Cape warns of increased risks from asbestos litigation claims

Although its full year results are likely to beat market expectations, shares in Cape have fallen to their lowest in seven and a half years as the industrial services group warned of "increased risk" of adverse impact from industrial disease litigation claims over its old asbestos factory.

The company, which in 2006 set up a scheme to pay out compensation to workers who have suffered from asbestos related diseases connected with its asbestos factory in Barking, said it remained confident that the merits of its legal defence were persuasive and that no new financial provision was currently required.

But ahead of a six-week trial that is due to begin in January where the group has received a number of product liability claims from insurers, Cape's legal counsel has now reviewed detailed evidence and expert witness statements and provided updated advice to the board.

Due to the "emerging complexity" of the litigation, directors believes "that there is an increased risk that the litigation could have an adverse impact on the Cape scheme, and in turn upon the Cape group of companies".

Cape feels it cannot yet make an accurate estimate of its potential liability in respect of the insurer public liability claims and from any potential further claims.

"It is possible that a number of issues may be subject to appeal which would lead to an extended period of uncertainty for the Cape scheme and the group."