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Mouchel
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Outlook

The market in the UK is likely to remain flat in the short term and we don’t envisage a step change in growth within the next 12 to 18 months. 

Whilst local authority spending in highways declined in 2010/11, our market has stabilised as Government cuts focus on capital expansion projects rather than the maintenance work we specialise in delivering. We are also well positioned to take advantage of the expected increase in integrated blue-collar and white-collar contracts through our joint venture with EnterpriseMouchel. 

We don’t see significant growth in our water business in the short term, although work is set to increase as we approach the middle of the AMP5 regulatory period in 2012/13.   

We see good opportunities in the Middle East, particularly through our existing clients in the region. We have a strong brand, despite our business there being relatively small compared to the UK.  We have largely completed a restructure of this business to provide a stable platform for growth.

In Australia, we have been very successful in a short timescale through our partnership with Downer. There is good potential for work across Highways and Infrastructures Services and our existing highways contracts in Western Australia form a good base to grow and expand our business.

In GBS, our market is expected to grow due to the UK Government’s continuing drive to find cost savings and around six new contracts have been let each year since 2005. Our market for management consulting services has experienced a significant decrease in response to Government cuts and budgetary pressures, but two main contracts provide a solid foundation for the business and Management Consulting works closely with GBS to deliver additional services to our existing local authority partnerships.

Overall, whilst our previous expectations for full year revenue have not changed, our expectations for full year earnings performance have been reduced by approximately £4m principally due to the additional shortfall in our Middle East and Management Consultancy businesses.