Mouchel purchase pays off in orders

Mouchel's acquisition of Parkman has resulted in merger costs of £6.4m. But the enlarged consultancy group has a record forward orderbook of £850m thanks to its success in winning larger contracts.
Outsiders might have called the merger costs high, but Stuart Black, business development director, said: "We knew what the transition costs would be before we agreed the deal."
Exceptional costs relating to the merger ran to £5.4m, a figure that contained £2.9m of legal costs, £1.1m redundancy costs and £700,000 for the write-off of goodwill on IT systems.
"Both groups had put IT systems in place prior to the merger, both with write-off periods of five years," Black said. "So when we picked one of the two, we had to write-off the costs of the other there and then." The result is that Progression software from Ramesys now runs across the whole group, with its competitor Cims missing out.
Mouchel Parkman's latest financial results (six months to 31 January) show a pre-tax loss of £260,000 (profit of £4m last year) on turnover of £130m (£96m). Without the exceptional charges, Mouchel would have made a profit of £6.1m.
The enlarged group now stands higher in the various pecking orders of consultancies. Black said: "We are number one in local government property and number two in highways, behind Atkins, and in water we are now in the top five."
Black said the latest financial results were "smack bang in the middle of expectations". He added: "We gave ourselves 12 months to do the merger and the chunky things are now all done."
Mouchel operates in eight market sectors, which can broadly be organised, by its own definition, into two groups: well established (highways, property, rail and water); and incubator (education, waste, gas and housing).
Mouchel's largest operating division is managed services, where turnover jumped by 33% and operating margin rose from 4.6% to 5.0%.
A 10-year (extendable to 20-year) bundled service contract for Liverpool City Council is up and running. It covers property, estates, highways and traffic engineering. The Amey Mouchel road maintenance contracts have generated increased volumes of work in Area 5 on the M25, while support work for Alcatel in TubeLines' signal upgrading is worth £50m over eight years.