RNS Number:3125Z
Management Consulting Group PLC
06 March 2006
MANAGEMENT CONSULTING GROUP PLC
Financial results for the year ended 31 December 2005
Management Consulting Group PLC ("MCG" or "the Group"), the international
management consultancy group, today announces its results for the year ended 31
December 2005.
Key points
* Revenue up 9% to #129.6 million (2004: #119.2 million)
* Profit before tax up 12% to #13.9 million (2004: #12.4 million)
* Basic earnings per share up 15% to 5.3 pence (2004: 4.6 pence)
* Dividend up 19% to 0.8 pence per share (2004: 0.67 pence per share)
* The new year has started well and we look forward to the year ahead
with confidence
Rolf Stomberg, Chairman:
"2005 was a year of continued success that strengthened as the year progressed.
In the light of the performance, our strong cash position and future prospects,
the Board is recommending a final dividend 19% up on last year."
Kevin Parry, Chief Executive:
"2006 has started strongly. It is already clear that the first half of the year
will deliver excellent progress on last year, driven by the demand for Proudfoot
Consulting services.
We continue actively to explore the strategic development of the Group on the
back of a strong balance sheet with over #20 million of cash and no debt."
For further information please contact:
Management Consulting Group PLC
Kevin Parry Chief Executive 020 7710 5000
Mark Currie Finance Director 020 7710 5000
The Maitland Consultancy
Suzanne Bartch 020 7379 5151 (mobile) 07769 710 335
Peter Ogden 020 7379 5151 (mobile) 07811 124 197
An analyst briefing will be held at the offices of Management Consulting Group
PLC on the 6th floor of Fleet Place House, 2 Fleet Place, Holborn Viaduct,
London, EC4M 7RF on Monday 6 March 2006 at 9.30 am.
Notes to Editors
Management Consulting Group PLC will, over time, become an umbrella organisation
for a diverse range of consulting and professional services offerings. It
currently comprises two consulting businesses: Proudfoot Consulting and Parson
Consulting.
Proudfoot Consulting helps clients to achieve significantly increased
profitability through the implementation of operational improvements leading to
increased sales, lower operating and overhead costs, greater output and lower
capital expenditure. Its clients include AMP, BP, Degussa, Exide, Newmont
Mining, Sara Lee and Societe Generale.
Parson Consulting specialises in financial management consultancy. It has four
service lines: governance and risk management, operational financial management,
strategic financial management and transaction support. Its clients include
Astra Zeneca, Avis, Barclays, Citigroup, Ford, General Mills, JP Morgan Chase,
Shell, Unilever and Warner Bros.
Forward-looking statements
This preliminary announcement contains certain forward-looking statements with
respect to the financial condition, results of operations and businesses of
Management Consulting Group PLC. These statements and forecasts involve risk and
uncertainty because they relate to events and depend upon circumstances that
will occur in the future. There are a number of factors that could cause actual
results of developments to differ materially from those expressed or implied by
these forward-looking statements and forecasts. Nothing in this announcement
should be construed as a profit forecast.
Overview
2005 2004 2004
IFRS Restated UK GAAP
for IFRS
#'000 #'000 #'000
Continuing operations
Revenue 129,601 119,248 119,248
Cost of sales (64,847) (60,414) (60,270)
-------- -------- --------
Gross profit 64,754 58,834 58,978
Selling costs (34,931) (30,448) (30,362)
Administrative expenses (16,264) (15,950) (20,067)
-------- -------- --------
Profit from operations 13,559 12,436 8,549
Finance income / (costs) 361 (34) (34)
-------- -------- --------
Profit before tax 13,920 12,402 8,515
Tax expense (4,128) (3,945) (2,995)
-------- -------- --------
Profit for the year from continuing
operations 9,792 8,457 5,520
-------- -------- --------
Basic/headline earnings per share 5.3 4.6 5.0
(pence) -------- -------- --------
Trading in 2005 showed good progress in both consultancies. The performance of
the Group improved as the year progressed. We entered 2006 with a strong order
book.
Revenue for the year was up 9%. There was no material change in the balance of
our businesses with Proudfoot Consulting generating 67% of revenue (2004: 68%)
and Parson Consulting generating 33% of revenue (2004: 32%).
North America remains our most important geographic region but its dominance
declined somewhat from 65% of revenue to 61% of revenue with a greater share in
Europe and elsewhere. This reflected our investment in geographic regions
outside North America.
The gross profit margin continues to be tightly managed and was little changed
from last year at 50% (2004: 49%). Administrative expenses increased by only 2%.
Selling costs increased to 27% of revenue compared with 26% last year reflecting
the recruitment costs as we expanded the geographic coverage of Proudfoot
Consulting to Greater China and Parson Consulting to France and Australia.
Profit from operations increased by 9% to #13.6 million. This includes a credit
of #0.9 million arising from a time expired indemnity given in 2000 in
connection with the sale of Proudfoot Consulting's Japanese operations. The 2004
profit included a similar sized credit of #0.8 million arising from an expired
management incentive plan.
Net finance income increased to #0.4 million, primarily from interest income on
our cash balance.
Profit before tax was #13.9 million, an increase of 12% on 2004.
Earnings per share increased by 15% to 5.3 pence per share.
The performance of the two consultancies is set out below:
Year ended Year ended
31 Dec 2005 31 Dec 2004
#'000 #'000
Revenue
Proudfoot Consulting 86,385 81,437
Parson Consulting 43,216 37,811
------- -------
129,601 119,248
------- -------
Profit from operations
Proudfoot Consulting 11,314 10,082
Parson Consulting 2,245 2,354
------- -------
13,559 12,436
------- -------
All figures are stated in accordance with International Financial Reporting
Standards.
Proudfoot Consulting
Proudfoot Consulting's revenue was #86.4 million, an increase of 6% over 2004.
Revenue grew in both the dominant markets of North America and Europe; North
America by 7% and Europe by 3%.
In North America, the same industry sectors continued to buy Proudfoot
Consulting's services as last year: manufacturing, natural resources,
telecommunications and financial. The services purchased focussed on clients
achieving greater sales effectiveness and greater output through productivity
gains as well as an ongoing emphasis on lower cost production through better
supply chain and procurement management in particular.
The UK business continued to be the strongest in Europe. In addition there were,
late in 2005, encouraging signs of increased activity in continental Europe,
particularly in Germany. We have not, however, yet seen a sustained pattern of
increased activity in any individual continental European country.
The revenue in the rest of the world included revenue of #0.8 million from
Greater China following our opening of offices in Hong Kong and Shanghai in
early 2005.
The profit from operations for the Proudfoot Consulting business was #11.3
million (2004: #10.1 million). After adding back depreciation, the EBITDA margin
was unchanged at 13%, compared with our target of a sustainable 15% margin. The
second half margin was 16% reflecting the higher revenue in the second half than
in the first half and the inherent operational gearing in the business.
Parson Consulting
Parson Consulting's revenue increased to #43.2 million, an increase of 14% over
2004. The growth in revenue was achieved despite the peak demand for US domestic
Sarbanes-Oxley related work having passed in 2004.
The profit from operations was #2.2 million, #0.1 million lower than in 2004.
After adding back depreciation and the start up costs, the EBITDA margin was 9%.
We continue to target a sustainable 15% EBITDA margin from top line growth and
operational gearing.
Parson Consulting has continued to invest in diversifying its worldwide service
offerings and its non US geographic regions to counteract the impact of the
declining demand for US based Sarbanes-Oxley related work. The revenue growth
results from these investments. Non Sarbanes-Oxley related work amounted to #17
million in the year and the non US business now represents nearly 25% of the
total revenue.
There were significant improvements in project margins in the year but this is
not yet visible in the profit from operations due to the investments in service
developments and people in Australia and France.
Balance sheet
Net assets increased by #9.7 million to #57.9 million, driven primarily by the
post tax profits in the year of #9.8 million.
Whilst the average exchange rates were little changed in 2005 compared with
2004, the year end closing rates of exchange showed a strengthening of the US
dollar to Sterling. As a result net assets increased by #1.5 million. This was
offset by the lowering of the discount rate used to estimate our closed defined
benefit pension fund liability which reduced net assets by approximately #1.6
million.
The cash balance increased by #7.1 million to #21.6 million at 31 December 2005
(2004: #14.5 million). The increase in cash is attributable to the trading
result, offset by contributions to the closed US defined benefit pension plan,
tax and dividends. The current cash balance places the Group in a strong
position to pursue modest sized acquisitions as part of its strategy to grow the
Group and diversify its consulting offerings.
Long term provisions declined due to the release of the Japanese indemnity
provision, offset by a #0.5 million increase in the liability to the US
retirement benefit plan as a result of foreign exchange losses and more
conservative actuarial assumptions. In the year we continued to fund the plan to
reduce the deficit further. The investment performance was broadly in line with
actuarial assumptions.
Dividend
As a result of the growth in earnings per share from 4.6 pence to 5.3 pence, the
cash position and the outlook for 2006, the Board is pleased to recommend a
final dividend of 0.8 pence per share which represents an increase of 19% over
the 0.67 pence per share in respect of 2004. The dividend will be payable on 5
June 2006 to shareholders on the register on 19 May 2006. Under IFRS, this
dividend will be recognised in the Group's results in 2006.
People
We are grateful for the contribution of all employees and their part in the
continued development of Proudfoot Consulting and Parson Consulting.
On 1 March 2005, Mark Currie joined the Board and succeeded Stephen Purse as the
finance director. At the Annual General Meeting held on 26 April 2005, Alan
Barber was appointed as a non-executive director to the Board.
On 3 March 2006, Mr Stephen Ferriss and Mr Andrew Simon joined the Board as
non-executive directors and will offer themselves for re-election at the
forthcoming Annual General Meeting.
Strategy
Our strategy is focussed on building a Group comprising a series of
consultancies with particular specialisms in different aspects of consulting.
This approach will diversify the dependency of the Group from our two existing
consultancies.
We remain of the view that both the Proudfoot Consulting and the Parson
Consulting businesses have excellent medium term prospects. Going forward, we
will continue to expand the geographical overlap of the two businesses to
maximise the benefit that comes from our existing infrastructure. We also intend
to deepen the resource and our commitment to our existing businesses and
continue to develop our service offerings.
Prospects
2005 was characterised by an abnormal first half to second half revenue split in
Proudfoot Consulting. We do not expect this to be repeated in the current year.
As it is too early in our current year to have good visibility into second half
trading, it would be appropriate to assume that the normal seasonal bias to the
first half of the year will be observed in 2006.
The strong end to 2005 in Proudfoot Consulting produced a high order book in
that consultancy providing good visibility into the first half of the year.
Parson Consulting's order book was little changed from the end of the previous
year. Trading in the first two months of the year in Proudfoot Consulting has
shown strong year on year growth in all its markets. Parson Consulting has
started the year slowly in North America but has shown good growth in other
geographic regions.
Consequently, the Group should deliver strong year on year revenue growth in the
first half of the year driven by an encouraging outlook for Proudfoot Consulting
balanced by a more cautious view for Parson Consulting.
Dr Rolf Stomberg Kevin Parry
Chairman Chief Executive
Consolidated income statement
year ended 31 December
2005 2004
note #'000 #'000
Continuing operations
Revenue 3 129,601 119,248
Cost of sales (64,847) (60,414)
--------- ---------
Gross profit 64,754 58,834
Selling costs (34,931) (30,448)
Administrative expenses (16,264) (15,950)
--------- ---------
Profit from operations 3 13,559 12,436
Finance income / (costs) 6 361 (34)
--------- ---------
Profit before tax 13,920 12,402
Tax expense (4,128) (3,945)
--------- ---------
Profit for the year from continuing 9,792 8,457
operations --------- ---------
Earnings per share - pence
From continuing operations
Basic 7 5.3 4.6
Diluted 7 5.2 4.5
--------- ---------
Consolidated statement of recognised income and expense
year ended 31 December
2005 2004
#'000 #'000
Exchange differences on translation of 1,488 (1,745)
foreign operations
Actuarial losses on defined benefit pension
fund and medical schemes (1,646) (1,696)
Tax on items taken directly to equity 825 -
--------- ---------
Net income / (expense) recognised directly in 667 (3,441)
equity
Profit for the year 9,792 8,457
--------- ---------
Total recognised income and expense for the year 10,459 5,016
--------- ---------
Consolidated statement of changes in equity
2005 2004
#'000 #'000
At 1 January 48,276 45,652
Dividends paid (1,241) (925)
Net profit for the year 9,792 8,457
Own shares purchased for deferred share awards (181) -
Issue of share capital
Deferred consideration for acquisitions - 27
Exercise of share option schemes 35 48
Movement in share compensation reserve 640 439
Movement in reserve for management incentive plan (56) (1,981)
Other recognised income and expense 667 (3,441)
-------- --------
At 31 December 57,932 48,276
-------- --------
Consolidated balance sheet
2005 2004
#'000 #'000
Non-current assets
Goodwill 68,278 66,109
Other intangible assets 418 392
Property, plant and equipment 1,521 1,397
---------- -----------
Total non-current assets 70,217 67,898
---------- -----------
Current assets
Trade and other receivables 16,159 12,735
Cash and cash equivalents 21,555 14,510
---------- -----------
Total current assets 37,714 27,245
---------- -----------
Total assets 107,931 95,143
---------- -----------
Current liabilities
Trade and other payables (28,045) (24,222)
Current tax liabilities (3,959) (4,722)
---------- -----------
Total current liabilities (32,004) (28,944)
---------- -----------
Net current assets / (liabilities) 5,710 (1,699)
---------- -----------
Non-current liabilities
Retirement benefit obligation (11,869) (11,383)
Non-current tax liabilities (4,674) (4,080)
Long-term provisions (871) (1,774)
Other non-current accruals (581) (686)
---------- -----------
Total non-current liabilities (17,995) (17,923)
---------- -----------
Total liabilities (49,999) (46,867)
---------- -----------
Net assets 57,932 48,276
---------- -----------
Equity
Share capital 47,373 47,256
Share premium account 38,146 38,026
Shares to be issued 46 185
Share compensation reserve 1,256 616
Own shares held by employee share trust (1,270) (970)
Translation reserve (257) (1,745)
Other reserves 12,747 12,747
Retained earnings (40,109) (47,839)
---------- -----------
Total equity 57,932 48,276
---------- -----------
Consolidated cash flow statement
2005 2004
Note #'000 #'000
Net cash from operating activities 8 8,826 8,242
-------- ---------
Investing activities
Interest received 323 206
Acquisitions of subsidiaries - (1,074)
Purchases of property, plant and equipment (669) (1,061)
Purchases of intangible assets (454) (377)
Proceeds on disposal of property, plant 13 117
and equipment
Purchases of own shares (181) -
-------- ---------
Net cash used in investing activities (968) (2,189)
-------- ---------
Financing activities
Dividends paid 4 (1,241) (925)
Proceeds from issue of shares 35 48
-------- ---------
Net cash used in financing activities (1,206) (877)
-------- ---------
Net increase in cash and cash equivalents 6,652 5,176
Cash and cash equivalents at beginning of 14,510 9,738
period
Effect of foreign exchange rate changes 393 (404)
-------- ---------
Cash and cash equivalents at end of period 21,555 14,510
-------- ---------
Notes
1. Basis of preparation
The financial information included in this statement does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985. The
financial information has been extracted without material adjustment from the
consolidated financial statements of Management Consulting Group PLC for the
year ended 31 December 2005, which have been audited. The auditors have made a
report under Section 235 of the Companies Act 1985 in respect of the statutory
consolidated accounts for the years ended 31 December 2005 and 31 December 2004.
Their reports were unqualified within the meaning of Section 262(1) of the
Companies Act 1985 and did not contain a statement under Section 237(2) or (3)
of that Act.
While the financial information included in this preliminary announcement has
been computed in accordance with International Financial Reporting Standards
(IFRS), this announcement does not itself contain sufficient information to
comply with IFRSs.
Statutory accounts for the financial year ended 31 December 2004 have been
delivered to the Registrar of Companies pursuant to Section 242 of the Act
whereas those for 2005 will be delivered following the Annual General Meeting.
The Group's Annual Report and Accounts will be sent to shareholders on 20 March
2006 and will be available at the Company's registered office at Fleet Place
House, 2 Fleet Place, London, EC4M 7RF, United Kingdom and on our website:
www.mcgplc.com.
The Annual General Meeting will be held at the Regus Centre, 1 Northumberland
Avenue, Trafalgar Square, London, WC2N 5BW on 12 May 2006 at 10 am.
2. Accounting policies
The financial information has been prepared in accordance with IFRSs and is
covered by IFRS 1, First-time Adoption of IFRS. These financial statements have
been prepared in accordance with those IFRS standards and IFRIC interpretations
issued and effective or issued and early adopted as at the time of preparing
these statements (March 2006). The policies have been consistently applied to
all the periods presented, and the comparative figures in respect of 2004 have
been restated to reflect IFRS adjustments.
Full details of the Group's accounting polices can be found in the 2005 Interim
Report in note 2 which is available on our website: www.mcgplc.com.
3. Segmental information
The Group has one business reporting segment: management consultancy comprising
the two consultancies, Proudfoot Consulting and Parson Consulting.
Primary reporting format - geographic segments
The Group operates in three geographic areas - North America, Europe and the
Rest of the World.
The Group reports segment information on the basis of geographic area as
follows:
Year ended 31 December 2005
North Europe Rest of Consolidated
America World
#'000 #'000 #'000 #'000
Revenue
External sales 79,484 40,701 9,416 129,601
-------- -------- -------- --------
Profit/(loss) from operations
before release of indemnity 14,103 306 (1,747) 12,662
provision
Release of indemnity provision - - 897 897
-------- -------- -------- --------
Profit from operations 14,103 306 (850) 13,559
Finance income 361
-------- -------- -------- --------
Profit before tax 13,920
Income tax expense (4,128)
-------- -------- -------- --------
Profit after tax 9,792
-------- -------- -------- --------
3. Segmental information (continued)
Year ended 31 December 2005
North Europe Rest of Consolidated
America World
#'000 #'000 #'000 #'000
------- ------- ------- ---------
Capital additions by segment 718 168 83 969
Unallocated corporate additions 154
------- ------- ------- ---------
Total capital additions 1,123
------- ------- ------- ---------
Depreciation and amortisation
by segment 781 107 52 940
Unallocated corporate
depreciation 125
and amortisation ------- ------- ------- ---------
Total depreciation and 1,065
amortisation ------- ------- ------- ---------
At 31 December 2005
North Europe Rest of Consolidated
America World
#'000 #'000 #'000 #'000
Balance sheet
Assets
Goodwill 30,856 37,422 - 68,278
Other segment assets 8,047 6,473 835 15,355
------- ------- ------- ---------
38,903 43,895 835 83,633
Unallocated corporate assets 24,298
------- ------- ------- ---------
Consolidated total assets 107,931
------- ------- ------- ---------
Liabilities
Segment liabilities (14,576) (10,855) (2,587) (28,018)
Unallocated corporate (21,981)
liabilities ------- ------- ------- ---------
Consolidated total liabilities (49,999)
------- ------- ------- ---------
3. Segmental information (continued)
Year ended 31 December 2004
North Europe Rest of Consolidated
America World
#'000 #'000 #'000 #'000
Revenue
External sales 77,656 33,670 7,922 119,248
-------- ------- ------- --------
Profit/(loss) from operations
before release of management
incentive plan 12,487 66 (874) 11,679
Release of management
incentive plan - - 757 757
-------- ------- ------- -------
Profit from operations 12,487 66 (117) 12,436
Finance income (34)
-------- ------- ------- -------
Profit before tax 12,402
Income tax expense (3,945)
-------- ------- ------- -------
Profit after tax 8,457
-------- ------- ------- -------
North Europe Rest of Consolidated
America World
#'000 #'000 #'000 #'000
Capital additions 857 126 25 1,008
Unallocated corporate additions 430
-------- ------- ------ --------
Total capital additions 1,438
-------- ------- ------ --------
Depreciation and amortisation 742 230 82 1,054
Unallocated corporate
depreciation 110
and amortisation -------- ------- ------ --------
Total depreciation and 1,164
amortisation -------- ------- ------ --------
3. Segmental information (continued)
At 31 December 2004
North Europe Rest of Consolidated
America World
#'000 #'000 #'000 #'000
Balance sheet
Assets
Goodwill 27,745 38,364 - 66,109
Other segment assets 7,860 3,302 332 11,494
-------- ------- ------ ---------
35,605 41,666 332 77,603
Unallocated corporate assets 17,540
-------- ------- ------ ---------
Consolidated total assets 95,143
-------- ------- ------ ---------
Liabilities
Segment liabilities (12,605) (8,678) (2,052) (23,335)
Unallocated corporate (23,532)
liabilities -------- ------- ------ ---------
Consolidated total liabilities (46,867)
-------- ------- ------ ---------
4. Dividends
2005 2004
#'000 #'000
Amounts recognised as distributions to equity
holders in the year:
Final dividend for the year 1,241 925
ended 31 December 2004 of 0.67p (2003: 0.5p)
-------- --------
Dividends are not payable on shares held in the employee share trust which has
waived its entitlement to dividends. The amount of the dividend waived in 2005
(in respect of the year ended 31 December 2004) was #26,000 (2004: #19,000).
The directors recommend the payment of a final dividend in respect of 2005 of
0.8 pence to be paid on 5 June 2006 to ordinary shareholders on the register on
19 May 2006.
5. Staff numbers and costs
The average number of persons employed by the Group (including directors) during
the year, analysed by category, was as follows:
2005 2004
Sales and marketing 201 183
Consultants 459 454
Support staff 136 120
-------- --------
796 757
-------- --------
The aggregate payroll costs of these persons were as follows:
2005 2004
#'000 #'000
Wages and salaries 62,936 58,670
Social security costs 6,932 6,346
Other pension costs 1,085 800
-------- --------
70,953 65,816
-------- --------
Wages and salaries include #0.6 million (2004: #0.4 million) relating to share
options recognised as an expense under IFRS 2.
6. Finance income/(costs)
2005 2004
#'000 #'000
Interest receivable on bank deposits and similar 453 421
income
Interest payable on bank overdrafts and loans and (10) (183)
similar charges
Net finance charge on retirement benefit plans (82) (272)
-------- --------
361 (34)
-------- --------
7. Earnings per share
From continuing operations
The calculation of the basic and diluted earnings per share is based on the
following data:
Year Year
ended ended
31 December 31 December
2005 2004
Earnings #'000 #'000
Earnings for the purposes of basic earnings per
share being net profit attributable to equity
holders of the parent 9,792 8,457
---------- ---------
Number of shares Number Number
(million) (million)
Weighted average number of ordinary shares for the
purposes of basic earnings per share 185.2 185.0
Effect of dilutive potential ordinary shares:
Share options 1.4 1.8
Long-term incentive plan 0.2 -
---------- ---------
Weighted average number of ordinary shares for the
purposes of diluted earnings per share 186.8 186.8
---------- ---------
Pence Pence
Basic earnings per share 5.3 4.6
Diluted earnings per share 5.2 4.5
---------- ---------
The average share price for the year ended 31 December 2005 was 51.5 pence (31
December 2004: 41.3 pence).
8. Notes to the cash flow statement
Year ended Year ended
31 December 31 December
2005 2004
#'000 #'000
Profit from operations 13,559 12,436
Adjustments for:
Depreciation of property, plant and equipment 604 818
Amortisation of intangible assets 462 346
Gain on disposal of plant and equipment 14 -
Management incentive plan (56) (757)
Adjustment for pension funding (2,528) (2,911)
Adjustment for share options charge 640 439
Decrease in provisions (903) (110)
---------- ---------
Operating cash flows before movements in working
capital 11,792 10,261
Increase in receivables (4,153) (4,053)
Increase in payables 3,911 5,840
---------- ---------
Cash generated by operations 11,550 12,048
Income taxes paid (2,724) (3,806)
---------- ---------
Net cash from operating activities 8,826 8,242
---------- ---------
Cash and cash equivalents (which are presented as a single class of assets on
the face of the balance sheet) comprise cash at bank and other short-term highly
liquid investments with a maturity of three months or less.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR AKNKQCBKDANK
Management Consulting (LSE:MMC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Management Consulting (LSE:MMC)
Historical Stock Chart
From Jul 2023 to Jul 2024
