Work slumps at Mouchel as bidding war hits order book

Grant Prior 11 years ago

Failed bids by Costain and Interserve to takeover Mouchel have hit the consultant’s ability to win new work.

The contracting giants both tried to buy Mouchel earlier this year but were rebuffed by the consultant’s board who believed offers of £175m undervalued the firm.

Mouchel confirmed in a gloomy trading statement to the City today that the takeover battle had hampered its ability to win new work leading to a fall in the order book to £1.5bn from £1.9bn last year.

The firm said: “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.”

Local authority work has been hit hard by spending cuts in the education and road building sectors but highways maintenance work is holding up.

Mouchel is down to a shortlist of two in a joint venture with Carillion for the Sheffield PFI highways maintenance contract which could be worth £2bn over 25 years.

Mouchel said: “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.

“We do not anticipate a significant improvement in trading conditions in the short-term.”

Mouchel has cut 1,000 staff during the last year as it closed more than 14 offices.

A new finance director was also unveiled by the firm today as Rod Harris succeeded David Tilston who joined last September to oversee new banking facilities for the group.

Harris was previously finance director of Carillion Business Services for seven years.

A Mouchel statement said: ” David joined the board in September last year with a very clear priority to renegotiate Mouchel’s banking facilities and to strengthen the group’s financial management and operations.

“New facilities were agreed in January, well ahead of the original timetable and David has materially enhanced Mouchel’s operations and organisation since his appointment.

“Accordingly, the board and David have been discussing succession plans to see the group through to the next level of its development and have decided that this is an appropriate time to implement those arrangements.”

Richard Cuthbert, chief executive, added: “The Board is very grateful for David’s contribution and we wish him every success with his next assignment.

“I’m delighted that Rod has accepted this role. He knows Mouchel well and has already made a significant contribution to the business. I’m confident he will play a leading role as we continue to shape the business for the future.”

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