Preliminary Results -4-
November 30 2011 - 2:01AM
UK Regulatory
The Group operates three main defined benefit schemes; namely,
the Mouchel Superannuation Fund, the Mouchel Staff Pension Fund and
the Mouchel Business Services Ltd Pension Scheme. All remaining
employees, who contribute to a pension, are members of the Group's
defined contribution scheme.
Mouchel has admitted body status for a number of schemes. During
the year, for one of these schemes the pension deficit risk was
passed back to the customer following a renegotiated contract on 1
June 2011, leading to a curtailment gain.
We account for all of our defined benefit schemes under
International Accounting standard (IAS) 19 Employee Benefits. The
Government's decision to move to using the Consumer Price Index
(CPI) rather than the Retail Price Index (RPI) as the inflation
measure to determine the minimum pension increases to be applied to
public sector schemes has had a significant impact on the scheme
itself. A GBP7.7m gain as a result of this change has been
accounted for within other Comprehensive Income.
The IAS 19 charge for the year was GBP1.8m compared with GBP6.5m
last year. The decrease was mainly attributable to a GBP2.2m
reduction in current service cost, which includes the benefit from
the closure of the Group's schemes to future accrual with affect
from January 2011; GBP0.9m improvement in the finance income; and
GBP1.9m curtailment gain on third-party schemes (Teesside Pension
scheme), which has been included within exceptional items.
At 31 July 2011, the total deficit under IAS 19 was GBP32.8m
compared with GBP53m at 31 July 2010. The movement in the deficit
compared with a year ago reflects the credit of GBP7.7m resulting
from the change from RPI to CPI, actuarial gains in the intervening
period and contributions made by the Group of GBP11.6m.
(Loss)/earnings per share
Adjusted earnings per share decreased from 18.9p to (0.5)p.
Adjusted earnings per share is calculated after adding back shares
held by the employee trusts to the weighted average number of
shares. Earnings are adjusted to exclude amortisation of intangible
assets arising from business combinations, impairments of
intangible assets arising from business combinations and other
exceptional items (net of taxation). Basic loss per share increased
from 12.1p to 61.7p.
Dividends
The Group does not plan to pay a dividend in relation to the
year ended 31 July 2011 (2010: 2.25p). Following the revision of
the Group's banking facilities on 30 November 2011, the Board is
now unable to pay dividends until the banking facilities have been
repaid in full.
Order book and Pipeline
The Group's order book stood at GBP1.4bn at 31 July 2011
(excluding the rail and pipeline design businesses), compared with
GBP1.8bn the previous year. This drop in part reflects our reduced
ability to secure new orders from December 2010 to April 2011, when
we were subject to a number of approaches from companies wishing to
acquire Mouchel. The 'offer period' proved to be a disruption to
our staff and to our clients. Uncertainty over the Group's finances
has caused additional difficulties. Despite the reduction in
bidding activity during the 'offer period', the order book provides
good visibility of the Group's forward workload. We have secured
nearly GBP220m of new contracts and extensions during the year.
Our pipeline, which includes only tenders where we have been
shortlisted to bid, together with contract extensions, stood at
GBP2.2bn at 31 July 2011 (not including the rail and pipeline
design businesses) (2010: GBP2.2bn). However, our pipeline is under
pressure due to the difficulty in securing new large local
government contracts in our current financial position.
Nevertheless, we are still winning substantial business from our
existing clients and seeing the number of opportunities in our core
markets beginning to rise. In the wake of the 2010 CSR, a number of
local authorities are now coming to market for 'long and large'
bundled service partnerships with the private sector. Given the
scale of these opportunities, we are focusing only on those where
we believe that we have competitive advantage.
Following its review by the Department for Transport, we have
now moved into the final stages of the Sheffield PFI highways
maintenance contract tender, where we are, working with Carillion,
one of two remaining bidders. We are also bidding for highway
maintenance contracts in Scotland and recently have been
shortlisted for the HA's Asset Support Contract for Area 10 in the
North West of England. We are currently tracking additional
prospects worth GBP1bn (which fall outside our bidding pipeline as
shortlists of suppliers have not been drawn up).
Outlook
The outlook for Mouchel is challenging in the short term. Our
revenue is likely to be under continuing pressure as a result of
uncertainty last year arising from our financial position and
takeover speculation, which is adversely affecting our ability to
win new business. The economic environment is also putting pressure
on margins across our markets as clients continue to face cutbacks
in spending. As a result, there is further action we need to take
both to invest in the business and to address the Group's cost
base. Our new lending facilities give Mouchel the necessary
stability we need whilst we restructure our balance sheet in the
first half of 2012 but the facility also has associated costs. As a
result of the above, the Board's expectations for the outcome for
the current year, compared with 2011, are significantly
reduced.
The Board has appointed a new management team, who are taking
firm and decisive action to meet the challenges we face. This team
will work closely with all stakeholders to reduce debt, to restore
stability and return the business to growth in the medium term.
On behalf of the board
Grant Rumbles, Chief Executive
Rod Harris, Group Finance Director
Consolidated Income Statement (audited)
for the year ended 31 July 2011
Results
Exceptional before Exceptional
Results
before
exceptional exceptional
items items(1) Total items items(1) Total
2011 2011 2011 2010 2010 2010
Notes GBPm GBPm GBPm GBPm GBPm GBPm
=========================== ===== ============ ============ ======= ============ =========== =======
Revenue 2 539.6 11.8 551.4 632.6 - 632.6
Cost of sales (443.4) (14.3) (457.7) (522.2) - (522.2)
--------------------------- ----- ------------ ------------ ------- ------------ ----------- -------
Gross profit 96.2 (2.5) 93.7 110.4 - 110.4
Administrative expenses (80.5) (60.1) (140.6) (69.2) (45.2) (114.4)
--------------------------- ----- ------------ ------------ ------- ------------ ----------- -------
Operating profit/(loss) 2 15.7 (62.6) (46.9) 41.2 (45.2) (4.0)
Finance income 4 1.1 - 1.1 0.2 - 0.2
Finance costs 4 (11.8) (7.2) (19.0) (10.9) - (10.9)
--------------------------- ----- ------------ ------------ ------- ------------ ----------- -------
Profit/(loss) before tax 5.0 (69.8) (64.8) 30.5 (45.2) (14.7)
Taxation 6 (5.6) 1.8 (3.8) (9.3) 10.5 1.2
=========================== ===== ============ ============ ======= ============ =========== =======
(Loss)/profit for the year (0.6) (68.0) (68.6) 21.2 (34.7) (13.5)
=========================== ===== ============ ============ ======= ============ =========== =======
Basic and diluted loss per
share 8 (61.7)p (12.1)p
=========================== ===== ============ ============ ======= ============ =========== =======
Consolidated Statement of Comprehensive Income (audited)
for the year ended 31 July 2011
2011 2011 2010 2010
Notes GBPm GBPm GBPm GBPm
====================================================== ===== ===== ====== ===== ======
Loss for the year (68.6) (13.5)
====================================================== ===== ===== ====== ===== ======
Differences on exchange (0.5) 1.0
Changes in fair value of cash flow hedges (interest
rate swaps):
- gains recognised in equity (1.4) (7.2)
- gains removed from equity and recognised in
the Consolidated Income Statement in the year. 4 3.6 3.9
===== =====
2.2 (3.3)
Actuarial gain/(loss) on pension scheme valuations 16 10.5 (0.7)
Deferred tax on actuarial movement in pension
scheme valuations 9,16 (2.6) 0.2
====================================================== ===== ===== ====== ===== ======
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