Mouchel’s outlook remains promising

12 December 2008, 10:48am

Mouchel, the consulting and business services group, has reported that performance remained in line with its expectations in an Interim Statement published today.

The group’s prospects are underpinned by an exceptionally strong order book and a healthy bidding pipeline which provide excellent visibility of future earnings. They currently stand at £2.1 billion and £2.0 billion respectively, compared with an order book of £2.1 billion and a bidding pipeline of £2.2 billion at the last year-end.

Its strategy to secure long-term managed service and outsourcing contracts, mainly with clients in the UK public sector and industries regulated by government, means Mouchel continues to be less affected by the recent economic conditions in the UK and elsewhere.

Mouchel is working in markets that generally still present it with opportunities and have very little exposure to the UK commercial property market. The group also continues to monitor prospects to further develop and grow the business as and when they arise, for example in sectors such as IT, energy, education and social care.

Prospects for Mouchel’s highways business are good as its strategy has progressively moved away from design of new infrastructure, to maintenance of existing assets and to the application of technology to optimise highway capacity.

One of the Highways Agency’s (HA’s) key programmes, ‘Managed Motorways’, includes the Active Traffic Management (ATM) or hard shoulder running activities, an area where Mouchel has played a pioneering role on the introduction of ATM on the M42; it is also currently engaged in the introduction of the next phase of ATM on other parts of the Birmingham ‘motorway box’. Other technology-related opportunities include the TechMAC contracts, where Mouchel is awaiting the outcome of tenders for the West Midlands and North East areas.

Mouchel successfully commissioned the HA Area 3 contract, the second largest HA vertically integrated management contract in the country. The group is still in contention for Area 12, but it is more hopeful of securing one of either Area 13 – where it is the current incumbent with Amey - or Area 14. Mouchel, with Enterprise, is also pursuing vertically integrated maintenance contracts with local authorities. Its parking management contract in Hillingdon is also progressing well.

Within Mouchel’s Government Services business, the integration of Hedra and HBS is now complete. The business transformation and change management skills secured through the acquisition of Hedra are now being used to good effect, already resulting in a number of commissions to support major cost reduction and transformation programmes in the company’s partnerships with Lincolnshire, Middlesbrough and Oldham councils.

The Management Consulting business within Government Services has also secured several new commissions with other egovernment clients including specification of knowledge management requirements for the Abu Dhabi government, organisational design for the UK Skills Funding Agency, a review of operational and service improvement opportunities for Thames Water, procurement advice for the National Police Improvement Agency and further project management support on the National Healthy Schools programme.

Mouchel is also close to securing a further four-year extension with Lincolnshire County Council and is in discussions with Middlesbrough Borough Council for a five-year extension also from 2011. The group has also now reached financial close on the Hackney BSF contract with partner Babcock.

The market place for Mouchel’s services in Regulated Industries remains largely buoyant. Mouchel has won and successfully commissioned the leakage detection commission for all eight zones in Thames Water’s North East and North West areas. The contract is expected to run until 2010, with a potential five-year extension.

Rail has benefited during the period from the award last year of the professional services framework and property help desk contracts with Network Rail. Mouchel is still working on the Colchester to Clacton resignalling support contract for Network Rail. However, progress remains slow, reinforcing the decision to reposition the overall rail business towards design, asset management and programme management activities.

Mouchel’s international operations form a relatively small proportion of its total activities and, apart from Ireland, are focused on the UAE and Kuwait. In the UAE, Mouchel has continued to work on major infrastructure design projects and developments, particularly in Dubai. This is a rapidly changing environment and Mouchel has recently seen some scaling back in activity there, particularly in the Dubai Waterfront development. It is increasing its activities in Abu Dhabi where the current economic difficulties are expected to have less of an impact.

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