Support services group Mouchel is facing a sisyphean task of managing its debt pile while margins are squeezed and customers look elsewhere. Chief executive Grant Rumbles said: "We are evaluating all options for restructuring our balance sheet. These options include a significantly dilutive equity raise. The restructure is expected to be completed by the end of the 2012 financial year."
Revenues were flat on the prior period, but adjusted pre-tax profit slumped from £4.1m, to a loss of £6.3m. Net debt stood at £104.1m on 31 January, up £7.2m on 12 months earlier as tighter margins squeezed profitability. Mr Rumbles said the balance sheet position was making it difficult to win new business, the order book was down from £1.6bn, to £1.16bn and the bid pipeline was down from £2.0bn, to £1.51bn.
Mouchel is taking steps to reorganise and Mr Rumbles was confident that £18m in cost savings would return the group to profitability, but he would not say how much money Mouchel was looking to raise from any potential equity issuance. Broker Liberum Capital forecasts an adjusted pre-tax loss of £10.1m, giving negative EPS of 6.3p (from £5m and a loss per share of 0.5p in 2011)
MOUCHEL (MCHL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 7.8p | MARKET VALUE: | £9m | |
| TOUCH: | 7.7-7.9p | 12-MONTH HIGH: | 96p | LOW: 4.4p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | * | NET DEBT: | £104m | |
| Half-year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 270 | -1.5 | -1.1 | nil |
| 2012 | 270 | -11.6 | -11.3 | nil |
| % change | – | – | – | – |
| *Negative shareholders' funds | ||||
