30 Jun 2008 08:08
Management Consulting Group PLC
Trading Update
Management Consulting Group PLC (the "Group") issues the following trading update ahead of the announcement of the Group's 2008 interim results which are scheduled to be announced on 11 August 2008.
The Group's revenue for the six-month period ended 30 June 2008 is estimated to be approximately £160 million (2007: £100.5 million). The 2008 results include the benefits of the acquisitions of CBH Consulting and Kurt Salmon Associates which took place on 6 September 2007 and 12 October 2007 respectively
The profit before tax, amortisation of intangibles and non-recurring items is estimated to be between £14.5 million and £15.5 million (2007: £10.2 million).
Amortisation of intangibles is estimated to be approximately £1.1 million (2007: £0.6 million).
Non-recurring items charged during the period amounted to approximately £11.7 million (2007: £1.3 million). These items comprised the £2.3 million relating to the integration of the businesses acquired during 2007, £2.4 million relating to the general meeting called by shareholders in February 2008 and the resulting departure of the Chief Executive and an additional provision of around £7.0 million relating to the restructuring of the business subsequent to the general meeting. Included in this is a Group-wide initiative to rationalise office space and reduce the Group's rental-cost burden. Ultimately the Group expects to move out of a dozen offices worldwide and save approximately £2 million per annum in property and associated salary costs. In addition the Group has identified other cost savings which will be outlined in October.
Earnings per share, excluding amortisation of intangibles and non-recurring items, is expected to be around 2.7 pence (2007: 2.6 pence).
Strategic Review
On 23 April 2008 the Group announced a new organisational and management structure aligned with our services to clients. We have combined our industry-led and specialised consultancies together as the Consulting Practices Group and established Proudfoot Consulting in its own group focused on operational improvements. This structure is now firmly in place and functioning well. As part of this exercise it was announced that a strategic review was under way. Work on this is continuing and the results will be published in October 2008.
Parson Consulting
Parson Consulting has underperformed financially in recent years and was loss-making again in the first half of 2008. The new management of the Group is taking the earliest opportunity to reorganise this business. Before the end of 2008 appropriate elements of the Parson business worldwide will be absorbed into the rest of the Group's consultancies and the Parson brand will be discontinued, thus ensuring that any future losses from this business cease to impact the profitability of the Group as a whole. There will be no disruption to client service and indeed the future offering to clients will be enhanced as it will be made available across all industry vertical offerings of the Consultancy Practices Group. Further details will be published in due course. As a result an impairment of the intangible asset relating to the Parson Consulting business of £27.3 million will be recognised in the results for the first half of 2008. This is, of course, a non-cash item.
Outlook
The Group's business has performed robustly throughout the first half of 2008. Good performance in the three largest consultancies has been slightly offset by below par results from Parson Consulting. The strong growth of the order book has continued during the second quarter. In particular in the past month Proudfoot Consulting has won two major contracts with fees totalling more than £17 million. The board is mindful of the prevailing economic climate and continues to monitor it closely. It remains committed to the creation of shareholder value and looks forward to sharing the results of its strategic review in October.
Enquiries:
Management Consulting Group PLC Tel: +44 20 7710 5000
Alan Barber, Executive Chairman
Craig Smith, Finance Director
Maitland Tel: +44 20 7379 5151
Suzanne Bartch
Peter Ogden
Notes to editors:
Management Consulting Group PLC (MMC.L) is an umbrella organisation for a diverse range of consulting and professional services offerings. It operates through two groups, the Consultancy Practices Group, comprising Ineum Consulting, Kurt Salmon Associates, Parson Consulting (incorporating CBH Consulting from 1 January 2008), Salzer Consulting and Viaduct Consulting, and the Operational Consulting Group which is Proudfoot Consulting. The businesses operate worldwide. For further information, visit www.mcgplc.com.