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Mouchel downplays talk of takeover

Mouchel chief executive Richard Cuthbert moved swiftly this week to downplay analysts’ fears that the company was ripe for takeover following revelation of worse than expected losses last week.

On Thursday the firm revealed in its interim management statement that it has been forced to write off around £30M in earnings in the Middle East, has lost out in Network Rail’s re-tendering of its bridge contracts and is suffering from a general softening in the management consultancy market.

City analysts immediately said the firm was at risk of being broken up and sold off.

Cuthbert told NCE however that the reaction was “overdone” although he added “we would say that.”

“We are disappointed that we disappointed,” he said. “It was a bad day last Thursday but not the end of the world.

“Our core business is still strong. We’re a good business but now we are a bit cheaper. I’m disappointed about talks about acquisition.”

Richard Cuthbert, Mouchel

“We think we have a great future. We have an order book close to £2bn, we are profitable and we have good banking facilities. And we believe our opportunities are heightened by the recession especially in local government as it seeks to cut costs.”

Cuthbert said Mouchel’s success since flotation seven years ago was part of the problem last week. “In seven years we have never disappointed and people see Mouchel as a safe, defensive stock because of the visibility of earnings and our long term contracts. People have been shocked.”

He said the company had been flagging its difficulties in rail for two or three years, and was caught out in Dubai “like a lot of others.”

The company’s share price, which had drifted to £2.30 from £3 in March and £4.70 in October, slumped to £1.50 on publication of the interim statement. It had rallied a little to £1.57 when NCE went to press.

“Our core business is still strong,” Cuthbert maintained. “We’re a good business but now we are a bit cheaper. I’m disappointed about talks about acquisition but that’s the market.”

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