Mouchel gives rare cheer to investors

Outsourcing firm Mouchel said it was on track to meet expectations for its full year figures, cheering beleaguered investors.

Shares in the company have fallen over 90% in the last 12 months having been hit by government spending cuts, takeover speculation and underperformance in its businesses.

But the stock rose 4% today after the firm released a relatively upbeat trading update on the first four months of its financial year.

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Its banking arrangements gave the company adequate cash headroom, with net bank borrowings of £108m at the end of November down slightly on the same time last year, Mouchel said.

Its average 12 month rolling net debt improved from £114m at November 2010, to £107m at November 2011, the firm added.

The economic environment continued to put pressure on margins across its markets but Mouchel said it had continued to win contracts, while actions to "right-size" the business were well under way.

It plans to restructure the balance sheet of the group in the first half of 2012 and then return the firm to growth.

"Our expectations for the year to July 2012 remain unchanged and we expect the challenging market conditions of the last six months to continue for the foreseeable future," Mouchel said.

"Our immediate priorities are to reduce our cost base, manage our cash and restructure the balance sheet, whilst helping our clients to maintain the highest possible levels of service to their customers and end-users, so that we can return the business to growth in the medium term."