agreement was entered into, clean
     Certificates of Title relating to the properties which formed part of the sale and leaseback
     (which are no longer enforceable) were completed. On 4 January 2011, the loan together
     with accrued interest under the Clydesdale Facility Agreement were repaid in full by Old
     Cape.

19.6 Broker and sponsor engagement letter
     Old Cape and Numis have entered into a broker and sponsor engagement letter dated
     January 2011, pursuant to which Old Cape appointed Numis to act as broker and sponsor
     for the Group in relation to Admission. The letter contains a waiver by Numis of certain
     provisions of the nominated adviser and broker agreement summarised in paragraph 19.7
     below and provides that the nominated adviser and broker agreement will terminate upon
     the cancellation of the trading of Old Cape’s shares on AIM. The letter provides that Numis
     shall continue to provide brokerage services until Admission and the parties agreed that
     following Admission the parties shall enter into a broker agreement in replacement of the
     broking services provided by Numis pursuant to the nominated adviser and broker
     agreement (but varies the nominated adviser and broker agreement such that the fees
     payable for such services shall be £40,000 per annum). The letter provides that Numis will
     be paid a success fee of £300,000 upon Admission. The letter contains certain undertakings
     and indemnities from the Old Cape and is terminable at any time by either party by written
     notice. The agreement is covered by English law. New Cape has acceded as a party to this
     arrangement by entering into a similar letter with Numis dated 6 May 2011.

19.7 Nominated adviser and broker agreement
     The nominated adviser and broker agreement dated 22 September 2008 entered into between
     Old Cape, Numis, the Executive Directors and the non-executive Directors pursuant to which
     Old Cape appointed Numis as its nominated advisor and broker to Old Cape for the purposes
     of AIM for a period of 24 months and terminable by any party on not less than 90 days’ prior
     notice in writing. Old Cape pays a fee of £50,000 per annum with any applicable VAT thereon
     for the first 24 months to Numis for their Nominated Advisor advice. Under the terms of the
     agreement Old Cape gave various warranties and indemnities to Numis. Pursuant to the terms
     of the broker and sponsor engagement letter summarised at paragraph 19.6 above, the
     agreement will terminate upon the cancellation of the trading of Old Cape’s shares on AIM
     and Numis waives the right to receive any payment payable as a consequence of Cape moving
     from AIM to the Official List pursuant to clause 6.6 of that agreement.




                                               205
19.8 Sponsor agreement
     New Cape and Old Cape entered into an agreement dated 16 May 2011 with Numis
     pursuant to which Numis agreed to act as sponsor to New Cape and Old Cape in relation
     to Admission. The agreement contains customary warranties given by Old Cape and the
     Company to Numis and a customary indemnity given by New Cape and Old Cape to Numis
     in respect of liabilities arising out of or in connection with Admission.
       Numis has a right to terminate the sponsor agreement in certain circumstances including a
       breach of warranty, a breach of the sponsor agreement, a significant change affecting any
       matter contained in the Prospectus or the Scheme not becoming effective by 30 September
       2011. The Company has agreed to pay Numis a corporate finance fee of £300,000 in place
       of the success fee of £300,000 as referred to in paragraph 19.6 above.

19.9 Share supply deed
     The Share Supply Deed dated 19 March 2010 entered into between Old Cape and Sanne
     Trust Company Limited (“Sanne Trust”) in its capacity as trustee of the Old Cape Employee
     Benefit Trust) pursuant to which Old Cape would supply shares to Sanne Trust to satisfy
     awards to be granted by Old Cape under the Old Cape 2007 Performance Share Plan.

19.10 New Cape share supply deed
      The share supply deed dated 12 May 2011 entered into between New Cape and Sanne Trust
      in its capacity as trustee of the Cape Employee Benefit Trust pursuant to which New Cape
      would supply shares to Sanne Trust to satisfy awards to be granted by New Cape under The
      New Cape 2011 Performance Share Plan.
19.11 The material agreements relating to the 2006 Creditor Scheme detailed in paragraphs 4
      and 7 of Part VII of this Prospectus.

20.    PROPERTY, PLANT AND EQUIPMENT
20.1   In addition to the material tangible fixed assets described in Part II of this Prospectus the
       Group has the following material tangible fixed assets including leasehold properties as follows:
                                                                           CIS,
                                       UK        FE/PR          ME    Med & NA          HO         Total
       Description                    (£m)        (£m)        (£m)        (£m)        (£m)         (£m)
       Freehold Land & Buildings        7.2         7.2           –         0.2           –        14.6
       Long Leasehold Land &
         Buildings                      0.1             –       1.4           –           –         1.5
       Short Leasehold Land &
         Buildings                      0.7         1.6         0.9           –           –         3.2
       Fixtures, Fittings & IT
         Equipment                       –         1.5          0.2         0.1           –         1.8
       Plant & Equipment              15.2         3.7         19.7         3.0           –        41.6
       Scaffolding Equipment           0.3        77.0          2.1         6.7           –        86.1
       Motor Vehicles                  0.0         4.1          1.0         0.4           –         5.5
                                  555         555           555        555         555         555
       Total                       23.5        95.1          25.3       10.4          –         154.3
                                  aaa         aaa           aaa        aaa         aaa         aaa
20.2 Woodlands Park
     Woodlands Park is a site owned by Cape near Slough adjoining the M25 and extending for
     130 acres. It is surplus to Cape’s requirements therefore the long term strategy is to dispose
     of the land. However, this is severely constrained by previous tipping activity and the
     contamination over much of the site caused by deposited asbestos, cellulose fibre and
     trapped methane gas arising from the breakdown of the cellulose waste.




                                                  206
      The extent of the contamination is such that freehold disposal of the landfill site (105 acres)
      is not an option at present although the agricultural land (25 acres) could be sold. However,
      the proximity to the remainder of the site and potential importance in securing alternative
      access to the landfill site is such that it would be unwise to sell the agricultural land before
      the future of the whole site is confirmed.
      The current state of the contaminated land means that excavation on this part of the site
      is not an option and potential purchasers are likely to be dissuaded from purchasing the site
      either for existing or alternative use other than at a substantially discounted price or with
      an indemnity from Cape. The situation is likely to subsist for sometime certainly until the
      immediate restoration works are completed, a period of around 5 years and potentially
      significantly further into the future.
      Since 1999 Cape has engaged an environmental consulting company to manage the day to
      day tasks involved in the site, although they have been involved in site monitoring since
      1994. There is both monthly and quarterly monitoring of the site’s groundwater, surface
      water and landfill gas.

21. LITIGATION
Save as set out below, there are no governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened of which New Cape is aware), which may
have, or have had, during the 12 months preceding the date of this Prospectus, a significant effect
on New Cape and/or the Group’s financial position or profitability.
Former subsidiaries of Cape previously owned asbestos mines that supplied asbestos to various
companies in the US. As a result, claims were made in the US which named Old Cape and its
subsidiaries as defendants in these actions; these claims have not been acknowledged by Cape and
it is not possible to quantify such claims.
Cape has previously received legal advice in the UK that default judgments obtained in North
America against companies within the Group which are not present in North America, would not
be enforceable in the UK. Consequently, the Directors believe that the above-mentioned matters
are unlikely to have a material effect on the Group’s financial position, however, it is for these
reasons that Cape will not enter into business in the United States of America.
In addition, Cape’s subsidiary, Cape Building Products Ltd (“CBP”), is subject to a court action
raised in the Commercial Court of the Glasgow Sheriff Court by Grove Investments Ltd (“Grove”)
in relation to repairing obligations under CBP’s lease of premises at the Germiston Industrial Estate
in Glasgow. Grove is CBP’s landlord at these premises and is claiming that CBP is required to carry
out certain repair work before its lease comes to an end in May 2011. CBP is currently defending
the claims, which are on hold as discussions between the parties are ongoing. The initial claim is
for approximately £10.3 million and is being vigorously defended as Cape firmly believes (on the
basis of advice received) that its actual liabilities will be considerably lower.

22. RELATED PARTY TRANSACTIONS
Save as set out below, neither New Cape nor Old Cape has entered into any related party
transactions (which, for these purposes, are those set out in the Standards adopted according to
the Regulation (EC) No 1606/ 2002) during the three financial years ended 31 December 2010,
31 December 2009 and 31 December 2008 or during the period between 31 December 2010 to
12 May 2011 (the latest practicable date prior to the publication of this Prospectus).
Related party transactions requiring disclosure under IAS 24 being the compensation of key
management personnel are set forth below. Please also refer to Note 36 to the Historical Financial
Information in Part B of Part II of this Prospectus.




                                                207
Key management personal compensation (including Directors):
                                                              2010            2009            2008
                                                              £000            £000            £000
(a)   Key management compensation
      Salaries and other short-term employee benefits        2,427           2,363           2,021
      Post-employment benefits                                 163             163             149
      Share based payments                                     997             743             295
                                                          555             555             555
                                                           3,587           3,269           2,465
                                                          555             555             555
(b)   Directors
      Aggregate emoluments                                   1,903           1,903           1,512
      Company contributions to defined benefit
        pension scheme                                           –               –              11
      Company contributions to defined contribution
        pension scheme                                       117             117              91
                                                          555             555             555
                                                           2,020           2,020           1,614
                                                          555             555             555
      Highest paid director
      Aggregate emoluments                                   1,066           1,066             933
      Defined contribution pension scheme
      Contributions in year                                     70              70              65

23. WORKING CAPITAL
New Cape is of the opinion that, taking into consideration the bank and other facilities available
to the Group, the working capital of the Group is sufficient for its present requirements, that is,
for at least 12 months following the date of this Prospectus.

24. COSTS AND EXPENSES OF THE PROPOSALS
The total costs and expenses of, or incidental to, the Proposals are estimated to be approximately
£2 million (exclusive of amounts in respect of VAT).

25. INFORMATION ON THE CREST SETTLEMENT SYSTEM
CREST, the computerised paperless system for settlement of sales and purchases of shares in the
London securities markets, commenced operations in July 1996.
The CREST Regulations provide for the transfer of shares without stock transfer forms, and the
evidencing of title to shares without share certificates, through a computer-based system and
procedures which are operated by Euroclear.
The New Cape Articles contain specific provisions to enable the New Cape Shares to be
dematerialised into a computer system, including CREST. A copy of the New Cape Articles is
available for inspection as described in paragraph 27.4 of this Part.
The Board has resolved to enable any or all of the New Cape Shares to join CREST and,
accordingly, New Cape Shareholders will be able to hold the New Cape Shares to which they
become entitled in electronic form in an account on the CREST system or in the physical form of
certificates. Each New Cape Shareholder will be able to choose whether or not to convert his New
Cape Shares into Uncertificated form and the Registrars will continue to register written
instructions of transfer and issue share certificates in respect of the New Cape Shares held in
Certificated form.
It is currently anticipated that the New Cape Shares will be eligible to join CREST immediately
upon Admission.




                                               208
26. MISCELLANEOUS
26.1 The New Cape Shares are not marketed to, nor are any available for purchase in whole or
     in part by, the public in the United Kingdom or elsewhere in connection with their
     Admission to the Official List.
26.2 Statutory accounts of Old Cape for each of the two years ended 31 December 2009 and
     31 December 2008 have been delivered to the Registrar of Companies in England and Wales.
     The statutory accounts of Old Cape for the year ended 31 December 2010 will be published
     on the same date of this Prospectus and will be filed with the Registrar of Companies in
     England and Wales shortly after. The auditors of Old Cape have made reports under the
     relevant provisions in English companies law in respect of these statutory accounts and,
     except in relation to the emphasis of matter paragraph contained in the accounts of Old
     Cape for the year ended 31 December 2008 as described in Part II of this Prospectus, each
     such report was an unqualified report.
26.3 There are no patents or other intellectual property rights, licences or particular contracts
     which are of fundamental importance to the Group’s business, except as referred to Part I
     of this Prospectus.
26.4 The information sourced from third parties has been accurately reproduced and so far as
     New Cape is aware and has been able to ascertain from information published by such third
     parties, no facts have been omitted which would render the reproduced information
     inaccurate or misleading.
26.5 PricewaterhouseCoopers LLP has given and not withdrawn its written consent to the
     inclusion of its accountants’ report on the historical financial information of the Group, set
     out in Part II of this Prospectus, in the form and context in which it is included and has
     authorised the contents of this report for the purposes of item 5.5.3R(2)(f) of the
     Prospectus Rules.
26.6 Numis Securities Limited has given and not withdrawn its written consent to the issue of
     this Prospectus with the inclusion of its name in the form and context in which they are
     included.

27. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents may be inspected at the offices of Lawrence Graham LLP,
4 More London Riverside, London SE1 2AU, United Kingdom, and at the corporate office of Old
Cape at 9 The Square, Stockley Park, Uxbridge, Middlesex, UB11 1FW, United Kingdom during
normal business hours on any day (Saturdays, Sundays and public holidays excepted) until the
close of business on the Scheme Effective Date (or until 30 September 2011 if the Proposals are
not implemented) and will also be available for inspection for 15 minutes before and during the
Court Meeting and the General Meeting:
27.1 the Old Cape Articles in their present form;
27.2 the amendments to the Old Cape Articles to be proposed at the General Meeting;
27.3 the memorandum of association of New Cape and the New Cape Articles;
27.4 a document showing the differences between the Old Cape Articles in their present form
     and the New Cape Articles;
27.5 the Annual Report and Accounts of Old Cape for the financial years ended 31 December
     2008, 31 December 2009 and 31 December 2010, including the audited consolidated
     accounts and the independent auditors’ reports for each of those financial years;
27.6 the report of the Reporting Accountants as set out in Part A of Part II of this Prospectus;




                                               209
27.7 the rules of the Old Cape Employee Share Plans and the rules of the New Cape 2011
     Performance Share Plan;
27.8 the Executive Directors’ service agreements with Old Cape and New Cape and the
     non-executive Directors’ letters of appointment with Old and New Cape referred to in
     paragraph 12 of this Part;
27.9 the consent orders referred to in paragraph 26.5 and 26.6 of this Part;
27.10 the Scheme Circular; and
27.11 this Prospectus.
This Prospectus and the Scheme Circular are also available on the Group website at
www.capeplc.com.


Date: 16 May 2011




                                              210
                             DEFINITIONS AND GLOSSARY
The following definitions apply throughout this Prospectus (except Parts II (‘Historical Financial
Information on the Group’) and Part III (‘Operating and Financial Review’), which contain separate
definitions) unless the context otherwise requires:
“1930 Act”                            the Third Parties (Rights Against Insurers) Act 1930 or,
                                      where relevant, the Third Parties (Rights Against Insurers)
                                      Act Northern Ireland 1903;
“2006 Creditor Scheme”                scheme of arrangement entered into in 2006 by Old Cape
                                      and various of its group companies with certain of their
                                      respective creditors in relation to asbestos claims liabilities;
“2006 Creditor Scheme                 has the same meaning as the ‘Scheme Agreements’ in the
 Agreements”                          New Cape Articles;
“2006 Creditor Scheme Assets”         the amount of cash or equivalent held by CCS on the
                                      relevant balance sheet date out of which 2006 Creditor
                                      Scheme Claims may be settled as defined and certified in
                                      accordance with the Funding Agreement;
“2006 Creditor Scheme Claim”          a claim falling within the 2006 Creditor Scheme;
“2006 Creditor Scheme                 Old Cape and the Group Companies in respect of which
 Companies”                           the 2006 Creditor Scheme became effective in accordance
                                      with its terms as detailed in paragraph 1 of Part VII of this
                                      Prospectus;
“2006 Creditor Scheme Directors” the two independent directors of CCS which the 2006
                                 Creditor Scheme Shareholder has the right to appoint in
                                 accordance with the procedure specified in the CCS
                                 Articles;
“2006 Creditor Scheme Fund”           the fund established in accordance with the terms and
                                      conditions of the 2006 Creditor Scheme;
“2006 Creditor Scheme Guarantee” the guarantee dated 14 March 2006 between CCS (as
                                 guarantor) and each of the 2006 Creditor Scheme
                                 Companies whereby CCS has conditionally undertaken and
                                 guaranteed to each 2006 Creditor Scheme Company on
                                 behalf of its 2006 Scheme Creditors to make payment of the
                                 liabilities relating to the 2006 Creditor Scheme as referred to
                                 and defined in the 2006 Creditor Scheme;
“2006 Creditor Scheme                 The Law Debenture Trust Corporation p.l.c. in its capacity
 Shareholder”                         as the current holder of the 2006 Creditor Scheme Share;
“2006 Creditor Scheme Shares”         the Old Cape Creditor Scheme Share and the CCS Creditor
                                      Scheme Share;
“2006 Scheme Creditors”               those persons defined as “Scheme Creditors” in the 2006
                                      Creditor Scheme;
“A$”                                  Australian dollars;




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“Admission”                       admission of New Cape to the premium listing segment of
                                  the Official List in accordance with the Listing Rules and
                                  the admission of the New Cape Shares to trading on the
                                  London Stock Exchange’s main market for listed securities
                                  in accordance with the Standards, expected to occur on
                                  17 June 2011;
“AIM”                             the market of that name operated by the London Stock
                                  Exchange;
“Annual General Meeting”          an annual general meeting of Old Cape or New Cape as the
                                  context requires;
“Audit Committee”                 the Audit Committee of Old Cape or, following the Scheme
                                  becoming effective, of New Cape;
“Audited Financial Information”   the 2010 Financial Information, the 2009            Financial
                                  Information and the 2008 Financial Information;
“Board” or “Directors”            the directors of New Cape whose names are set out in
                                  Part IV of this Prospectus or the directors of Old Cape from
                                  time to time, as the context may require;
“Business Day”                    any day other than a Saturday or Sunday on which banks in
                                  London are open for normal business;
“Cape A Ordinary Share”           the non-voting A ordinary share of 25 pence in the capital of
                                  Old Cape, to be created by way of reclassification pursuant
                                  to a resolution to be proposed at the General Meeting;
“Cape” or “Group”                 (i)    prior to the Scheme Effective Time, the Existing
                                         Group; and
                                  (ii)   after the Scheme Effective Time, the Enlarged Group;
“Cape Industrial Services”        Cape Industrial Services Limited, a company incorporated in
                                  England and Wales with registered number 03337119, being
                                  a wholly owned subsidiary of Old Cape
“Certificated” or                  in relation to a share or other security, a share or other
“in Certificated form”             security which is not in Uncertificated form (that is, not in
                                  CREST);
“CCS”                             Cape Claims Services Limited, a company which is
                                  registered in England and Wales under number 5445427;
“CCS Articles”                    the articles of association of CCS at the date of this
                                  Prospectus;
“CCS Creditor Scheme Share”       The special voting share of £1 in the share capital of CCS
                                  held by the 2006 Creditor Scheme Shareholder and having
                                  the rights and restrictions set out in the CCS Articles;
“CCS Creditor Scheme              Law Debenture, in its capacity as current holder of the CCS
 Shareholder”                     Creditor Scheme Share;
“CGT”                             capital gains tax;
“Closing Price”                   the closing, middle market quotation of an Old Cape Share,
                                  as published in the Daily Official List;




                                           212
“Combined Code”                the UK Combined Code on Corporate Governance
                               published in June 2008 by the Financial Reporting Council;
“Companies Act”                the UK Companies Act 2006 (as amended);
“Company” or “New Cape”        Cape plc, a company limited by shares incorporated in
                               Jersey under the Jersey Companies Law with registered
                               number 108031 (save that in Parts II and III of this
                               Prospectus the term “Company” refers to Old Cape);
“Consolidated Financial        the Audited Financial Information;
 Information”
“Court” or “High Court”        the High Court of Justice of England and Wales;
“Court Hearing”                the hearing of the Court at which the Court Order is made;
“Court Meeting”                the meeting of holders of Old Cape Shares to be held at the
                               London offices of Old Cape’s solicitors, Lawrence Graham
                               LLP, at 4 More London Riverside, London SE1 2AV, at
                               10.00 a.m. on 25 May 2011, convened pursuant to an order
                               of the High Court pursuant to Part 26 of the Companies Act
                               for the purposes of considering and, if thought fit, approving
                               the Scheme, notice of which is set out in Part VI of the
                               Scheme Circular and any adjournment thereof;
“Court Order”                  the order of the Court sanctioning the Scheme under
                               section 899 of the Companies Act and confirming the Old
                               Cape Reduction of Capital under section 648 of the
                               Companies Act;
“CREST”                        the computerised system for the paperless settlement of
                               sales and purchases of securities and the holding of
                               Uncertificated securities operated by Euroclear in
                               accordance with the CREST Regulations;
“CREST Regulations”            the Uncertificated Securities Regulations 2001 (SI 2001 No.
                               3755) or the Companies (Uncertificated Securities) (Jersey)
                               Order 1999 (as applicable) in each case, as from time to
                               time amended;
“Daily Official List”           the daily record setting out the prices of all trades in shares
                               and other securities conducted on the London Stock
                               Exchange;
“Disclosure and Transparency   the disclosure and transparency rules relating to the
 Rules” or “DTRs”              disclosure of information in respect of financial instruments
                               which have been admitted to trading on a regulated market
                               or for which a request for admission to trading on such a
                               market has been made, as published by the FSA;
“EBITDA”                       earnings before      interest,   taxation,   depreciation   and
                               amortisation;
“Effective Date”               in relation to Part VII, the effective date of the 2006
                               Creditor Scheme, being 14 June 2006;
“Enlarged Group”               New Cape and its subsidiary undertakings, including Old
                               Cape;




                                        213
“Established Creditor Scheme   in relation to Part VII, a 2006 Creditor Scheme Claim in
 Claim”                        respect of which a liability of the relevant 2006 Creditor
                               Scheme Company and, where applicable, CCS has been
                               established to pay a sum of money whether by way of an
                               order or award of a court or tribunal of competent
                               jurisdiction or by a settlement agreement;
“EU”                           the European Union, first established by the treaty made at
                               Maastricht on 7 February 1992;
“Euroclear”                    Euroclear UK & Ireland Limited (formally known as
                               CRESTCo Limited), the operator of CREST;
“Executive Directors”          Messrs May and Bingham;
“Existing Group”               Old Cape and its subsidiary undertakings;
“Facility”                     the facilities agreement dated 5 January 2011 entered into
                               between (1) Old Cape, Cape Industrial Services Limited
                               (“CISL”), Cape Industrial Services Group Limited (“CISGL”),
                               Cape Australia Investments Pty Limited (“Cape Australia”)
                               and Cape Australia Holdings Pty Limited (“Cape Australia
                               Holdings”) as original borrowers; (2) Old Cape, CISGL, CISL,
                               DBIISL, Cape Australia, Cape Australia Holdings, Cape (CHS)
                               Pty Limited, TCCPL and PCHGPL as original guarantors; (3)
                               Lloyds TSB Bank plc (“Lloyds”), Barclays Corporate, HSBC
                               Bank plc (“HSBC”) and Clydesdale Bank PLC (trading as
                               Yorkshire Bank) (“Clydesdale”) as arrangers; (4) Lloyds as
                               coordinator; (5) Barclays Bank plc, Lloyds, HSBC and
                               Clydesdale as original lenders; and (6) Lloyds as agent (the
                               “Agent”) and as further described in paragraph 19.1 of
                               Part VIII;
“Forms of Proxy”               the forms of proxy sent to Old Cape Shareholders for use
                               in connection with the Court Meeting and the General
                               Meeting, which accompanied the Scheme Circular;
“FSA”                          the Financial Services Authority of the United Kingdom;
“FSCS”                         Financial Services Compensation Scheme Limited, a
                               company incorporated in England and Wales with registered
                               number 3943048 and any statutory successor of it;
“FSMA”                         the UK Financial Services and Markets Act 2000, as
                               amended;
“Funding Agreement”            the funding agreement dated 14 March 2006 between Old
                               Cape as funder and CCS as borrower as referred to and
                               defined in the 2006 Creditor Scheme;
“General Meeting”              the general meeting of Old Cape to be held in connection
                               with the Proposals (excluding Admission) and any
                               adjournment of that meeting;
“Handbook”                     the Handbook of the FSA;
“HMRC”                         UK HM Revenue & Customs;
“IAS”                          international accounting standard;




                                        214
“IFRS”                             the International Financial Reporting Standards as adopted
                                   by the EU;
“Jersey”                           the Bailiwick of Jersey;
“Jersey Companies Law”             the Companies (Jersey) Law 1991, as amended;
“Jersey Court”                     the Royal Court of Jersey;
“Jersey Court Hearing”             the hearing by the Jersey Court at which the New Cape
                                   Reduction of Capital is expected to be sanctioned;
“Jersey Registrar of Companies”    the registrar of companies in Jersey;
“Law Debenture”                    The Law Debenture Trust Corporation p.l.c., in its capacity
                                   as the 2006 Creditor Scheme Shareholder;
“Listing Rules”                    the rules and regulations made by the FSA in its capacity as
                                   the UK Listing Authority under the FSMA 2000, and
                                   contained in the UK Listing Authority’s publication of the
                                   same name;
“London Stock Exchange”            the London Stock Exchange plc (or any successor body
                                   thereto);
“members”                          members of Old Cape on the register of members at any
                                   relevant date and “member” shall be construed accordingly;
“Model Code”                       the code included as part of the Listing Rules, which
                                   contains restrictions on the ability of persons discharging
                                   managerial responsibilities within a company to deal in that
                                   company’s securities;
“National Storage Mechanism”       the document publication facility made available by the FSA
                                   at www.Hemscott.com/nsm.do;
“New Cape Articles”                the articles of association of New Cape at the date of this
                                   Prospectus;
“New Cape Creditor Scheme          the one special voting share of £1 in the capital of New
 Share”                            Cape to be held by the New Cape Scheme Shareholder on
                                   behalf of creditors who were the subject of the 2006
                                   Creditor Scheme;
“New Cape Creditor Scheme          Law Debenture, in its capacity as the holder of the New
 Shareholder”                      Cape Creditor Scheme Share;
“New Cape Directors”               the directors of New Cape, as set out in paragraph 1 of
                                   Part IV of this Prospectus;
“New Cape Reduction of Capital” the proposed reduction of capital of New Cape, expected to
                                be carried out after the Scheme becomes effective, under
                                the Jersey Companies Law;
“New Cape Shareholder”             a holder of New Cape Shares from time to time;
“New Cape Shares”                  the ordinary shares of 25 pence each in the capital of New
                                   Cape to be issued credited as fully paid in accordance with
                                   clause 1 of the Scheme;




                                            215
“New Cape 2011 Performance        the New Cape performance share plan adopted by New
 Share Plan”                      Cape on 4 May 2011 (subject to approval of Old Cape
                                  Shareholders proposed to be given on 25 May 2011 and the
                                  Scheme becoming effective;
“New Cape Subscriber Shares”      the two subscriber ordinary shares with a nominal value of
                                  25 pence each in the capital of New Cape;
“New Shares”                      the ordinary shares in Old Cape of 25 pence each to be
                                  issued to New Cape pursuant to the Scheme;
“Nomination Committee”            the Nomination Committee of Old Cape or, following the
                                  Scheme becoming effective, of New Cape;
“Non-Executive Directors”         the non-executive directors of Old Cape or the non-executive
                                  directors of New Cape from time to time, as the context
                                  requires;
“Official List”                    the Official List of the UK Listing Authority;
“Old Cape”                        Cape Public Limited Company, a public limited company
                                  incorporated in England and Wales with registered number
                                  40203;
“Old Cape Articles”               the articles of association of Old Cape at the date of this
                                  Prospectus;
“Old Cape Creditor Scheme Share” the one special voting share of £1 in the capital of Old
                                 Cape held by the 2006 Creditor Scheme Shareholder on
                                 behalf of creditors who were the subject of the 2006
                                 Creditor Scheme;
“Old Cape Creditor Scheme         Law Debenture, in its capacity as the holder of the Old
 Shareholder”                     Cape Creditor Scheme Share;
“Old Cape Employee Share Plans” the Old Cape 2006 Sharesave Plan, the Old Cape 2004
                                Employee Incentive Plan and the Old Cape 2007
                                Performance Share Plan;
“Old Cape 2004 Employee           the Old Cape 2004 employee incentive plan adopted on
 Incentive Plan”                  7 May 2004;
“Old Cape 2006 Sharesave          the Old Cape 2006 sharesave plan adopted on 19 June 2006;
 Plan”
“Old Cape 2007 Performance        the Old Cape 2007 performance share plan adopted on
 Share Plan”                      28 June 2007;
“Old Cape Reduction of Capital”   the reduction of Old Cape’s share capital associated with the
                                  cancellation and extinguishing of the Scheme Shares
                                  provided for by the Scheme and under section 641 of the
                                  Companies Act;
“Old Cape Shareholder”            a holder for the time being of Old Cape Shares (other than
                                  New Cape);
“Old Cape Shares”                 the ordinary shares of 25 pence each in the share capital of
                                  Old Cape;




                                           216
“Overseas Shareholders”    Old Cape Shareholders who are resident in, ordinarily
                           resident in, or citizens or nationals of, jurisdictions outside
                           the United Kingdom or Jersey;
“Pensions Regulator”       the UK Pensions Regulator established under section 1 of
                           the Pensions Act 2004;
“Proposals”                collectively, the Scheme, the Employee Share Plan Proposals,
                           the New Cape Reduction of Capital and Admission;
“Prospectus”               this prospectus;
“Prospectus Rules”         the rules and regulations made by the FSA in its capacity as
                           the UK Listing Authority under Part VI of FSMA, and contained
                           in the UK Listing Authority’s publication of the same name;
“Registrar of Companies”   the Registrar of Companies in England and Wales;
“Registrars”               Capita Registrars (Jersey) Limited of 12 Castle Street,
                           St Helier, Jersey JE2 3RT;
“Remuneration Committee”   the Remuneration Committee of Old Cape or, following the
                           Scheme becoming effective, of New Cape;
“RIS”                      any information service authorised from time to time by the
                           FSA for the purpose of disseminating regulatory
                           announcements;
“Scheme”                   the proposed scheme of arrangement under Part 26 of the
                           Companies Act between Old Cape and holders of Scheme
                           Shares including any modification, addition or condition
                           approved by the High Court, details of which are set out in
                           the Scheme Circular;
“Scheme Circular”          the circular dated 9 May 2011 sent to holders of Old Cape
                           Shares and to the Old Cape Creditor Scheme Shareholder
                           containing details of the Proposals;
“Scheme Effective Date”    the date the Scheme becomes effective in accordance with
                           its terms, expected to be 17 June 2011;
“Scheme Effective Time”    the time at which the Scheme becomes effective on the
                           Scheme Effective Date;
“Scheme Record Time”       6.00 p.m. London time on the Business Day immediately
                           preceding the date of the Court Hearing;
“Scheme Shareholder(s)”    a holder of Scheme Shares;
“Scheme Shares”            (i)   all Old Cape Shares in issue at the date of the Scheme
                                 and remaining in issue at the Scheme Record Time;
                           (ii) all additional (if any) Old Cape Shares in issue 48 hours
                                prior to the Court Meeting at which the Scheme is
                                approved and remaining in issue at the Scheme Record
                                Time; and
                           (iii) all further (if any) Old Cape Shares which may be in
                                 issue up to the Scheme Record Time in respect of




                                     217
                                     which the original or any subsequent holder shall be
                                     bound or shall have agreed in writing by such time to
                                     be bound by the Scheme and remaining in issue at the
                                     Scheme Record Time,
“SDRT”                           stamp duty reserve tax;
“SEC”                            the US Securities and Exchange Commission;
“Shareholder(s)”                 holders of Old Cape Shares;
“Standards”                      the current edition of the Admission and Disclosure
                                 Standards produced by the London Stock Exchange;
“subsidiary” or “subsidiary      has the meaning given in the Companies Act;
 undertaking”
“Takeover Code”                  the City Code on Takeovers and Mergers in the United
                                 Kingdom;
“Towers Watson”                  Towers Watson, a part of Towers Perrin Forster & Crosby
                                 Inc. and the independent actuary of the 2006 Creditor
                                 Scheme;
“Treasury Committee”             the Treasury Committee of Old Cape or, following the
                                 Scheme becoming effective, of New Cape;
“UK” or “United Kingdom”         the United Kingdom of Great Britain and Northern Ireland;
“UK Corporate Governance Code” the UK Corporate Governance Code published in June 2010
                               by the Financial Reporting Council;
“UK Listing Authority”           the FSA acting in its capacity as the competent authority for
                                 the purposes of Part VI of FSMA and in the exercise of its
                                 functions in respect of the Admission to the Official List
                                 otherwise than in accordance with Part VI of FSMA;
“UK Takeover Panel”              the Panel on Takeovers and Mergers which issues and
                                 administers the Takeover Code;
“Uncertificated” or               in relation to a share or other security, a share or other
“in Uncertificated form”          security title to which is recorded on the relevant register
                                 of the share or security concerned as being held in
                                 Uncertificated form in CREST and title to which, by virtue
                                 of the CREST Regulations, may be transferred by means of
                                 CREST;
“US”, “USA” or “United States”   the United States of America, its territories and possessions,
                                 any state of the United States of America; and
“VAT”                            value added tax.




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