Posted on October - 26 - 2010
Annual sales fall and losses deepen at Mouchel
MOUCHEL, the professional services provider, saw annual losses deepen and revenues fall in the year to July 31.
Pre-tax losses widened by 9%, from £13.5m to £14.7m as sales slumped 15% from £740.6m to £632.6m.
The group, which has three Liverpool offices, a Knowsley base and an Ellesmere Port presence, blamed the collapse of work in the Middle East, its withdrawal from rail re-signalling work and a temporary drop in workload in the water business linked to the new five year spending review by industry watchdog Ofwat.
Uncertainty over Government spending has also taken its toll on the group’s performance.
It said today that demand remained relatively strong in the early part of the financial year, but since the end of this March, and in particular since the change of Government in May, there has been “an extensive reassessment of spending priorities” which has led to the postponement or reduction in scale of a range of programmes, particularly small-scale highway improvement schemes and school building projects.
In a bid to cut costs the group reduced its workforce by 8% to 10,210 by the end of July and a further 4% to date, including fears for jobs at its Cunard Building office in Liverpool where about 100 staff provide administrative and IT functions and up to 70 engineers are based.
LDP Business revealed this week that Mouchel is considering relocating the back office roles, with Oldham and Lincoln a possible destination.
The company said no decision has been made yet, but staff expect an announcement within the next week or two, with one worker saying the situation is causing “stress and worry” among the workforce.
Also linked to the restructuring is a refinancing of the group’s banking facilities.
It said lending banks are “supportive” but warned that, due to current market conditions, the cost of refinancing will be higher than current levels.
However, Mouchel believes pressure on the public sector to rein in costs after the coalition Government’s spending cuts will provide opportunities for more input from the private sector.
It said during the year it has strengthened its partnerships with a range of local authorities, including Liverpool and Knowsley through its 2020 brand, to offer services from traffic management to landscaping.
By the end of July the group’s forward order book was £1.8bn, compared with £1.9bn last year, while its bidding pipeline of near-term opportunities remained at the same level of £2.2bn.
Chief executive Richard Cuthbert said: “Trading in the current year has started more slowly than expected and the immediate outlook remains uncertain.
“While we expect to see some improvement in the second half of 2010/2011 as cost savings impact, in these circumstances it is right that the group takes a more cautious approach to performance through 2011 and perhaps beyond.”
But he went on to say that the coalition Government’s policies and the group’s business strategy gives the board confidence for the medium- and long-term prospects.
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