Cape sinks following discovery of accounting irregularities

Energy support services firm Cape is down 30% in early morning trade, following the revelation that it has discovered accounting irregularities at its Australian business and as a result has initiated "a detailed analysis of all balance sheet items group-wide".

In a statement the company has explained that: "The trading performance of the group's businesses in the UK, CIS/Mediterranean & North Africa and Gulf/Middle East regions and Asia was in line with expectations. However, the Group's operating margin was impacted by a substantial deterioration in the performance of the group's onshore Australian business driven by both a further downturn in current trading and the recognition of a number of legacy issues."

It added: "As part of the previously reported review of the Group's Australian operations, a detailed review of the onshore Australian business' balance sheet was initiated, which has led to the identification and correction of a number of issues relating to the valuation of certain balance sheet items. This review is expected to be complete before year-end; until then there remains some uncertainty over the full year performance for this business."

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The company goes on to say that: "In light of the legacy issues identified in the onshore Australian business, the board has prudently extended the review to a detailed analysis of all balance sheet items group-wide. It is expected that this review will be complete for year-end reporting."

CM