Support services group Mouchel has been left reeling as an error in its accounts combines with the departure of Chief Executive Richard Cuthbert to cause a 43 per cent drop in share value.
In April Mouchel, which builds schools, roads and railways among other things, was rejecting bids as high as 151p a share on the grounds that they undervalued the business.
The company had suffered setbacks caused by the government cutbacks, but brought further trouble upon itself thanks to an accounting error which led to them overestimating the profit from a one off gain by a massive £4.3 million.
To make matters worse the group’s finance director Rod Harris recently announced increased risk provisions for contracts and project claims to the tune of a further £4.3 million. Expert analysis for the company is looking fairly bleak, John Lawson of Investec stated:
“This is a big disappointment and, although the 2011 forecast downgrade was caused by historic issues (non-recurring and reportedly non-cash), we expect the stock to trade significantly lower today. We are maintaining our sell recommendation and plan to review our sum of the parts based target price [of 40p]”..