Cape Acquires Total Corrosion Control Group Pty Ltd

Cape PLC has agreed to acquire the Australian based Total Corrosion Control group of companies.

These arrangements, which are due to complete on August 31, 2007, are between Cape Australia Investments Pty Limited ("Cape Australia"), a wholly-owned subsidiary of Cape PLC and the shareholders of TCC Holdings (2005) Pty Ltd ("TCC Holdings"), the ultimate holding company of the TCC Group.

Cape Australia has agreed to acquire all of the issued share capital of TCC Holdings for a consideration that reflects an enterprise value for the TCC Group of A$85.0 million (34.3 million). Subject to the TCC Group achieving its earnings target for the year ending June 30, 2008, up to a further A$12.5 million (5.1 million) will be payable.

The initial consideration payable at completion will comprise A$65.0 million (26.3 million) in cash and A$20.0 million (8.1 million) in Cape new ordinary shares ("Initial Consideration Shares") (at an issue price per share calculated by reference to the volume weighted average price of Cape's ordinary shares over the five business days immediately preceding 31 August 2007) which will be subject to orderly market provisions concerning their disposal over the two years following completion. The additional consideration will be payable in cash.

At completion, application will be made for the Initial Consideration Shares to be admitted to trading on AIM.

The TCC Group, which operates mainly in Western Australia, offers a wide range of industrial services to blue chip clients in the mining, oil, gas and construction industries. The TCC Group specializes in the provision of blasting, industrial painting, protective coatings, thermal and acoustic insulation, sheet metal fabrication, rubber lining and access scaffolding. The TCC Group is headquartered in Kwinana where it operates one of the largest blasting and painting workshops in the world. It also has regional offices at Karratha and Port Hedland. Its principal customers are BHP Billiton, Alcoa, Rio Tinto, BP Refineries, the Murrin Murrin Nickel Mine and Woodside.

In the year to June 30, 2007, the TCC Group's turnover was A$113.6 million (45.9 million), its earnings before interest, depreciation, tax and amortization were A$14.9 million (6.0 million) and it generated earnings before interest and tax of A$14.0 million (5.6 million). The approximate value of the net assets being acquired at completion is A$ 18.2 million (7.4 million). Cape's Directors are of the opinion that the acquisition will be earnings enhancing in the first year.

PricewaterhouseCoopers Corporate Finance and DLA Phillips Fox acted for Cape on this transaction. Middletons acted for the TCC Group's current shareholders.

Cape's Chief Executive, Martin May, said:

"Cape's agreement to acquire the TCC Group is a major milestone in the achievement of Cape's international strategic plan. I am pleased to say that our dealings with the TCC Group, from initial discussions through exclusivity and due diligence to completion, have been conducted in a timely and professional manner which is much to the credit of the TCC Group's vendors, advisers and senior management.

Cape's Directors believe that following completion of the acquisition agreements, the TCC Group will bring immediate benefits to both businesses. The TCC Group will provide a stable platform from which to develop Cape's existing Far East/ Pacific Rim businesses while significantly extending Cape's footprint in the region. The TCC Group's blasting, painting, insulation and access services are all key components of Cape's core disciplines. The TCC Group's established presence in Australia's booming resources sector offers Cape an opening into a huge new market. With this platform in place, Cape will not solely be reliant on making acquisitions in Australia but will also be able to achieve organic growth by competing on both price and quality of service.

We are also delighted to have secured the continuing involvement of the TCC Group's highly experienced senior management team and its skilled blue-collar workforce. Moreover, as part of its commitment to the region, Cape plans over the coming months to relocate its regional head office from Singapore to Perth, Western Australia. In the meantime, Cape will shortly complete on a lease of premises in the Darwin area from which to support offshore works on the North West Shelf and will continue to pursue other complementary acquisition opportunities and targets in Australia."

Terry Iannello, the TCC Group's Managing Director, said:

"The TCC Group is excited by the new phase of growth offered by our inclusion in the Cape group of companies. Cape's international strengths, coupled with the TCC Group's long expertise in the Australian market, will provide many additional benefits and services to our clients, as well as additional opportunities for our staff and management. We look forward to working together to provide even more high quality services to the energy, mining, oil and gas industries in Australia. We have also been impressed with the ease of the process and the negotiations with Cape and look forward to working together as Cape TCC."


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