Consultant Mouchel made a loss of £14.7M after tax and saw a 15% drop in revenue, according to its preliminary results published today.
The firm, which provides technical and management support to local authorities, government departments and agencies and in the rail and utilities sectors also racked up £45.2M in exceptional items over the financial year to 31 July.
While £22.5M of this was attributed to restructuring costs - Mouchel has cut staff numbers by 20% since January 2009 - £15.2M was put against long-standing debts from its Middle East business.
Chief executive Richard Cuthbert acknowledged that 2009/10 had been a difficult and challenging year as a result of the fiscal pressures facing the public sector, Mouchel’s principal source of income.
“Mouchel has faced some challenges in recent times. We have taken the tough decisions needed to ensure that we are operating appropriately in the current business environment and that we can maximise the benefits of a return to growth. Trading in the current year has started more slowly than expected and the immediate outlook remains uncertain and, while we expect to see some improvement in the second half of 2010/11 as cost savings impact, in these circumstances it is right that the Group takes a more cautious approach to performance in the coming year. However, the Coalition Government’s policies together with our focused business strategy, our reliance on long-term contracts and our leading role in transforming essential services and in sustaining vital infrastructure all give us confidence in the medium- and long-term prospects for the Group.”
Cuthbert added that he was optimistic that the medium-term prospects for the group were good, given the general trend towards wider public service outsourcing as a means of improving efficiency and value for money in this area.
He explained that the firm, which employed around 10,200 staff at the year-end, had needed to take some tough decisions to re-structure the business in a way that offered greater competitiveness in what will continue to be a demanding market environment. The result has been a full-year saving in future operating costs of £25M.
“These results reflect not just the difficult business environment but also the bold steps we have taken to adapt to the changing needs of our core markets and to set the company on the right course for the future” said Cuthbert. “Our order book and bidding pipeline, which each stands at around £2b, remain strong and this, together with statements made in the government’s Comprehensive Spending Review earlier this month, gives us every reason to remain cautiously optimistic about future prospects.
“We have had some spectacular successes this year too, of course, having secured long-term maintenance and management work on Highways Agency networks in the North West (Area 13) and the South West (Area 1) and by breaking into the highways management market in Western Australia with landmark wins in joint venture with our Australian contracting partner, Downer. And we have recently been appointed as preferred bidder for the Bournemouth Council integrated services partnership. At the same time our water business is beginning to benefit from the new AMP cycle of spending and we have re-shaped our management consulting business to align with current market conditions but also to capitalise on the growing demand for business transformation support.”
Mouchel – which recently appointed David Tilston as Group Finance Director to replace Kevin Young, who resigned in August – has also announced the appointment of three new Non-Executive Directors today. Richard Rae, Seamus Keating and David Sugden will all join the firm during the coming months.