Management Consulting Group PLC Interim Management Statement (7919P)

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RNS Number : 7919P

Management Consulting Group PLC

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

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