Mouchel shares slump 30 per cent after heavy losses

The embattled outsourcing company Mouchel saw its shares slump 30 per cent 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 company 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.

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 31 July. Its shares, which were trading above 260p at the start of the year, fell 30 per cent to end at 88p last night.

The company hopes the Coalition Government's Comprehensive Spending Review, revealed last week, will spark demand for outsourcing businesses. It said it hoped to expand in new areas such as the health sector and police and educational centres, in an attempt to revive trade.

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

Its chief executive, Richard Cuthbert, said: "Mouchel believes that pressure on the public sector to reduce costs will lead to greater demand for private sector support."

The group said it had an order book of £1.8bn, and was bidding for a further £2.2bn of business.