Highways contractor says it is facing “very challenging” market conditions

Mouchel’s order book has been hit by Costain and Interserve’s efforts to takeover the firm, it admitted today.

The highways maintenance contractor saw its order book fall to £1.5bn from £1.9bn last year, Mouchel confirmed in a trading statement to the City today.

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The firm said: “The overall level of bidding activity has been lower than in previous periods and our ability to secure new orders was adversely impacted by the Offer Period which ran from December 2010 to April 2011.”

The firm reported falls in local authority work but said highways maintenance had held up.

Mouchel is down to a shortlist of two in a joint venture with Carillion for the Sheffield PFI highways maintenance contract which could be worth £2bn over 25 years.

Overseas, the firm said it has signed contracts worth over £25m with Main Roads Western Australia and has won a series of highway design and infrastructure planning contracts in Saudi Arabia.

Despite “very challenging” trading conditions the firm said the “number of opportunities in our core markets is beginning to rise.”

Mouchel added: “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 our client base, has been particularly hard hit by the unexpected speed and depth of these cuts.

“Our response to these conditions has been to focus on those items under our control, namely our client relationships, our cash position and our cost base.

“We have successfully refinanced and right sized the Group, and this process continues as we bring innovation to the way we deliver services and advice to clients.

“We do not however anticipate a significant improvement in trading conditions in the short-term.”

The firm also announced the appointment of a new finance director.

Rod Harris – previously finance director of Carillion Business Services for seven years – will succeed David Tilston, who joined last September to oversee new banking facilities for the group.

Mouchel said in a statement: “ David joined the board in September last year with a very clear priority to renegotiate Mouchel’s banking facilities and to strengthen the group’s financial management and operations.

“New facilities were agreed in January, well ahead of the original timetable and David has materially enhanced Mouchel’s operations and organisation since his appointment.

“Accordingly, the board and David have been discussing succession plans to see the group through to the next level of its development and have decided that this is an appropriate time to implement those arrangements.”