4 April 2011 – Costain statement

Costain has announced that it has no intention to make an offer for Mouchel as the directors of the latter have refused to allow Costain to undertake further due diligence to allow it to reconfirm the terms of its offer.  Shares in Mouchel have slumped on the news as speculative money has come out of the stock – we believe that investors who followed our tip to buy at under 100p should stay in as we believe the shares have scope for a bounce.  Despite the current difficult trading conditions, the company has obviously managed to convince its largest shareholders,  Schroders (20%) and Prudential (13%), that it has a solid future as an independent entity.  This should provide some comfort – SPECULATIVE BUY.