Embattled Mouchel slumps as cuts bite

Embattled outsourcing firm Mouchel saw its shares slump yesterday after it scrapped its dividend and reported a sizeable full-year loss.

Mouchel, which develops infrastructure for councils and Government agencies, experienced a drop in demand after the change of Government in May, as departments reined in spending and postponed or scaled-down projects.

In response, the firm rolled out a restructuring programme, taking the number of job cuts since 2009 to 2,000 and creating a larger-than-expected one-off cost of 45.2m.

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Mouchel decided not to pay its final dividend after posting a pre-tax loss after exceptional costs of 14.7m and a 15 per cent drop in revenues to 632.6m in the year to July 31. Shares fell 26 per cent.

The company hopes the coalition Government's comprehensive spending review, revealed last week, will spark demand for outsourcing businesses.

It said it would look to expand in new areas such as the health sector, police and educational centres in a bid to revive trade.

The group, which also offers consultancy services, said it would look to selectively grow business with central Government and take on some of "the more established players".

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It recently partnered with training firm A4E on a Department for Work and Pensions project.

Mouchel's clients include Government agencies and councils across the UK, including Milton Keynes, Middlesbrough and Bath & North East Somerset.