Services firm is feeling the pinch

The company that provides Rochdale Council services via the Impact Partnership has posted annual losses of £65 million.

And the crisis at business services group Mouchel is set to get even worse with more pain predicted. 

Mouchel, which provides highways, property management, ICT, payroll, and revenues and benefits services for the council, has been rocked by Government spending cuts and under–performance in parts of its operation.

It has secured a lifeline by agreeing amended terms on banking facilities due to expire in March 2014, but in its delayed results announcement it said expectations for the coming year were “significantly reduced”.

The company’s order book has shrunk to £1.4 billion from £1.8 billion a year and new chief executive Grant Rumbles admitted economic conditions will squeeze margins and force clients to cut back on spending.

Mr Rumbles, who took the helm two months ago, will oversee more cost cuts and an overhaul of the company’s balance sheet but said that uncertainty over Mouchel’s financial position and recent takeover speculation had affected the company’s ability to win new business.

Revenues were down by 13 per cent to £551.4 million in the year to 31 July, while a string of exceptional items caused bottom–line losses to hit £64.8 million, compared with a deficit of £14.7 million a year earlier.