Unchanged expectations could be considered a positive where Mouchel Group is concerned given the awful time it had last year (see Mouchel’s ‘annus horribilis’) but the underlying situation is still grim.
In its interim trading statement from the start of the financial year (August 1 2011) to date, the company said it was winning contracts and continuing it actions to pull the outfit in shape (see Mouchel appoints ‘turnaround specialist as chairman). Despite new contract wins (totalling £79m since July 2011) and expansions and extensions to existing contracts, its pipeline had shrunk from £2.2bn to £1.6bn by the end of November 2011. This was mainly because of its failure to be selected by West Sussex Council to provide outsourced services. This aspect of the pipeline was valued at approximately £400m. It is also in discussions with Rochdale Council to agree an exit from their partnership. If this is agreed the order book will decrease by c£130m but with negligible impact to operating profit and cash.
Turnaround specialist David Shearer was only appointed as chairman earlier this month so it is too soon to see any effect but the interim statement underlines the size of the task he faces.