More jobs are to go at consulting and business services group Mouchel in an effort to cut costs.

The company, which currently employs 11,100 people, has admitted that the crackdown on public sector spending has had an adverse impact on business. Group finance director Kevin Young is leaving the company, with a company source saying other top executives would also be going.

In its Interim Management Statement covering the period to 15 June 2010 issued on Wednesday, the company said:

“The Group's prospects continue to be underpinned by a strong order book and bidding pipeline, which at 31 May 2010 stood at £1.9 billion and £2.0 billion respectively, compared with £2.0 billion and £2.3 billion respectively at the half year.

There is in addition currently a further £1.5 billion of prospective tenders outside the pipeline which we are tracking.

It is because of this backdrop, together with our overall market position, that we remain confident in the long-term prospects for the Group.”

Mouchel is currently suing Westminster Council over the £50 million contract it won in February which was rescinded in favour of the existing incumbent NSL. Mouchel has now officially told its investors that it will not  benefit from the initial contribution to profit towards the end of the year from the Westminster parking management contract.

The company said that until the start of the new fiscal year, and in many cases right up to the outcome of the general election in mid-May, it had continued to experience relatively strong demand across most areas of the business.

However, as a result of the measures taken by the new government to address the budget the Group's services have been adversely affected by the deficit and by the similar actions of some local authority clients. The timing and the impact of these measures had been particularly noticeable in the more discretionary areas of expenditure, for example in highways scheme workload and in schools capital programmes.

However, Mouchel said that its reliance on long-term contracts and relationships, focused on the delivery of essential services and the maintenance of vital infrastructure, meant that core business was being sustained and it  remained confident about medium and long-term prospects.

Mouchel said that in addition to the steps it had taken to reduce the Group's cost base in recent months, it had now also embarked on a further and more comprehensive exercise to take cost out of the business in the immediate short-term. The company has decided not to proceed with any other asset sales, including its utilities division.  Mouchel said it was at the low point of the regulatory cycle and had positioned the water business well for the future under new management and as a result of significant successes in the AMP5 bidding round.

Slow start to AMP5 contracts

The company has already secured a significant number of commissions under AMP5, including long-term contracts with the Thames, Severn Trent, Wessex, South West, Yorkshire and Scottish Water companies. The most significant success during the period was the reappointment by United Utilities of the KMI+ joint venture, in partnership with Kier Construction, Murphy Group and Interserve Project Services, for a further five-year period.

However, although Mouchel expects to secure further appointments, the start of many contracts had been slower than anticipated. The company said the volume of work would be “more back-end loaded” than in previous regulatory periods, particularly in the light of the current economic environment.

Apart from AMP5-related contracts, Mouchel is still continuing to bid a number of opportunities, the most significant of which is in support of Siemens for the Thames Water outsourced meter reading commission where a decision is now expected in August.