Mouchel Share Discussion Threads

[dealy] 30/11/2011 17:08

The only question is: what is this business worth to a competitor who can expand its portfolio, extract synergies etc? The £1.5 billion backlog might be worth more than the current £100m enterprise value if it was bolted on to a peer.

If the answer is £120m then the equity would be worth about £30m or double the current price. Margins always suffer if revenue falls 13% and you have fixed costs. But if you can hang in there until the upturn comes then margins are likely to recover quickly.

I am holding out for a 25p takeover in the next 3 months. After all, the renewal of covenant lighter financing facilities cannot be viewed as a negative.

[narindg] 30/11/2011 16:16

i will buy at 11p or better.. i think we may see that judging by today

[ccnp] 30/11/2011 12:19

but taken over by whom ?

positive cash flow will make a receivership and privately pre agreed nod, nod, wink, wink trade sale attractive to the BANKs

[dealy] 30/11/2011 09:42

the dividend issue should be pretty obvious. in this environment no companies should pay dividends because they will not get money later from banks if they need it.

The positive here is that the company will survive long enough to be taken over.

[pikey01] 30/11/2011 09:17

One headline I thought relevant to holders was the restriction on dividends (yes I know they need to turn a profit first ;-))

From the RNS:

"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."

My reading of that is the restriction applies until ALL borrowings repaid -which might be a while away...

[salpara111] 30/11/2011 08:57

Well,

I think holders would do well to have a look at what has happened at Costain.

They managed themselves into trouble about 5 years ago.

It has taken them 4 years to rebuild/refocus the business, get their finances in order and build slowly back up to their current 5% divi yield.

However look at their share price....it is at the same dire level it was at 4 years ago when it hit rock bottom.

I guess the question is....how long are you willing to hold in order to see a sustained rise in the sp?

I would imagine that it will bumble along the 10p line for the forseeable future now.

[narindg] 30/11/2011 08:53

i am sad because i was bitten before and just didnt want anybody else to get caught out..

[the_beagle] 30/11/2011 08:32

I was expecting you, you sad little man.

[narindg] 30/11/2011 08:24

i was warning about this yesterday..boy

[the_beagle] 30/11/2011 08:24

dealy...First of all they need to issue a few million options to the new BOD!

Seriously oversold imo and the professionals are shaking out the little men atm.

[dealy] 30/11/2011 08:14

I think the margin status is a function of the dire economy. If the economy recovers than margins will recover sharply. Consolidation can also improve margins. Main news is that the company can trade its way to a sale of the company.

[highly geared] 30/11/2011 08:05

The biggest issue is the dire net margins (which are here to stay) and falling revenues whilst servicing/paying down the debt. I don't think there's any problem re; going concern status and it should be around in 12 months but in terms of ability to generate operating profits, the best you're looking at is probably £15-20 million which at 5-6 x means the debt effectively cancels out any meaningful t/o value.

[crosswire] 30/11/2011 07:50

Banking facility update

Further to the trading statement made on 13 October 2011, Mouchel yesterday agreed amendments to the terms of our principal banking facilities which expire on 31 March 2014. The purpose of the amendments was to avoid a breach of the banking facilities which would otherwise have occurred upon publication of the 2011 Accounts.

[wallywoo] 30/11/2011 07:49

Think you are wrong, and this company would be in administration now if that was the case. Lots of work to do but all the bad news is in the share price already. My vote is the share price will have a volatile but ultimately a good day.

Most positive thing for me is that they are still generating cash (2.1M) despite such a bad year.

[paragon157] 30/11/2011 07:48

VOLVO

I'm not in these .. But your spot on how come those Mega Overpaid Clowns of Directors turned down 135p absolutely mind blowing isn't it just .. Although these days in this Mickey Mouse Manipulated Financial World absolutely nothing surprises me anymore .. Remember the SCHE fiasco .. Lmao at it all !

[highly geared] 30/11/2011 07:41

Yes, as I indicated yesterday, the issue is falling revenues and absolutely dire net margins (which will worsen unless a huge axe is taken to the cost base; if they can indeed make such cost savings).

[davius] 30/11/2011 07:23

RNS Number : 0330T
Mouchel Group plc
30 November 2011

Mouchel Group plc
Preliminary Results

For the year ended 31 July 2011

Financial headlines

2011 2010 % change
Revenue GBP551.4m GBP632.6m - 13%
Operating cash flow before
exceptional items GBP39.3m GBP70.3m - 44%
Underlying operating profit(1) GBP15.7m GBP41.2m - 62%
Profit before tax and exceptional
items GBP5.0m GBP30.5m - 84%
Loss before tax GBP(64.8m) GBP(14.7m) - 341%
Underlying operating margins 2.9% 6.5%
Adjusted earnings per share (0.5)p 18.9p -103%
Basic loss per share (61.7)p (12.1)p - 410%
Order book GBP1,425m GBP1,824m
Exceptional items before tax GBP(69.8)m GBP(45.2)m
Net bank borrowings GBP87.7m GBP83.4m + 5%

(1) Underlying operating profit, underlying operating margins and adjusted earnings per share exclude exceptional items (including the annual amortisation of intangible assets arising from business combinations)

(2) A full copy of the Annual Report and Accounts for the year ended 31 July 2011 is made available on Mouchel's website at www.mouchel.com

Business headlines

-- A disappointing year due to a range of factors including UK Government measures to tackle the budget deficit, disruption as a result of takeover speculation and underperformance of parts of the business.

-- New and strengthened management team with appointment of Grant Rumbles as Chief Executive and Rod Harris as Group Finance Director.

-- Pursued measures to reduce cost base and provide greater stability, including the disposal of Rail and Pipeline Design businesses.

-- Encouraging start in developing Australasia business in partnership with Downer, including success in three Western Australian highway maintenance contracts worth GBP138m to Mouchel over five years. Now pursuing opportunities on the East Coast of Australia.

-- Strategic wins during the year included:

-- a contract with the Highways Agency (HA), in joint venture with Thales, to run the National Traffic Information Service (NTIS), worth GBP28.5m to Mouchel over seven years;

-- a five-year extension to our BPO partnership with Middlesbrough Council worth around GBP70m to the Group; and

-- a new 10-year incremental partnership contract with Bournemouth Council worth GBP148m over 10 years.

-- Reduced, but strong, order book (GBP1.4bn at 31 July 2011).

-- Continuing pressure on turnover, margins and pipeline.

-- The Board's expectations for the current year, compared with 2011, are significantly reduced.

Banking facility update

Further to the trading statement made on 13 October 2011, Mouchel yesterday agreed amendments to the terms of our principal banking facilities which expire on 31 March 2014. The purpose of the amendments was to avoid a breach of the banking facilities which would otherwise have occurred upon publication of the 2011 Accounts.

-- Revised principal banking facilities with lending facilities in place until 31 March 2014. The amended credit facilities comprise:

o a GBP129m term loan;

o a GBP35m revolving credit facility; and

o an additional GBP16m revolving credit facility (the 'Top-up facility') in place until 28 February 2013.

-- Agreed covenant structure under which Mouchel is subject to a single covenant, measuring absolute EBITDA quarterly.

-- Lenders entitled to subscribe for 5% of Mouchel's issued share capital at nominal value subject to standard anti-dilution provisions, with an equity tracker fee payable upon a change of control that is the economic equivalent of 5% of issued share capital at that time.

-- Fees to range from GBP2.25m to GBP10.25m depending on timing of balance sheet restructuring or change of control, payable on the earlier of 31 January 2013 and the date of the relevant restructuring or change of control.

Grant Rumbles, Chief Executive of Mouchel commented:

"Our results have been disappointing. The economic downturn and government steps to reduce public spending have continued to influence Mouchel's results this year. The business has suffered from disruption as Mouchel was subject to takeover speculation and from refinancing anxieties which have influenced clients' decisions about awarding us work. Parts of our business have underperformed, notably Management Consulting and we have experienced difficulties delivering a large commission in the Middle East, which is now nearing completion. Against this backdrop, it has proved difficult to accurately forecast performance which has resulted in several revisions to our profit expectations. "I joined Mouchel as Chief Executive with the aim of putting this business back on a firm footing, so we can move forward with the confidence to deliver on behalf of all our stakeholders. I will be looking at the Group's business and strategy over the coming months and will focus on cash, our costs and our clients. I will be reviewing every aspect of our business, including the markets we operate in, our operating model and the management structure. I will be looking aggressively at our cost base and particularly at our supporting functions and central overheads. I know that we can do much better. "Mouchel has a strong underlying business with great staff who help to transform client organisations and to deliver excellent services to the public. We have a new management team and we will take firm and decisive action to meet the challenges we face. We will work closely with all stakeholders to reduce debt, restore stability and return the business to growth. "Whilst the outlook is challenging in the short term, I believe that Mouchel has strong underlying businesses that can deliver real and sustainable value to all stakeholders."

[crosswire] 30/11/2011 06:13

Mouchel Group, the consulting and business services group will release its preliminary results on Wednesday, 30 November 2011.

The short-term outlook for the Group continues to be very challenging and is heavily influenced by the steps the Coalition government is taking to rapidly bring down the deficit in public spending. Local government, which makes up more than two-thirds of its client base, has been particularly hard hit by the unexpected speed and depth of these cuts. The company's response to these conditions has been to focus on those items under its control, namely its client relationships, its cash position and cost base. The Group has successfully refinanced and right sized the company, and this process continues as it brings innovation to the way it delivers services and advice to clients. The Group does not however anticipates a significant improvement in trading conditions in the short-term.

The fundamentals of its business and the medium to long-term opportunities for the Group remain strong. With banking facilities in place to 2014 and with its leading market positions in local government outsourcing, public sector consulting, highways and water, the Group is well placed to work with organisations across the U.K. public sector and in selected overseas markets to improve the quality and efficiency of public services. In an environment where all of its clients are facing the challenge of delivering higher quality services more efficiently, its skills in transforming essential services and sustaining vital infrastructure will always be in demand.

Accordingly, the Group remains confident in the medium and long-term prospects for the company. Brewin Dolphin expects the Group to post its revenues of £560 million and £507 million for FY 2011 and FY 2012 respectively with EBITDA of £25.70 million and £29.50 million. Pre-tax profit (pre-except) for the periods are expected to be at £5.00 million and £7.00 million.

Profit per share for the periods are expected at 3.20 pence and 4.50 pence.

[crosswire] 29/11/2011 22:43

Elsewhere, shares in Topps Tiles rose ½ to 23½p despite a fall in sales, while Mouchel advanced 5½ to 17½p amid rumours it is close to securing a refinancing deal with its lenders.

[crosswire] 29/11/2011 16:57

Mouchel Group Plc. : Mouchel awarded managed motorways commission (28/11/2011)

28 November 2011

Infrastructure and business services group, Mouchel, has been awarded a commission to support the Highways Agency in the delivery of the next tranche of managed motorway schemes.

Mouchel's award followed a mini-tender competition through the Project Support Framework to which Mouchel was initially appointed in April 2011 and it was only one of two suppliers chosen by the Agency.

Mouchel will provide the Highways Agency with development, design and site assurance services on two schemes on the M1 motorway in Derbyshire/South Yorkshire; between Junctions 28 to 31 and 32 to 35a. Work will commence immediately to meet the Agency's delivery timetable for work to start on the M1 J32 to J35a in 2012-13, and on the M1 J28 to 31 in 2013-14 or 2014-15.

This award builds upon Mouchel's track record of providing controlled and managed motorways in the UK including the M25, M42 ATM Pilot and Birmingham Box Phases 1 and 2. Mouchel is also currently working on other managed motorway schemes outside this award including M3/M4 and Birmingham Box Phase 3 (M6 J5-8).

Commenting on the award, Jeremy Wray, Operating Group Director of Mouchel Consultancy Services and Commission Director for the Project Support Framework, said:

"We feel this award demonstrates Mouchel's unique expertise and experience in design and site assurance. The two schemes allocated to Mouchel are imperative to the delivery of managed motorway schemes and will require us to meet challenging timescales for solutions and delivery. It reinforces Mouchel's position at the forefront of developing and delivering these managed motorway schemes."

[the_beagle] 29/11/2011 14:25

At least the Autumn budget is positive for Mouchel as far as I can see, so good news for the future trading environment.

[salpara111] 29/11/2011 14:22

I am assuming that it is all the shorts unwinding before tomorrow causing the temporary spike.

[highly geared] 29/11/2011 12:32

MCHL a difficult one to call. In this market they'd do well to get taken out on 5-6x "normalised" earnings; ex debt. What are normalised when the sector is on its knees , work is shrinking and pricing is suicidal?

Based on say 3-5% net margin going forward and say a reduced t/o of say £500 million (may be difficult to sustain); then say £20 million normalised;
6x normalised gives you £120 million but remove debt of say £75 million and this gives you a business value of around £45 million. This implies a share price of 35-40p might do it.

Haven't looked at pension situation re ; deficit (?).

Clearly some upside on a short term basis but macro economy makes things very uncertain as the cuts start to bite but as the public sector contracts then more services could be outsourced albeit at silly fees.

Results will give clarity on what's been but going forward will be tough.