6 Jan 2010 07:00
6 January 2010
Management Consulting Group PLC
Pre-Close Period Trading Update
Management Consulting Group PLC ("MCG" or "the Group") issues the following pre-close period trading update ahead of the announcement of the Group's 2009 preliminary results on 8 March 2010.
Group trading
As reported in the Interim Management Statement ("IMS") issued on 10 November 2009, MCG expects to report revenue for the 2009 financial year in the range of £280m to £290m and underlying* operating profit between £28m and £30m. Net debt is expected to be around £90m. The Group is in compliance with the covenants under its existing banking facilities and will manage its affairs to ensure that this continues to be the case.
The term 'underlying' is defined as "before non-recurring items, the amortisation of acquired intangible assets and the impairment of acquired goodwill from continuing operations".
Trading in the three divisions of MCG remains as indicated in the IMS. Ineum Consulting is still performing strongly, especially in its heartland of France where the public sector business performed particularly well in 2009. Kurt Salmon Associates has seen trading recover somewhat over the past few months in both its businesses, consumer products and health care, and has returned to profit in the second half of 2009. Alexander Proudfoot has continued to operate at a lower than normal level, although it is beginning to see new leads that inspire some confidence for the Spring 2010 selling season.
Ineum Consulting
Mr Chiheb Mahjoub was appointed Chief Executive of Ineum Consulting on 9 December 2009, replacing Mr Miguel de Fontenay who stepped down from that role. Mr de Fontenay has subsequently left the Group, along with one other senior manager of Ineum Consulting.
As previously announced Mr Mahjoub was appointed to the Board of Directors of MCG on 10 November 2009. Under the terms of the acquisition of Ineum Consulting in 2006, the vendors have the right to put forward a director for appointment to the Board of Directors of MCG until 1 September 2010. As previously announced, Mr Marco Lopinto was therefore appointed to the Board on 15 December 2009 as an Executive Director. Mr Lopinto has been with Ineum since 2005, is responsible for the Strategy Practice of Ineum Consulting and plays a key role in the development of the Ineum Consulting business.
Non-recurring items
During 2009 the Group continued to restructure its business, rationalise office space and reduce its headcount. Currently MCG employs around 1,500 people, a reduction of over 35% from the 2,350 employed in June 2008. We are currently vacating one floor of our KSA office space in Atlanta and closing another office in Minneapolis. The non-recurring cost of these latest closures is £3.6m and will be recorded in the 2009 results. As a result of this the Group will benefit from lower rental costs of £0.5m per annum from 2010 onwards.
In respect of the departure of Mr de Fontenay, the Group will be showing a non-recurring item of £1.3m.
As a result of these major items, and the continuation of the other Group redundancy plans detailed earlier in the year, the total non-recurring cost for 2009 is expected to be in the range of £15m to £16m.
Executive Chairman, Alan Barber, commented, "2009 was a challenging year for MCG after the record results achieved in 2008. We took decisive action during the year to manage the cost base in a difficult trading environment. As a result of this we are expecting to post an underlying operating profit between £28m and £30m. We are dedicated to ensuring the business is well positioned to benefit from the eventual recovery in the global economy and to create long term value for shareholders."
For further information, please contact:
| Management Consulting Group PLC | Tel: +44 20 7710 5000 | |
| Alan Barber | Executive Chairman | |
| Craig Smith | Finance Director | |
| Financial Dynamics | Tel: +44 20 7269 7242 | |
| Ben Atwell | ||
Notes to editors:
Management Consulting Group PLC (MMC.L) is an umbrella organisation for a diverse range of consulting and professional services offerings. MCG operates through three divisions: Alexander Proudfoot, Ineum Consulting and Kurt Salmon Associates. Alexander Proudfoot provides operational improvement services. Ineum Consulting provides consulting services with industry expertise. Kurt Salmon Associates provides retail and health care consulting. The Group operates worldwide. For further information, visit www.mcgplc.com