Management Consulting Group PLC Interim Management Statement (7919P)
October 30 2012 - 11:17AM
UK Regulatory
TIDMMMC
RNS Number : 7919P
Management Consulting Group PLC
30 October 2012
30 October 2012
Management Consulting Group PLC
Interim Management Statement and Share Buy-back Programme
Management Consulting Group PLC ("MCG" or "the Group"), the
international professional services group, today provides an
Interim Management Statement with an update on progress in its
business since reporting its half-year results on 2 August 2012.
MCG also announces today that it intends to commence a share
buy-back programme to make market purchases of up to GBP5m of its
ordinary shares over the next twelve months.
The Group's two operating divisions, Alexander Proudfoot and
Kurt Salmon, are performing in line with expectations, and the
outlook for the businesses has not changed from that reported in
the Group's half-year results.
Alexander Proudfoot has continued to benefit from demand from
clients in the natural resources sector and those with operations
in emerging markets, and it continues to invest to grow its
activities in these sectors. All parts of the Proudfoot business
have performed well this year, although continuing economic
uncertainty in Europe and North America is having some effect on
the timing and size of opportunities in these markets in the second
half of 2012. For the year as a whole Alexander Proudfoot is
expected to report total revenues similar to those reported in
2011.
Kurt Salmon's operations in North America and Asia, mainly
focused on the retail and consumer goods sector, have continued to
perform well. In Europe, client activity levels appear to have
stabilised, albeit at lower levels than in 2011. Kurt Salmon's
longstanding relationships with its existing clients provide a
stable platform for the business, and it has also been successful
this year in expanding its client base in its target areas. The
relative weakening of the Euro during 2012 compared to 2011 will
have some impact on reported revenues in Sterling for the year as a
whole.
As noted in our interim statement on 2 August, in the light of
current market conditions we have taken action to underpin the
profit performance of the Kurt Salmon business in 2012 and 2013,
including restructuring certain practices, eliminating some
non-core lower margin activities and making adjustments to
headcount, resulting in further non-recurring costs in the second
half of 2012.
In the trading update released on 13 June this year, the Board
stated its belief that MCG's share price has not reflected the
underlying value of the business and noted that if this
undervaluation continued, it would consider utilising some of the
cash generated by the business for share buy-backs. In recent
months the market price of MCG's shares has persisted at a level
which the Board believes does not properly reflect the value of the
business and accordingly the Board has concluded that it is now
appropriate to commence market purchases of MCG shares.
The buyback programme will be conducted in accordance with the
terms of the authority to make market purchases of the Company's
own shares given to the directors at the Annual General Meeting
held on 19 April 2012. It is expected that the programme will be
executed over the course of the next twelve months and will
comprise market purchases of up to GBP5m in aggregate over the
buyback period. The Board will keep the appropriateness of the
programme under review based on factors including market conditions
and MCG's business requirements.
The Group continues to make conditional share awards to senior
employees to align their interests better with those of
shareholders as a whole. Shares which are purchased in the market
will be held as Treasury shares, which the Board expects will be
applied towards satisfying existing employee share awards over the
next three years. To the extent that these Treasury shares are not
used for share awards they will be dealt with in accordance with
applicable law and regulation.
The Board believes that the programme is in the interests of all
shareholders and remains committed to delivering shareholder value
through all appropriate means including dividends, organic growth,
recruitment and investment in existing operations, as well as
appropriate acquisitions. The Group's net debt remains well below
historic levels. MCG is in a strong financial position and is both
profitable and cash generative, affording flexibility regarding
methods to increase long-term shareholder returns and providing the
necessary resources to repurchase MCG shares, whilst maintaining
investment for growth.
Nick Stagg, Chief Executive commented:
"Kurt Salmon and Alexander Proudfoot have a strong position in
their core markets and have continued to make good progress in
spite of the difficult market conditions experienced this year.
Whether or not market conditions improve in 2013, MCG has a broadly
diversified business in terms of both geography and sector focus,
its operations are profitable and cash generative, and we will
continue to focus on investing for profitable growth in the
business and improving returns to shareholders. This will include
the purchase of MCG shares in the market to mitigate the dilution
from employee share plans, given the Board's view on the
undervaluation of the business reflected in the share price."
For further information please contact:
Management Consulting Group PLC Tel: +44 20 7710 5000
Nick Stagg, Chief Executive
Chris Povey, Group Finance Director
FTI Consulting (formerly Financial Tel: +44 20 7831 3113
Dynamics)
Ben Atwell, Susan Stuart
Notes to editors:
Management Consulting Group PLC (MMC.L) provides professional
services across a wide range of industries and sectors.
It comprises two independently managed practices: Alexander
Proudfoot and Kurt Salmon. Alexander Proudfoot develops and
implements operational improvements to its clients to increase
productivity and reduce costs. Kurt Salmon provides consultancy
services to a wide range of industries in both the private and
public sectors. The Group operates worldwide. For further
information, visit www.mcgplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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