25/04/2006
We've been keen and consistent supporters of Mouchel Parkman, which once again beat City expectations with excellent interims to January.
Under chief executive Richard Cuthbert, this was another period of sales and profits growth for the group, which derives the bulk of its revenues from long-term outsourcing work in the public sector and regulated industry.
Revenues were lifted 25% to �175.1m, sending pre-tax profits 42% north to �12.5m. Highlights included a strong cash performance (more than 100% of operating profit was converted to operating cash flow), an impressive contract strike rate and news of a record �1.1bn order book.
In the highways division new contract wins and renewals helped revenues 14% higher to �82.4m. Maiden contracts were scored for the joint venture with Accord, for the Highways Agency and the London Borough of Harrow, establishing Mouchel Parkman’s position in the roads market. Margins were lower at 7% (7.4%), but this reflected the impact of bid costs in a busy bid period and ‘AccordMP’ set-up costs.
Elsewhere, margins spiked from 6.3% to 8% in government services, which encompasses property and regeneration activities as well as consulting work in ‘incubator’ sectors, education and housing. Cuthbert highlighted progress in rail and water, where work on AMP4 water contracts ramped up and ServiRail made an encouraging contribution.
For the year, Cazenove’s Michael Morris has nudged up his pre-tax forecast from �27m to �27.5m, ahead of �31m on �400.3m revenues for 2007. Forecast earnings of 17.7p and 19.5p leave the shares trading on prospective multiples of 19.6 and 17.8, roughly in line with consulting peers. Not cheap after a stellar share price performance, but well worth holding.
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James Crux
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