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Mouchel (MCHL) – Interims PTP: £9.3m (£13.6m) Divi: 1.85p (1.55p)

Once only known for its transportation services, Mouchel has grown into a more mainstream support services business and a direct competitor to Capita (CPI) and WS Atkins (ATK). The £46 million acquisition of HBS in August 2007 was misunderstood by the City, according to chief executive Richard Cuthbert. ‘Some analysts described it as a bolt-on acquisition, which is a bit of an insult,’ he said. HBS has provided a direct route in the business process outsourcing market (BPO). The market is worth £4 billion in the UK and growing at 10% a year.

Last month, Mouchel snapped up Hedra for £50 million, a business providing management consultancy services to the UK public sector, further strengthening its BPO skills. It will target central government and the health industries for project opportunities.

A third of its business comes from highways consultancy, maintenance and local government contracts. This includes traffic services, where it hopes involvement in parking enforcement schemes will help it gain more work from local authorities.

The only bad egg in the mix is rail, and that hasn’t been too bad. Rail is less than a tenth of its business. As such, Mouchel doesn’t have the strong influence on customers as seen in highways. There has been uncertainty over projects with Network Rail, which may take work in-house. ‘The only way to improve matters is to improve our footprint in rail through an acquisition, but now isn’t the right time,’ says Cuthbert. The spending patterns in rail suggest it is an industry worth pursuing, he adds. The focus will now be on project management and consultancy.

Shares says: A steady earner with new-found growth potential.

by: Dan Coatsworth