2011 year in review

Key performance indicators

Financial headlines

Chairman's statement

Business headlines

Chief Executive overview

Operations and performance

Highways segmental review

Government and Business Services segmental review

Regulated Industries segmental review

Management Consulting segmental review

Financial statements

Management Consulting segmental review

We brought you schools...

...now we’re working with teachers to raise the standard of teaching

Management Consulting revenue, which excludes £11.8m relating to the BPR contract in Abu Dhabi, has  reduced by £26.1m compared with the previous year, primarily due to reduced demand following the 2010 CSR review (around £14m) and Consortium buying framework revenue was lower by around £8m.

The demand for our Management Consulting services remained depressed during the year and led to an exceptional impairment charge of £41.3m against goodwill in the period. Government spending has decreased significantly and as a result we plan to refocus the Management Consulting division to concentrate on its transformational services, which we believe continue to add value to all Mouchel’s businesses, helping them to win and deliver operational contracts.

In local government there has also been reduced spending on consulting services. However, we were able to maintain revenue from our long-term partner organisations (through our BPO contracts in Lincoln and Bournemouth);  our work for the Department of Health (DoH), including the Centre for Workforce Intelligence (an independent agency working on specific projects for the DoH and an operating unit within Management Consulting to determine DoH future workforce requirements); and from our major projects in Abu Dhabi.

Mouchel has maintained its position on the Department for Education (DfE) Project Management and Education Services Framework and is one of only five companies to secure a position on the 2011 ‘taxi rank’ academies and free school framework. We are also one of only six companies to have won a place on both Lots within the 2011 project management education advisory framework.

UK utility companies have experienced a recent change in regulation and consequently have come under increased pressure from their owners to improve performance, planning and operational effectiveness. Mouchel’s presence in the water sector was enhanced this year by securing a place on Thames Water’s management consultancy framework. Similarly, we continue to work with public and private companies in the transport sector, and on the implementation of Mouchel’s NTIS contract.

The BPR project relates to a BPR contract undertaken in the UAE involving the review of current business processes, and identification and documentation of best practice. This project, entered into in April 2010, represented a significant departure for the Group in that this was the first contract of its kind we had undertaken in the Middle East to establish a Middle Eastern consultancy business. The Group has disbanded the unit and the losses associated with this project have been treated as exceptional. There is still approximately £12m trade receivables and unbilled revenue outstanding. (Note 3 to the Accounts gives further details.)

We have developed new relationships with a number of private sector funding and developer clients who value our property expertise together with our experience and knowledge of local government. Our facilities management team had a successful year with wins at Croydon, and the West London Mental Health Trust.

Market overview and outlook

The visibility of the forward workload for Management Consulting is poor and reflects the short-term nature of contracts.

Trading conditions within the Management Consulting business sector are likely to be extremely difficult in the short term, with demand for  consulting reduced generally and clients seeking increasing value for money from their reduced consultancy spend and moving towards more risk-based payment models.

Mouchel will continue to provide cost reduction and efficiency services to clients and to focus increasingly on our core markets of highways, local government (including health and education) and utilities.

The health market, in particular, is undergoing a period of change following the Government’s White Paper on public health: Healthy lives, healthy people (July 2011). If implemented, the proposed shift in power from primary care trusts and strategic health authorities to local communities may create opportunities for Management Consulting to  provide advice on commissioning and change services.

In education, Mouchel has developed relationships with academy sponsors and will look to extend these further through both direct work and projects from the DfE frameworks.

Results