After taking over Parkman, and taking Parkman Chief Executive Richard Cuthbert, Mouchel's share price has dropped, fuelled mainly by the reported costs of the merger. Preliminary results for the year to July will be published in October. for

However the merger costs are 'one-off's' and the new organisation is stronger (and claims it will make further acquistions). Is it ready for take-off in the run-up to the publication of accounts?

Just thinking the SP is almost low enough for the board to pop up with a MBO, and there goes one of them stuffing a few in his sky on the cheap .... more to follow?

I'm not sure what the mentality of the management is here. They seem the clear losers from the failed MCHL/IRV/COST love triangle - with IRV seemingly coming off best.

15 June 2011

Mouchel Group plc

Interim Management Statement

Mouchel Group plc ("Mouchel" or the "Group"), the consulting and business services group, today provides its Interim Management Statement covering the period to 14 June 2011, ahead of its year-end trading update which is expected to be issued at the beginning of August 2011.

Performance in the year to date

Mouchel holds leading positions in the UK highways and local authority outsourcing markets. We have a focussed strategy and great client relationships, and remain confident about the Group's medium and long-term prospects. However, conditions continue to be very challenging in these markets as the majority of our clients are undergoing budget cuts and internal restructuring.

Underlying trading is in line with our expectations. In addition, during the year we have negotiated commercial conclusions to a number of contracts, including our exit from certain activities. Some of these negotiations have led to higher costs or lower profitability than originally expected, although these have been offset by a significant one-off gain on one of our long-term contracts.

In Government and Business Services, our business process outsourcing (BPO) activities are in demand, with almost every local authority pursuing service transformation strategies, rather than simply cost savings and service cuts. An increasing number of councils are looking to private sector partnership and risk sharing. Whilst our work in the local authority property sector has been scaled back considerably as a result of the reductions in school building, refurbishment and maintenance expenditure, there is greater stability in our long-term contracts and service partnerships - these contracts are also our best source of growth, as a result of service expansion or extension.

In Management Consulting, the visibility of forward workload is poor and the market for our services continues to be depressed. Our strategy of working with our local authority partnership contracts to transform services however is providing benefits and these, together with our well-established, long-term contracts with the Departments of Health, have helped to sustain performance, though below our original expectations.

In Highways, our maintenance joint ventures in England and Scotland and now in Australia are performing strongly. However, our local authority contracts and technology work with the Highways Agency (HA) have all been adversely impacted by the significant spending cuts, especially in discretionary and capital works programmes.

In Regulated Industries, our workload with the water companies continues to increase as AMP5 capital programmes progress through feasibility and design stages. Our environment teams work closely with the highways business and have therefore been scaled back in line with the reductions in that market. In the Middle East performance is stable though the Abu Dhabi market remains slow.

Order book

The overall level of bidding activity has been lower than in previous periods and our ability to secure new orders was adversely impacted by the Offer Period which ran from December 2010 to April 2011. This means, as previously reported, that the Group's win rate in the current financial year will be below our target range.

However, we have been successful in securing nearly GBP200m of new contracts and extensions in the year to date. In the second half, the most notable of these has been the National Traffic Information Service (NTIS), in joint venture with Thales UK, for the HA. This seven year contract, initially worth GBP57m, is central to the HA's role of managing traffic and making the most efficient use of the existing strategic road network.

The Group's order book at the end of May stood at GBP1.5bn, compared with GBP1.9bn at the same time last year. Whilst lower than in the past, the order book provides excellent visibility of the Group's forward workload and we are making progress in rebuilding momentum.

The five year extension to our BPO partnership with Middlesbrough Council commenced on 1 June 2011, and is worth approximately GBP70m to the Group. The extension provides for significantly improved profitability and reduced risk compared with the first ten years of the contract.

Overseas, we have now signed, in joint venture with Downer, all three of our highways maintenance contracts with Main Roads Western Australia, with work having started on two and with the third now in the mobilisation phase. We will benefit from a full year's revenue of over GBP25m from these contracts in 2011/12. In the Middle East, we have won a number of highway design and infrastructure planning contracts in Saudi Arabia.

Pipeline

Our pipeline, which includes only tenders where we have been short-listed to bid together with contract extensions, currently stands at GBP2.0bn (as it was at the end of January and at this time last year). However, and as expected, the number of opportunities in our core markets is beginning to rise, following the very soft market conditions that we experienced through the much of 2010 and the first quarter on this year, exacerbated by the Offer Period.

Following its review by the Department of Transport, we have now moved into the final stages of the Sheffield PFI highways maintenance contract tender where we are, in joint venture with Carillion, one of two remaining bidders. If successful, this contract will be worth GBP2bn to the JV over 25 years. We are also bidding for highway maintenance contracts in Scotland and have recently been short-listed for the HA's Asset Support Contract (ASC) for Area 10 in the north-west of England.

We are already positioning for the significant number of UK local authority highways tenders which will come to market next year and our successful DownerMouchel JV is pursuing additional highway maintenance contract opportunities that will arise elsewhere in Australia in 2012.

Our pipeline of BPO opportunities is increasing significantly as a number of local authorities are now coming to market for "long and large" bundled service partnerships with the private sector. Given the scale of these opportunities, we are focussing only on those where we believe that we have competitive advantage. We have half a dozen live prospects, with the same number in the early stages of procurement.

In addition, we are working with all of our existing BPO partners in order to help them transform services, increase efficiency and service quality and bring down costs. We expect our contracts in Bournemouth, Lincolnshire, Rochdale and Oldham to expand in 2011/12.

In total we are currently tracking prospects worth GBP1.6bn which lie outside of our bidding pipeline.

Costs and cash

The actions taken in the first half to reduce staff numbers and offices have proved successful, with significant reductions in our cost base. We continue to take opportunities to improve our efficiency and delivery, particularly through the creation of fewer larger centres of excellence and smaller offices offering local client services. Our new shared service centre has opened in Oldham and this is expected to bring further benefits to our operational efficiency and cost base.

Net bank borrowings at the end of May were GBP109m, compared with GBP97m at the half year. The average for the four months to the end of May was GBP109m, compared with GBP111m in the first half of the current financial year.

Under the terms of our bank refinancing, we have total facilities of GBP170m extending to 31 March 2014. We are executing our debt reduction plan which leads to a voluntary repayment of GBP30m by the end of May 2012, principally through improvements in working capital and non-core disposals.

Outlook

The short-term outlook for the Group continues to be very challenging and is heavily influenced by the steps the Coalition government is taking to rapidly bring down the deficit in public spending. Local government, which makes up more than two-thirds of our client base, has been particularly hard hit by the unexpected speed and depth of these cuts. Our response to these conditions has been to focus on those items under our control, namely our client relationships, our cash position and our cost base. We have successfully refinanced and right sized the Group, and this process continues as we bring innovation to the way we deliver services and advice to clients. We do not however anticipate a significant improvement in trading conditions in the short-term.

The fundamentals of our business and the medium to long-term opportunities for the Group remain strong. With banking facilities in place to 2014 and with our leading market positions in local government outsourcing, public sector consulting, highways and water, we are well placed to work with organisations across the UK public sector - and in selected overseas markets - to improve the quality and efficiency of public services. In an environment where all of our clients are facing the challenge of delivering higher quality services more efficiently, our skills in transforming essential services and sustaining vital infrastructure will always be in demand.

Accordingly, we remain confident in the medium and long-term prospects for the Group.

Directorate Change.

Mouchel Group plc ("Mouchel" or the "Group"), the consulting and business services group, today announces that Rod Harris has been appointed to succeed David Tilston as Group Finance Director.

The pain continues - Out of extended auction down 12.4%.

Trading Update

Further to the pre-close trading update on 4 August 2011, Mouchel Group plc ('the Group') provides a further trading update today, ahead of the announcement of its Preliminary Results.
In the Interim Management Statement on 15 June 2011, the Group reported that it expected a significant one-off profit on one of its long-term contracts to offset lower profitability than originally expected following commercial conclusions on a number of contracts.

The Group was very recently informed that, as a result of an actuarial error, the one-off gain will be 4.3m lower than previously expected which has an immediate and corresponding impact on the profits the Group will report for the year to 31 July 2011.

In addition, as part of the year-end audit process, Rod Harris, the new Finance Director, has reviewed contract risks and project claims, taking into account the continuing challenging business environment. As a result, the Group has decided to increase provisions in respect of these contract risks and project claims by a similar amount to the reduction in the one-off gain.

The reduction in the one-off gain and the increase in provisions relate to non-recurring and non-cash items.

Richard Cuthbert, Chief Executive, has tendered his resignation with immediate effect, and he will work with the Group for a short period to ensure an orderly handover. Bo Lerenius will become executive Chairman until a new Chief Executive has been appointed. The Board will make a further announcement as appropriate.

Bo Lerenius said: "I would like to express the Board's gratitude to Rich for his many years of service and his continuing belief in and commitment to the business. The Board will focus on maintaining Mouchel's position in its core markets in the interests of all its stakeholders."

Extended auction - hardly surprising.

Down 43%

Ouch.

Back in auction down 46%.

Hard to imagine they were 250p a year and a half ago.

Have a read of my post 42.

Is it a coincidence that the "expected significant one-off profit" arose about the time of the bidding war.

2.50 !!! Don't look at the 5 year chart :-)

Would like to be smiling (gloating) at recent events, but hard to do so when I still have friends working there from the engineering companies the board and it's cronies have destroyed ...... what happened to companies that were happy to make a profit from hard work rather than BS and excuses?

I may buy around the 4p level unless they go bust before hand.

This is a joke price.

Its goodnight from me and .....

goodnight from him.

Board Changes and Update.

Looks like the next Jarvis imo.