RNS Number:3079H
Management Consulting Group PLC
07 August 2006
FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2006
Management Consulting Group PLC ("MCG" or "the Group"), the international
management consultancy group, today announces its results for the six months
ended 30 June 2006.
Key points
* Revenue up 18% on last year to #67.3 million (2005: #57.2 million)
* Profit from operations up 51% to #6.9 million (2005: #4.6 million)
* Profit before tax up 54% at #7.3 million (2005: #4.7 million)
* Earnings per share up 53% to 2.9 pence (2005: 1.9 pence)
* Order book currently in line with last year
* Proposed acquisition of Ineum Consulting
Rolf Stomberg, Chairman:
"The Group has delivered a good result. The acquisition of Ineum, announced last
month is a key development in our strategic plan to achieve growth by expanding
our service offerings in existing and new geographies."
Kevin Parry, Chief Executive:
"The Group has made significant progress on the first half of last year. Parson
Consulting has shown good revenue growth outside of North America. Steps have
been taken to address the shortcomings in its American business and progress
should be visible in the fourth quarter. Proudfoot Consulting has performed very
well and is now achieving its goal of a sustainable 15% operating margin."
For further information, please contact:
Management Consulting Group PLC
Kevin Parry Chief Executive 020 7710 5000
Mark Currie Finance Director 020 7710 5000
Maitland
Suzanne Bartch 020 7379 5151
Peter Ogden 020 7379 5151
An analyst briefing will be held today at the offices of Management Consulting
Group PLC on the 6th floor of Fleet Place House, 2 Fleet Place, Holborn Viaduct,
London, EC4M 7RF at 9.30 am.
Notes to Editors
Management Consulting Group PLC currently comprises two businesses: Proudfoot
Consulting and Parson Consulting. On 25 July 2006 it announced the acquisition
of Ineum Consulting ("Ineum") for Euro120 million (#82 million) plus the assumption
of up to Euro13.8 million (#9 million) of net debt. That transaction is
anticipated to complete, subject to shareholder approval, on 1 September 2006.
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 BP, National Australia Bank, Newmont
Mining, PSA Peugeot-Citroen and Societe Generale.
Parson Consulting specialises in financial management consultancy. It is free of
auditing conflicts and provides Sarbanes-Oxley compliant services. It has four
service lines: governance and risk management, operational financial management,
strategic financial management and transaction support. Its clients include
Avis, Citigroup, Ford, General Mills, Kingfisher, Shell and Warner Bros.
Ineum, which Management Consulting Group PLC has agreed to acquire subject to
shareholder approval, provides a broad range of consulting services relevant to
specific industries including operational strategy, marketing and sales, supply
chain management, IT and programme management. Its industry groups are focussed
on the financial, public, manufacturing, consumer goods, energy and utilities,
telecommunications and media, transportation and middle market sectors. The
financial management business of Ineum will be combined with that of Parson
Consulting's French business. Its clients include BNP Paribas, EDF, Schneider,
Societe Generale, Veolia and Vivendi.
Important note
This trading update contains certain forward-looking statements with respect to
the financial condition, results, 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 or developments to differ materially from those expressed or implied by
these forward-looking statements and forecasts. Nothing in this trading update
should be construed as a profit forecast.
Management Statement
The Group's trading results are consistent with the trading update provided on
12 May 2006: revenue for the period is considerably ahead of the same period
last year. Proudfoot Consulting has made good progress in all geographic areas.
Parson Consulting has made good progress outside North America but its
performance in North America was weak principally as a result of the run-off of
Sarbanes-Oxley related work.
The results for the six months ended 30 June 2006 are summarised as follows:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
2006 2005 2005
#'000 #'000 #'000
Revenue
Proudfoot Consulting 51,656 35,989 86,385
Parson Consulting 15,687 21,229 43,216
--------- --------- --------
67,343 57,218 129,601
--------- --------- --------
Profit/(loss) from operations
Proudfoot Consulting
- Before release of indemnity provision 8,431 2,636 10,417
- Release of indemnity provision 335 897 897
-------- -------- --------
8,766 3,533 11,314
Parson Consulting (1,857) 1,032 2,245
--------- --------- --------
6,909 4,565 13,559
--------- --------- --------
Group results
Revenue for the six months ended 30 June 2006 was up 18%.
The first half revenue of Proudfoot Consulting was strong, built on the back of
a robust order book going into 2006. A larger number of client engagements
contributed to the result than in the second half of 2005 which had a smaller
number of larger engagements. All geographic units showed revenue growth.
The performance of Parson Consulting was mixed. In North America, as
Sarbanes-Oxley related work has been completed, the transition to the provision
of our other services has been slow to establish. This was due to a softer than
expected market which offset the impact of our increased sales initiatives. In
contrast outside North America, all units have shown good progress and the new
services in the areas of strategic finance and corporate transactions support
have sold well.
In the period, 53% of Group revenue was attributable to North America (six
months ended 30 June 2005: 61%). North American revenues increased by 4%
compared with the corresponding period of 2005. Europe's share of revenue was
36% (six months ended 30 June 2005: 34%) with reported revenues 25% up compared
with the corresponding period of 2005. In the rest of the world, revenues
increased by 138% with growth in all geographies.
The Group's gross margin continued to be well managed and was 51% (six months
ended 30 June 2005: 49%).
Selling costs were #2.6 million higher than in the corresponding period of 2005
due to both increased revenue and investment in extra sales resources in Europe
and Greater China.
The total profit from operations was #6.9 million compared with #4.6 million in
the corresponding period of 2005.
The tax charge on pre-tax profits is 28% compared with 27% for the first half of
2005. This includes 6% points in respect of deferred tax that is required to be
charged in respect of tax deductions for goodwill but will not become payable
unless our consulting businesses are sold. The underlying tax rate of 22% is
below the statutory rate of tax due to the utilisation of brought forward losses
that have not previously been able to be recognised as deferred tax assets.
Proudfoot Consulting
Proudfoot Consulting's revenue was #51.7 million (2005: #36.0 million). Every
geographic region showed strong growth on the first six months of last year.
This has been achieved by a solid overall performance rather than being due to
any particularly large engagements.
The profit from operations was #8.8 million (2005: #3.5 million). The increase
in profitability is attributable to the operational gearing associated with the
increased revenue. The European region's progress has continued and it
contributed #1.8 million to profit from operations.
There is a non-recurring credit of #0.3 million (2005: #0.9 million) associated
with a surplus provision arising from the disposal of Proudfoot's Japanese
business in 2000. No further profits or losses will arise from that transaction.
In the light of Proudfoot Consulting's strong trading, we have established a
start-up business in Brazil with an initial revenue investment estimated to
amount to #0.5 million in this calendar year concentrating on the management and
sales functions.
Parson Consulting
Parson Consulting's revenue was #15.7 million (2005: #21.2 million). Revenue in
North America declined by #6.9 million with engagements related to
Sarbanes-Oxley amounting to #2.5 million compared with #7.7 million in the same
period of last year. In the rest of the world revenue increased by 29% to #6.3
million (2005: #4.9 million).
The revenue decline in North America resulted in Parson as a whole reporting a
loss from operations of #1.9 million (2005: profit from operations of #1.0
million).
We previously reported that Parson North America's trading has been slow. This
continued in the second quarter of the year as the sale of follow on
Sarbanes-Oxley related and other engagements did not meet the expected target
levels. This was due to a softer than expected market demand which offset the
impact of our increased sales initiatives. In April we strengthened the
management of Parson North America, so separating that unit's management from
that of the consultancy's management as a whole. In addition, the management
structure has been simplified and restructured. Intense reinforcement of core
sales disciplines is underway.
In contrast outside North America, the non Sarbanes-Oxley service lines have
sold well and in the United Kingdom in particular we have seen a good take-up in
services associated with corporate transactions. We have also seen good growth
in Australia and France where our recent investments in new service lines are
coming to fruition.
Earnings per share
The basic earnings per share for the six months ended 30 June 2006 increased by
53% to 2.9 pence compared with 1.9 pence in the corresponding period last year.
Dividend
In accordance with our established policy, we pay dividends once per year, after
the declaration of the annual results. Accordingly, no interim dividend is being
declared.
Balance sheet
The decrease of #0.3 million in the goodwill balance is wholly attributable to
the weakening of the US dollar against Sterling.
The Group's cash balance was #23.5 million compared with #10.9 million at 30
June 2005. The increase in cash reflects the conversion to cash of the profits
of the Group in the last 12 months decreased by the funding of the closed US
defined benefit pension plan and the dividend.
The deficit related to the closed defined benefit pension and medical plans
decreased substantially from #14.6 million at 30 June 2005 to #6.1 million as a
result of cash contributions, the investment performance, foreign exchange and a
1% higher discount rate being applied to the long term liabilities following
increases in market rates.
Strategic direction
On 25 July 2006 we announced the proposed acquisition of Ineum which is due to
complete on 1 September 2006. This is a key development in the execution of the
Group's strategic goal to deliver growth through broadening our consultancy
offerings in existing and new geographies. The proposed acquisition increases
the depth of Parson Consulting, our financial management practice, and also
allows us to offer services to specific industries and the public sector in
line with their particular needs. The acquisition has a number of important
operational, geographic and financial benefits: it secures France's largest
independent national management consultancy, secures a strong position for the
Group in the world's fourth largest consulting market place and adds a
well-managed and profitable business with growing revenues. As well as reducing
the Group's exposure to US dollar earnings, the acquisition is also expected
to be earnings and operating margin enhancing in 2007.
Going forward our strategy remains unchanged. We will continue to explore ways
to develop the service offerings of all parts of the business. Proudfoot
Consulting and Parson Consulting businesses have excellent medium term
prospects. We continue to be interested in making acquisitions of businesses
that broaden the Group's consulting offerings and in widening the coverage of
Parson Consulting and Ineum in geographies outside their existing operations.
The timing of future acquisitions will depend upon the commercial fit,
availability of suitable businesses and the terms on which they are available.
Financial impact of Ineum acquisition
The acquisition of Ineum will result in approximately #30 million of term debt
which will improve the efficiency of the Group's capital structure, without
constraining the implementation of the Group's strategy.
The acquisition will also result in the identification of intangible assets. In
accordance with IFRS intangible assets other than goodwill are amortised in the
income statement over their estimated economic life. One-off integration costs
amounting to #3.8 million are estimated to be incurred in the 2006 and 2007
financial years. Excluding these items, we anticipate that the acquisition of
Ineum will be earnings enhancing in the 2007 financial year.
Outlook
Whilst it remains too early to comment on the outcome for the year as a whole
because work to be won in the remainder of the year is a key determinant of the
result, we remain confident that the business overall will continue to perform
well.
The Group order book is in line with the level at this time last year with
Proudfoot Consulting comprising a greater proportion and Parson Consulting a
lesser proportion of the order book than a year ago. Parson North America's
early indicators of pipeline opportunities are showing good improvements which
are anticipated to translate into fourth quarter progress. The pipeline for
Proudfoot Consulting and for Parson Consulting outside North America is robust.
R W H Stomberg
Chairman
K A H Parry
Chief Executive
7 August 2006
Independent review report
by Deloitte & Touche LLP to Management Consulting Group PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2006 which comprises the consolidated income
statement, the consolidated statement of recognised income and expense,
statement of changes in equity, the consolidated balance sheet, the consolidated
cash flow statement and related notes 1 to 11. We have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the financial
information.
This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of Group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with International Standards on Auditing (UK and
Ireland) and therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2006.
Deloitte & Touche LLP
Chartered Accountants
London
7 August 2006
A review does not provide assurance on the maintenance and integrity of the
website, including controls used to achieve this, and in particular on whether
any changes may have occurred to the financial information since first
published. These matters are the responsibility of the directors but no control
procedures can provide absolute assurance in this area.
Legislation in the United Kingdom governing the preparation and dissemination of
financial information differs from legislation in other jurisdictions.
Consolidated income statement
Six months ended 30 June 2006 Six Six
months months Year
ended ended ended
30 June 30 June 31 December
2006 2005 2005
Note #'000 #'000 #'000
Continuing operations
Revenue 3 67,343 57,218 129,601
Cost of sales (32,697) (29,307) (64,847)
--------- --------- ---------
Gross profit 34,646 27,911 64,754
Selling costs (19,370) (16,746) (34,931)
Administrative expenses (8,367) (6,600) (16,264)
--------- --------- ---------
Profit from operations 6,909 4,565 13,559
Investment income 531 224 453
Finance costs (125) (51) (92)
--------- --------- ---------
Profit before tax 7,315 4,738 13,920
Income tax expense 5 (2,014) (1,285) (4,128)
--------- --------- ---------
Profit for the period 5,301 3,453 9,792
--------- --------- ---------
Earnings per share
From continuing operations
Basic 6 2.9 1.9 5.3
Diluted 6 2.8 1.8 5.2
--------- --------- ---------
Consolidated statement of recognised income and expense
Six months ended 30 June 2006 Six Six
months months Year
ended ended ended
30 June 30 June 31 December
2006 2005 2005
Note #'000 #'000 #'000
Exchange differences on
translation of foreign
operations (3,261) (478) 1,488
Actuarial gains/(losses) on
defined benefit pension and
medical schemes 9 3,734 (3,152) (1,646)
Tax on items taken directly
to equity 449 300 825
-------- -------- ---------
Net income/(expense)
recognised directly in equity 922 (3,330) 667
Profit for the period 5,301 3,453 9,792
-------- -------- ---------
Total recognised income
and expense for the period 6,223 123 10,459
-------- -------- ---------
Statement of changes in equity
Six months ended 30 June 2006 Six Six
months months Year
ended ended ended
30 June 30 June 31 December
2006 2005 2005
#'000 #'000 #'000
At 1 January 57,932 48,276 48,276
Dividends paid (1,486) (1,241) (1,241)
Profit for the period 5,301 3,453 9,792
Own shares purchase for
deferred share awards - (181) (181)
Issue of share capital
Exercise of share options 120 35 35
Share compensation expense 444 332 640
Movement in reserve for
management incentive plan - (56) (56)
Other recognised income and expense 922 (3,330) 667
-------- -------- ---------
At 30 June 63,233 47,288 57,932
-------- -------- ---------
Consolidated balance sheet
as at 30 June 2006
30 June 30 June 31 December
2006 2005 2005
Note #'000 #'000 #'000
Non-current assets
Goodwill 66,031 66,358 68,278
Other intangible assets 1,388 522 418
Property, plant and equipment 1,460 1,468 1,521
-------- -------- ---------
Total non-current assets 68,879 68,348 70,217
-------- -------- ---------
Current assets
Trade and other receivables 14,237 15,037 16,159
Cash and cash equivalents 23,484 10,858 21,555
-------- -------- ---------
Total current assets 37,721 25,895 37,714
-------- -------- ---------
Total assets 106,600 94,243 107,931
-------- -------- ---------
Current liabilities
Trade and other payables (27,056) (22,503) (28,045)
Current tax liabilities (3,915) (4,256) (3,959)
-------- -------- ---------
Total current liabilities (30,971) (26,759) (32,004)
-------- -------- ---------
Net current
assets/(liabilities) 6,750 (864) 5,710
-------- -------- ---------
Non-current liabilities
Retirement benefit obligation 9 (6,146) (14,574) (11,869)
Non-current tax liabilities (5,294) (4,094) (4,674)
Long-term provisions (476) (880) (871)
Non-current accruals (480) (648) (581)
-------- -------- ---------
Total non-current liabilities (12,396) (20,196) (17,995)
-------- -------- ---------
Total liabilities (43,367) (46,955) (49,999)
-------- -------- ---------
Net assets 63,233 47,288 57,932
-------- -------- ---------
Equity
Share capital 7 47,488 47,373 47,373
Share premium account 38,151 38,146 38,146
Shares to be issued 46 46 46
Share compensation reserve 1,133 948 1,256
Own shares held by
employee share trust (1,270) (1,270) (1,270)
Translation reserve (3,518) (2,223) (257)
Other reserves 12,747 12,747 12,747
Retained earnings (31,544) (48,479) (40,109)
-------- -------- ---------
Total equity 63,233 47,288 57,932
-------- -------- ---------
Consolidated cash flow statement
Six months ended 30 June 2006 Six Six
months months Year
ended ended ended
30 June 30 June 31 December
2006 2005 2005
Note #'000 #'000 #'000
Net cash from operating
activities 8 5,690 (2,142) 8,826
-------- -------- ---------
Investing activities
Interest received 442 149 323
Purchase of property, plant
and equipment (403) (385) (669)
Purchase of intangible assets (1,193) (334) (454)
Proceeds on disposal of
property, plant and equipment - 16 13
Purchase of own shares - (181) (181)
-------- -------- ---------
Net cash used in investing activities (1,154) (735) (968)
-------- -------- ---------
Financing activities
Dividends paid 4 (1,486) (1,241) (1,241)
Proceeds from issue of shares 120 35 35
-------- -------- ---------
Net cash used in financing activities (1,366) (1,206) (1,206)
-------- -------- ---------
Net increase/(decrease) in
cash and cash equivalents 3,170 (4,083) 6,652
Cash and cash equivalents
at beginning of period 21,555 14,510 14,510
Effect of foreign exchange
rate changes (1,241) 431 393
-------- -------- ---------
Cash and cash equivalents at
end of period 23,484 10,858 21,555
-------- -------- ---------
Notes
1. General information
The information for the year ended 31 December 2005 does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985. A copy
of the statutory accounts for that year has been delivered to the Registrar of
Companies. The auditors' report on those accounts was unqualified pursuant to
Section 235 of the Companies Act 1985 and did not contain a statement under
Section 237 (2) or (3) of that Act.
2. Summary of significant accounting policies
(a) Basis of preparation
The interim report has been prepared using accounting policies consistent with
International Financial Reporting Standards (IFRS).
The interim report was approved by the Board on 7 August 2006.
(b) Accounting policies
The accounting policies and methods of computation applied by the Group in the
interim report are consistent with those followed in the preparation of the
Group's annual financial statements for the year ended 31 December 2005. The
Group's consolidated financial statements for the year ended 31 December 2005
are available on our website: www.mcgplc.com.
3. Segmental information
The Group operates in three geographical areas - North America, Europe and Rest
of the World. The following is an analysis of the revenue and results for the
period, analysed by geographic segment, the Group's primary basis of
segmentation:
Six months ended 30 June 2006
North Rest of
America Europe World Consolidated
#'000 #'000 #'000 #'000
Revenue
External sales 35,935 24,552 6,856 67,343
-------- -------- -------- ----------
Profit/(loss) from
operations before release of
indemnity provision 4,508 2,411 (345) 6,574
Release of indemnity
provision - - 335 335
-------- -------- -------- ----------
Profit/(loss) from
operations 4,508 2,411 (10) 6,909
Finance income 406
-------- -------- -------- ----------
Profit before tax 7,315
Income tax expense (2,014)
-------- -------- -------- ----------
Profit for the period 5,301
-------- -------- -------- ----------
Six months ended 30 June 2005
North Rest of
America Europe World Consolidated
#'000 #'000 #'000 #'000
Revenue
External sales 34,666 19,673 2,879 57,218
-------- -------- -------- ----------
Profit/(loss) from
operations before release of
indemnity provision 4,406 748 (1,486) 3,668
Release of indemnity
provision - - 897 897
-------- -------- -------- ----------
Profit/(loss) from
operations 4,406 748 (589) 4,565
Finance income 173
-------- -------- -------- ----------
Profit before tax 4,738
Income tax expense (1,285)
-------- -------- -------- ----------
Profit for the period 3,453
-------- -------- -------- ----------
4. Dividends
2006 2005
#'000 #'000
Amounts recognised as distributions to equity holders
in the period:
Final dividend in respect of the year ended 31
December 2005 of 0.80p per share (2005: year ended
31 December 2004 of 0.67p per share) 1,486 1,241
-------- --------
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 2006
(in respect of the year ended 31 December 2005) was #34,000 (2005: #26,000).
5. Taxation
The effective tax charge for the half year is 28% (30 June 2005: 27%), based on
profit before tax excluding the release of the Japan indemnity provision of #0.3
million. The effective tax rate is lower than the average corporation tax rate
(36%) applicable to the Group due to tax losses brought forward.
6. Earnings per share
From continuing operations
The calculation of the basic and diluted earnings per share is based on the
following data:
Six Six
months months Year
ended ended ended
30 June 30 June 31 December
2006 2005 2005
#'000 #'000 #'000
Earnings
Earnings for the purposes of basic
earnings per share being net profit
attributable to equity holders of the
parent 5,301 3,453 9,792
--------- --------- --------
Number Number Number
Number of shares (million) (million) (million)
Weighted average number of
ordinary shares for the purposes of
basic earnings per share 185.5 185.1 185.2
Effect of dilutive potential ordinary
shares
- Share options 1.5 3.5 1.4
- Long-term incentive plan 0.2 0.2 0.2
--------- --------- --------
Weighted average number of
ordinary shares for the purposes of
diluted earnings per share 187.2 188.8 186.8
--------- --------- --------
Pence Pence Pence
Basic earnings per share 2.9 1.9 5.3
Diluted earnings per share 2.8 1.8 5.2
--------- --------- --------
The average share price for the six months ended 30 June 2006 was 57.3 pence (30
June 2005: 50.2 pence and 31 December 2005: 51.5 pence).
7. Share capital
During the interim period, the Company issued the following ordinary shares of
25 pence each:
Number of Nominal
shares value
#'000
At 1 January 2006 189,493,412 47,373
Employee share options exercised 458,359 115
------------- --------
At 30 June 2006 189,951,771 47,488
------------- --------
8. Notes to the cash flow statement
Six Six
months months Year
ended ended ended
30 June 30 June 31 December
2006 2005 2005
#'000 #'000 #'000
Profit from operations 6,909 4,565 13,559
Adjustments for:
Depreciation of property, plant
and equipment 386 288 604
Amortisation of intangible assets 200 234 462
Gain on disposal of plant and
equipment - 16 14
Management incentive plan - (56) (56)
Adjustment for pension funding (1,235) (920) (2,528)
Adjustment for share options charge 444 332 640
Decrease in provisions (395) (886) (903)
--------- -------- ---------
Operating cash flows before
movements in working capital 6,309 3,573 11,792
Decrease/(Increase) in receivables 1,912 (1,940) (4,153)
(Decrease)/Increase in payables (1,429) (1,980) 3,911
--------- -------- ---------
Cash generated by operations 6,792 (347) 11,550
Income taxes paid (1,102) (1,795) (2,724)
--------- -------- ---------
Net cash from operating activities 5,690 (2,142) 8,826
--------- -------- ---------
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.
9. Retirement benefits
The retirement benefits liability relates to the closed US defined benefit
pension scheme and to the closed US post-retirement medical benefits plan.
Entitlement to additional benefits under the US defined benefits pension scheme
ceased on 31 December 2001. The US post-retirement medical benefits plan relates
to certain former employees who retired prior to 30 September 1995 and to a
small number of current and former employees who were employed at that date.
Accordingly, further benefit accruals under this plan are insignificant.
The retirement benefits liability at 30 June 2006 has been estimated by the
actuaries on the basis described in the last annual report except that the
discount rate applied to the liabilities has been increased by 1% to 6.25%. An
actuarial gain of #3.7 million arose in the period (30 June 2005: loss of #3.2
million).
10. Share based payments
The fair value of options granted was determined using the stochastic valuation
model. An expense of #0.4 million has been recognised in the period in respect
of the share options granted above (six months ended 30 June 2005: #0.3 million;
2005 full year: #0.6 million). The cumulative share compensation reserve at 30
June 2006 is #1.1 million (30 June 2005: #0.9 million; 31 December 2005: #1.3
million). Options scheduled to vest in March 2006 did not meet the performance
criteria and have now lapsed.
11. Events after the balance sheet date
On 25 July 2006 the Group announced the proposed acquistion of Ineum for total
consideration of Euro120 million (#82 million) plus the assumption of up to Euro13.8
million (#9 million) of debt. The acquisition is due to complete in September
2006.
Important note
This trading update contains certain forward-looking statements with respect to
the financial condition, results, 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 or developments to differ materially from those expressed or implied by
these forward-looking statements and forecasts. Nothing in this trading update
should be construed as a profit forecast.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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