LIVERPOOL stockbroker Panmure Gordon said it retained its “positive stance” on professional services group Mouchel, despite a warning over its 2009-2010 performance.
The group said in a trading update for the year to July 31 that, although results will be in line with management expectations, they will probably come in towards the lower end of the range.
They will also include a one-off charge of up to £15m associated with a cost-cutting drive that is expected to achieve up to £20m of savings.
A research note by Panmure Gordon analysts Andy Brown and Dymphna D’Costa said: “Comments that profits will be towards the bottom end of the range are not great, but the recent share price weakness appears to have already factored this in.”
And they added that the cost savings, plus a reduction in net debts, together with a solid order book and orders pipeline, meant they retained their positive stance on the company.
Mouchel provides a range of services, including functions such as traffic management and landscaping for Liverpool and Knowsley councils under its 2020 brand, through a regional network that includes offices in Liverpool, Knowsley and Ellesmere Port.
It said trading still remains challenging due to the uncertainty in many public sector markets, and it expects this to remain so until the Government’s much- awaited spending review due to be announced on October 20, and probably for several months after.
But it stressed that it can prosper from Government demands to reduce public sector spending by at least 25% over the next four years by assisting in helping to achieve spending reductions and improve efficiencies.
And it said, given its market leading positions in highways and meeting the outsourcing needs of local authorities, it expects to see an increase in opportunities throughout 2011 and beyond.
“Our existing portfolio of contracts and our strong established relationships mean that we are well-placed to capitalise on this trend,” the statement said.
During the year, the group managed to secure £650m of new contracts and its order book and bidding pipeline compare favourably with the previous year’s levels.
By July 31, the group had secured £1.8bn of orders and boasted a bidding pipeline of £2.2bn, which compared with £1.9bn and £2.2bn, respectively, for the same period last year.
The update said: “Our win rate for the year was once again at the top end of our target range of one-in-three, to two-in-five of all tenders by value.
“In addition, we are tracking a further £1.5bn of prospective tenders in the early stages of procurement.
“Accordingly, we remain confident in the long-term prospects of the group.”
