TIDMMMC
RNS Number : 6395B
Management Consulting Group PLC
06 March 2014
6 March 2014
MCG Announces Preliminary Results for 2013
Stronger second half performance in Alexander Proudfoot
and encouraging progress in Kurt Salmon
Management Consulting Group PLC ("MCG" or "the Group"), the
global professional services group, today announces its results for
the year ended 31 December 2013.
Key points
-- Revenues of GBP257.3m (2012: GBP285.8m); approximately 10% lower
-- Underlying* operating profit of GBP21.2m (2012: GBP25.7m),
with underlying operating profit margin slightly lower at 8.2%
(2012: 9.0%)
-- Profit from operations of GBP17.5m, down 4% (2012: GBP18.2m)
with improved margin on profit from operations - up at 6.8% (2012:
6.4%). Retained profit for the year of GBP9.1m (2012: GBP10.4m
restated)
-- Strong cash generation in the second half of the year
resulting in closing net debt of GBP39.8m (2012: GBP30.3m),
approximately 1.5x adjusted EBITDA**
-- Underlying* EPS of 2.4p (2012: 3.2p restated); basic EPS 1.9p (2012: 2.1p restated)
-- Proposed final dividend of 0.595p per share. Total dividend
unchanged at 0.825p per share (2012: 0.825p per share)
* Throughout this statement the term 'underlying' is defined as
'before non-recurring items and amortisation of acquired
intangibles'.
**Adjusted EBITDA is adjusted operating profit, after adding
back depreciation and amortisation and certain other non-cash items
including the cost of share awards.
The results for the year ended 31 December 2012 have been
restated for the impact of amendments to "IAS 19, Employee
Benefits", which are explained further in note 2.
Nick Stagg, Chief Executive, commented:
"Whilst the Group's results for 2013 do not match those in the
previous year, the second half performance was significantly better
than the first half. We remain focused on improving the performance
of Alexander Proudfoot and will invest in this business in 2014 to
improve its longer term performance. Kurt Salmon has had a good
start to the year and we expect to see some underlying revenue
growth and a continued slight improvement in operating margins in
2014. Overall, we remain focused on leveraging our core expertise
and market leading positions to deliver improved results."
For further information please contact:
Management Consulting Group PLC
Nick Stagg Chief Executive 020 7710 5000
Chris Povey Finance Director 020 7710 5000
FTI Consulting
Ben Atwell 020 7831 3113
An analyst briefing will be held at the offices of FTI
Consulting at Holborn Gate, 26 Southampton Buildings, London WC2A
1PB on 6 March at 9.30am.
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 helps clients to
embed disciplined execution in their operations to achieve growth
targets, revenue and profit goals. 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.
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 or developments to differ materially from those expressed
or implied by these forward-looking statements and forecasts. The
forward-looking statements are based on the directors' current
views and information known to them at 6 March 2014. The directors
do not make any undertakings to update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise. Nothing in this statement should be
construed as a profit forecast.
Chairman's Statement
The performance of the Group's businesses in 2013 was adversely
affected by a poor first half in Alexander Proudfoot and the
continued impact of market weakness on the Kurt Salmon operations
in France. We saw a much improved performance overall in the second
half of the year, which has provided a more encouraging start to
2014.
In Kurt Salmon we have worked hard to protect our margins and
profitability to mitigate the effects of market weakness in France,
where Kurt Salmon has its largest and most broadly based practice.
Our French business remains a market leader and is well positioned
to benefit as conditions in the country improve. In other European
markets, in North America and in Asia, Kurt Salmon has continued to
make progress. I am pleased that we improved our margin in Kurt
Salmon despite lower revenues, a reflection of the actions taken in
the last two years to focus on the profitability of our core
practices, as well as the market strength of the Kurt Salmon brand,
the quality of our offering to clients, and the capabilities and
dedication of our people. Although it is still early, the first
weeks of the new financial year have shown promise across the Kurt
Salmon business.
After a weak first half, Alexander Proudfoot's revenues
recovered strongly in the second half, up more than 40% on the
previous six months, but the results for the year as a whole did
not match those reported in 2012. Alexander Proudfoot has had a
weak start to 2014, and although the pipeline of prospects is
encouraging, and taking into account currency headwinds, we have a
cautious view on the outlook for the business at this stage of the
year. The volatility seen in Alexander Proudfoot over the course of
the 2013 has been a feature in previous years, and will remain an
issue for the business whilst it is based on the sale and delivery
of a relatively small number of discrete large scale projects in
any given year. Proudfoot has a unique and compelling offering and
the Board has concluded that development and investment are now
required to provide it with a firm platform for profitable growth
in the future. We expect these initiatives to have some negative
impact on the profitability of the Alexander Proudfoot business
during 2014, but over timethey should help to build a more stable
and predictable revenue base and drive top-line growth.
As announced on 5 March, Luiz Carvalho has stepped down as CEO
of Alexander Proudfoot and as a director of MCG. I would like to
thank Luiz for his valuable contribution as CEO of Alexander
Proudfoot and as a director of MCG over many years. Nick Stagg will
now take on the role of CEO of Alexander Proudfoot on an interim
basis in addition to his Group CEO role. Whilst Nick is fulfilling
the Alexander Proudfoot role I will increase my day to day
involvement with the Group, supporting Nick and the executive
management team. It remains my intention, as announced on 13
December 2013, to step down as Chairman of MCG at the end of
2014.
The Group remains in a strong financial position and our net
indebtedness at the end of 2013 of GBP39.8m was approximately 1.5
times adjusted EBITDA. We will continue to focus on promoting
profitable growth in the business to benefit our shareholders. The
Board is proposing to maintain the dividend for the full year at
0.825 pence per share.
Kurt Salmon and Alexander Proudfoot deliver work of the highest
quality to their clients. We continue to work to develop our
businesses through investment and recruitment in those sectors and
geographies where there aregood prospects for profitable growth. If
we continue to maintain and grow our client base, whilst sustaining
and improving the quality of our offering, we will deliver value to
our shareholders and provide satisfying opportunities for our
people.
Alan Barber
Chairman
6 March 2014
Chief Executive's review
Overview
MCG has two operating divisions: Alexander Proudfoot and Kurt
Salmon, which serve a broad range of industries in a number of
geographies. MCG operates globally with approximately 96% of
revenue in 2013 coming from projects delivered outside the UK.
The Group delivered a much improved performance in the second
half of 2013, following a poor first half driven by a disappointing
result in Alexander Proudfoot. The year as a whole was also
affected by weakness in the Kurt Salmon business in France although
in Kurt Salmon outside France we saw improved momentum, and a
better overall performance in the second half leading to an
enhanced margin for the year as a whole.
MCG's strategy is to exploit the platform provided by its
existing businesses, which are leaders in their fields, in order to
drive organic revenue and margin growth. We have no current
intention to make large-scale acquisitions, but will look to add
capabilities where appropriate through smaller acquisitions and
team hires. We will focus on opportunities for growth in markets
and industry sectors where we can readily exploit our strengths.
The geographical spread of our businesses and our existing global
office infrastructure will support an increase in operational
activity. We are committed to continuing to deliver efficiencies in
the Group's operations and to enhancing financial discipline across
the Group.
Results for the year
Total revenue for the year ended 31 December 2013 was GBP257.3m,
10% lower than the previous year (2012: GBP285.8m). Two principal
factors contributed to the reduction in revenue. First, Alexander
Proudfoot's revenues in the first half of 2013 were significantly
lower than those seen over the previous two-and-a-half years, and
although they recovered strongly in the second half of the year,
revenues for 2013 as a whole were nearly GBP18m, some 21% lower
than in 2012. Second, revenues in Kurt Salmon's French business
were some GBP10m lower than the previous year as a result of
continued weakness in that market. The change in overall revenues
in Kurt Salmon was also affected by the management action to divest
or restructure during 2012 and 2013 non-core and low margin
practices, as a result removing more than GBP5m of revenue year to
year on a like-for-like basis.
These effects were mitigated by continued revenue growth in Kurt
Salmon elsewhere in Europe, and in North America and Asia.
Underlying operating profit in 2013 was GBP21.2m (2012:
GBP25.7m), the GBP4.5m reduction principally reflecting the impact
of lower revenues and margins in Alexander Proudfoot. Underlying
operating profit in Kurt Salmon was higher than the previous year,
but the weaker revenue and its margin impact in Alexander Proudfoot
in the first half resulted in a slightly lower underlying operating
profit margin for the Group for the year as a whole of 8.2% (2012:
9.0%).
We continue to seek to align the performance of employees in
each of our businesses with objectives that are consistent with
value creation for our shareholders. Underlying operating profit
for 2013 reflects a charge of GBP3.9m relating to share awards made
to employees (2012: GBP3.1m). During the year 100 senior employees
(including directors) received awards over approximately 13.6
million shares in total, generally vesting over three years and
conditional upon continued employment, and in some cases also
subject to financial or share price performance. At the year end
there were total awards in place over 48.8 million shares relating
to 135 employees (2012: 43.3 million shares and112 employees). Some
25.5 million of these share awards, should they vest, are required
to be satisfied from existing MCG shares, and the other awards may
be satisfied from existing or new shares. The Group's Employee
Benefit Trusts held 11.9 million shares at the year end for this
purpose, and a further 2.4 million treasury shares were held which
may be used to satisfy share awards. Some 160 of our employees now
either hold shares in MCG or have received conditional awards over
MCG shares.
For 2013 the Group is reporting net non-recurring expenses of
GBP1.5m (2012: GBP5.3m). These comprise GBP1.2m relating to
redundancy and similar costs, mainly in France, and a loss on
disposal of GBP0.3m relating to the sale of Cleversys, a non-core
IT business within Kurt Salmon.
The charge for amortisation of acquired intangibles was GBP2.2m
(2012: GBP2.3m). Consequently the profit from operations decreased
to GBP17.5m (2012: GBP18.2m), a margin of 6.8% (2012: 6.4%).
The net interest expense was unchanged at GBP3.5m (2012: GBP3.5m
restated). Revisions to IAS 19 mean that the reported net interest
charge for 2013 (and 2012 as restated) now includes an imputed
charge in relation to defined benefit pensions of GBP1.2m (2012:
GBP1.0m restated).
The profit before tax was slightly lower at GBP14.0m (2012:
GBP14.7m restated). The tax charge was GBP4.9m (2012: GBP4.3m).
After adjusting for non-underlying items the underlying effective
tax rate was 34% (2012: 30% restated). The increase in the
underlying tax rate in 2013 reflects the fact that in 2012 some
previously unrecognised tax losses were recognised in the deferred
tax asset.
Consequently, the profit for the year attributable to the
shareholders decreased to GBP9.1m (2012: GBP10.4m restated).
Underlying earnings per share were 2.4p (2012: 3.2p restated) and
basic earnings per share were 1.9p (2012: 2.1p restated).
Balance sheet and dividend
The weak first half revenue performance in 2013 resulted in net
debt rising to GBP51.7m at the half year stage, however strong cash
generation in the second half reduced net debt by GBP11.9m to
GBP39.8m at the end of the year (2012: GBP30.3m). This equates to
1.46x adjusted EBITDA for 2013 as measured for the purpose of the
Group's borrowing facility. Cash generated by operations was
GBP6.7m, lower than in the previous year (2012: GBP14.9m) as a
result of lower operating profits and unfavourable working capital
movements.
On 30 October 2012 MCG announced that it intended to commence a
share buy-back programme to make market purchases of its ordinary
shares of up to GBP5m over the succeeding twelve months, and on 31
October 2013 it announced that this programme would be extended for
a further six months. Up to 31 December 2013 the Company had
purchased 2.8 million of its ordinary shares of 1p each for a total
consideration of GBP0.7m.
The interim dividend for 2013 of 0.23p per share was paid on 7
January 2014. The Board is recommending, subject to shareholder
approval, an unchanged total dividend for the year of 0.825p per
share. The directors therefore recommend, subject to shareholder
approval, a final dividend for 2013 of 0.595p per share to be paid
on 2 July 2014 to shareholders on the register on 16 May 2014.
Alexander Proudfoot
Results for the year
Notwithstanding a strong recovery in the second half, the weak
first half performance in Alexander Proudfoot led to a
disappointing result for the year as a whole with revenues 21%
lower than the previous year at GBP68.8m (2012: GBP86.7m).
The lower revenues resulted in a reduced underlying operating
profit for the year as a whole of GBP7.4m (2012: GBP12.2m) and
lowered margins. The underlying profit margin for the year was
10.8% (2012: 14.1%).
The weak revenue performance in the first half of 2013 reflected
the impact of a reduced order book position at the end of 2012 and
slow order intake in the early part of 2013. The order intake
picked up significantly as the year progressed and this was the
basis of a strong recovery in revenues and margin in the second
half, delivering 40% higher revenues than the first half, and a
second half operating profit margin broadly in line with the same
period in 2012.
The number of staff employed byAlexander Proudfoot increased
from 294 at the end of 2012 to 337 at the end of 2013. The business
operates a flexible global staffing model and employee numbers were
higher at times during 2013 to meet the requirements of client
projects.
Review of operations
During 2013 Alexander Proudfoot was organised on the basis of
six business units: Europe, North America, South Africa, Brazil,
Chile and Hong Kong. The business is headquartered in Atlanta in
the United States. Alexander Proudfoot serves clients globally from
these locations.
The first half weakness was not focused on one particular
geography or sector, although the proportion of work for clients in
the natural resources sector was lower than in 2012, at close to
one-third of total revenue for the year. The nature of the work in
this sector has also shifted as commodity prices have softened,
from throughput/revenue-related work to production efficiency/cost
reduction. Alexander Proudfoot has continued to find success across
a range of other industries, with the financial services and
manufacturing sectors being the most significant sources of revenue
alongside natural resources clients.
In the North American business unit, revenues were slightly down
year on year, but this unit provided approximately 40% of total
divisional revenues in 2013, reflecting stronger momentum in terms
of activity levels in the United States relative to other
geographies.
In Western Europe the business has focused on three core
markets: the UK, France and Germany. In recent years it has also
generated significant revenues from projects sold to natural
resources clients headquartered in Europe, which are typically
delivered at operational locations in other parts of the world. As
a result, the lower level of natural resources work in 2013
contributed to significantly lower revenues in the European
business in the year.
Alexander Proudfoot operates very effectively in emerging
markets. The Hong Kong business unit was established in early 2013
and had a successful first year, generating GBP1.3m in revenues.
Overall revenues from the two South American business units
increased year on year, although those in the South African unit
were significantly lower as a result of the reduced levels of
activity in the natural resources sector. In overall terms, nearly
50% of Alexander Proudfoot's revenues in 2013 related to work
delivered (rather than sold) outside North America and Western
Europe.
Alexander Proudfoot has demonstrated over many years that it has
a unique and compelling offering that produces real and sustainable
performance improvement for its clients. The business has a global
reach and a flexible capability and is well placed to grow in those
industry sectors where it has a strong track record of success, in
both developed and emerging markets. The weak performance in the
first half of 2013 has highlighted the potential volatility in the
revenue profile of the business over a short term reporting cycle,
given the typically large scale of most of its individual client
projects. Proudfoot's current business model does not necessarily
produce a regular cycle of recurring work with the same client over
a period of several years. In order to mitigate this, the business
has continued to focus on building long-term relationships with
existing and prospective clients as well as driving individual
project sales. Approximately two-thirds of 2013 revenues related to
work for clients with whom the business had an existing
relationship.
However, as noted, the MCG Board and the Alexander Proudfoot
management team intend to continue to work to develop and invest in
the offering further to provide a more stable revenue base and
establish a sound platform for long term growth.
Kurt Salmon
Results for the year
Kurt Salmon reported an overall decrease in revenues in 2013 but
a small increase in underlying operating profit reflecting
management action to drive margin improvement.
Overall revenues for the year were GBP188.5m, some 5.3% lower
than the previous year (2012: GBP199.0m). The lower revenues
reflect weaker activity in France, mitigated by some growth in
other markets. Notwithstanding lower revenues, Kurt Salmon reported
an increase in underlying operating profit for the year to GBP13.8m
(2012: GBP13.5m) and an improved underlying operating margin of
7.3% (2012: 6.8%).
In 2012 and 2013 management divested or restructured certain
non-core low margin practices within Kurt Salmon. This removed more
than GBP5m of revenue year on year and contributed both to the
lower total revenues in Kurt Salmon and the improved margin. In
September 2013 Kurt Salmon completed the sale of Cleversys, an IT
implementation practice that operated alongside the Kurt Salmon
consulting business in France. Cleversys' revenues in 2013 as part
of the MCG Group were GBP5.0m (2012: GBP6.4m).
The number of staff employed by Kurt Salmon decreased during the
year from 1,350 at the end of 2012 to 1,131 at the end of 2013. The
overall headcount reduction reflects the decisions taken by
management to adapt to lower levels of activity in France, both in
terms of natural attrition and redundancies implemented during the
year, and the impact of the disposal of Cleversys. Kurt Salmon
continues to recruit in the higher growth sectors and geographies
within the business.
Review of operations
Kurt Salmon is organised on the basis of geographic locations
and global industry verticals. Kurt Salmon has its headquarter
operations in Paris and New York. In Continental Europe Kurt Salmon
operates from offices in France, Germany, Belgium Luxembourg, and
Switzerland. It operates in the UK from MCG's head office location
in London, and in the United States from New York, Atlanta and San
Francisco. In Asia, Kurt Salmon has offices in Tokyo, Shanghai and
Hong Kong.
The French consulting practice produced about 45% of Kurt
Salmon's total revenues in 2013 and market conditions in France are
therefore a key driver for the business as a whole. Kurt Salmon
remains a leader in the French management consulting market with a
stable blue chip client base. A high proportion of its annual
revenues are derived from clients who have been commissioning work
from Kurt Salmon for many years and the French business was
resilient through the weak economic conditions that prevailed in
the wake of the 2008 financial crisis. In 2012 it was clear that
economic uncertainty related to the Eurozone crisis had adversely
affecting spending by our existing clients on consulting services
in France. Whilst the Eurozone issues eased in 2013, the underlying
weakness in the French economy that emerged more clearly in the
second half of the year continued to affect the level of revenues
in France, which were some 10% lower in 2013 than 2012. As a result
the Kurt Salmon management team actively managed costs and staff
resources in the French business during 2013 to align these with
lower revenue levels.
The Kurt Salmon business in France is broadly based in terms of
industry coverage; the most significant sectors are financial
services, industrials and the public sector. Consulting spend by
some financial sector clients was again subdued in 2013, and
revenue from public sector work decreased sharply compared with
2012. In contrast, revenue from industrial clients increased
slightly. Many clients were cautious in the year and we saw a trend
towards commissioning smaller multiple consulting projects over
time, rather than single larger projects.
Elsewhere in Europe, Kurt Salmon has operations in the UK,
Germany, Luxembourg, Belgium and Switzerland, which together
represented approximately 12% of total divisional revenues in 2013.
In overall terms these other European practices performed well in
2013, generating double-digit revenue growth on a like-for-like
basis, led by a particularly strong performance from the retail
practice in Germany.
Kurt Salmon's operations in North America represented
approximately 35% of total divisional revenues in 2013, the largest
element of which related to the retail and consumer goods practice.
In most respects this business performed well in 2013, although
positive revenue growth trends in the core retail consulting
businesses, particularly in relation to the interaction of bricks
and mortar and digital retail platforms, were offset by a weaker
performance in that part of the practice working with private
equity clients on retail-focused transactions. Our North American
healthcare consulting practice continued to make good progress and
won a significant new project outside its core market to advise on
a major hospital development in the Middle East. The US financial
services practice, based in New York, also made good progress in
2013, reporting increased revenues.
In Asia, Kurt Salmon's businesses in Japan and China are focused
on the retail sector and together represented less than 5% of total
divisional revenues in 2013. Our Japanese business has seen
improved demand as confidence has improved in the wake of a more
expansionary fiscal policy, and reported revenue growth in local
currency of nearly 30% in 2013, although this was significantly
lower in Sterling terms as a result of the weaker Yen. The Chinese
business, acquired in 2011, continues to make good progress.
Whilst growth in the French economy stalled during most of 2013
and business confidence was damaged by the failure so far to
implement long-term restructuring initiatives, there are signs that
client activity levels for Kurt Salmon appear to have stabilised,
and the business has had a good start to 2014. Revenue growth in
the French business in 2014 is chiefly dependent on whether we see
a better trading environment driven by a significant improvement in
business confidence. France will remain an important and profitable
market for Kurt Salmon. In North America and Asia there are good
short-term prospects for organic growth.
Summary
Whilst the Group's results for 2013 as a whole do not match
those in the previous year, the performance of both our businesses
was significantly better in the second half of the year than in the
first.
Alexander Proudfoot had a difficult start to 2013, and whilst
the second half performance improved significantly, the result for
the year as a whole was disappointing. Kurt Salmon's performance
was affected by weakness in the French market, where it remains a
leading player in the consulting sector, but we took action in 2013
to adjust resources to the right level and therefore to protect our
margins. Elsewhere, in our other European operations, and in North
America and Asia, Kurt Salmon continued to perform well, and the
operating profit margin in Kurt Salmon as a whole improved.
Outlook
MCG reports its results in Sterling but its revenues and costs
are largely incurred and billed in other currencies. The recent
strengthening of Sterling against both the Euro and US Dollar, and
recent currency volatility in some emerging markets, if these were
to persist, will affect year on year revenue trends reported in
Sterling. The impact may be greater on the Alexander Proudfoot
business, which has a significant proportion of its revenues in
emerging markets currencies, the South African Rand and Brazilian
Real in particular. The margin impact of such currency volatility
on the Group's reported results in Sterling is however partly
mitigated by the fact that a significant part of the Group's
operating costs are based in these same local currencies.
Kurt Salmon has had a good start to 2014 in all key geographies
and the current order book position is ahead of the same time last
year with a healthy pipeline of prospects at this stage. Client
activity in our French business has been encouraging in the first
two months of the year, and the business is properly resourced to
manage expected demand. In the US, the Kurt Salmon retail and
consumer goods practice delivered a strong finish to 2013 and the
positive trend has continued into 2014. The management team at Kurt
Salmon has positioned the business to take advantage of the
increasing challenges facing its clients in terms of digital
transformation, and this provides opportunities for profitable
growth in 2014. The current outlook for Kurt Salmon as a whole in
2014 is for some revenue growth and a continued slight improvement
in operating margins.
The Board's efforts will focus on maintaining and improving the
performance of Alexander Proudfoot for the long term. At this stage
we retain a cautious view on the outlook for this business in 2014.
The order intake in Alexander Proudfoot in the latter part of 2013
slowed a little, and the level of the year end order book, although
higher than the position at the beginning of the year, was lower
than at the 2013 half year stage. The rate of order intake in the
first two months of 2014 has been slower than expected, although
the current order book is satisfactory and the pipeline of
prospects is encouraging. The rate of conversion of the current
pipeline to order input will now need to increase in order to
deliver revenues for the first half of 2014 that are significantly
higher than the same period in 2013, and material revenue growth
for 2014 as a whole. As noted, currency headwinds will also affect
reported revenues.
In the light of the performance in 2013 and the slow start to
2014, the Board of MCG has undertaken a review of the business to
explore ways to develop the offering to provide a more secure
revenue base, and establish a sound platform for long term growth.
It is likely that the initiatives that result will require some
investment in the business in 2014, which will have some adverse
impact on margins this year, notwithstanding the quantum of
revenues that are delivered.
Kurt Salmon has had a good start to 2014 in all key geographies
and the current order book position is ahead of the same time last
year with a healthy pipeline of prospects at this stage. Client
activity in our French business has been encouraging in the first
two months of the year, and the business is properly resourced to
manage expected demand. In the US, the Kurt Salmon retail and
consumer goods practice delivered a strong finish to 2013 and the
positive trend has continued into 2014. The management team at Kurt
Salmon has positioned the business to take advantage of the
increasing challenges facing its clients in terms of digital
transformation, and this provides opportunities for profitable
growth in 2014. The current outlook for Kurt Salmon as a whole in
2014 is for some revenue growth and a continued slight improvement
in operating margins.
MCG retains a strong position in its key European markets and
has well-established positions and brands in North America where
economic growth is expected to be more robust. Approximately 17% of
MCG's 2013 revenues were derived from projects delivered outside
the developed economies of North America and Western Europe, and
emerging markets continue to provide opportunities for growth which
may not be so readily available elsewhere.
We will continue to work to develop our businesses with
selective investment and recruitment in those sectors and
geographies where there are good prospects for profitable growth in
order to deliver value to our shareholders.
Group income statement
2013 2012
Note GBP'000 GBP'000
restated
------------------------------------------- ---- --------- ---------
Continuing operations
Revenue 4 257,304 285,759
Cost of sales (165,226) (185,308)
------------------------------------------- ---- --------- ---------
Gross profit 92,078 100,451
------------------------------------------- ---- --------- ---------
Administrative expenses - underlying (70,898) (74,705)
------------------------------------------- ---- --------- ---------
Profit from operations - underlying 21,180 25,746
Administrative expenses - non--recurring
other (net) (1,525) (5,304)
------------------------------------------- ---- --------- ---------
Profit from operations before amortisation
of acquired intangibles 19,655 20,442
Administrative expenses - amortisation
of acquired intangibles (2,161) (2,255)
------------------------------------------- ---- --------- ---------
Total administrative expenses (74,584) (82,264)
------------------------------------------- ---- --------- ---------
Profit from operations 4 17,494 18,187
Investment revenues 8 121 239
Finance costs 8 (3,595) (3,732)
------------------------------------------- ---- --------- ---------
Profit before tax 14,020 14,694
Tax 9 (4,897) (4,304)
------------------------------------------- ---- --------- ---------
Profit for the year attributable to owners
of the company 9,123 10,390
------------------------------------------- ---- --------- ---------
Earnings per share - pence
From profit for the year attributable
to owners of the company
Basic 10 1.9 2.1
Diluted 10 1.8 2.1
Basic - underlying 10 2.4 3.2
Diluted - underlying 10 2.3 3.1
-------------------------------------- --- ---
Results for the year ended 31 December 2012 have been restated
for the impact of amendments to "IAS 19 Employee Benefits", which
are explained further in note 2.
Group statement of comprehensive income
2013 2012
GBP'000 GBP'000
restated
------------------------------------------------- -------- --------
Profit for the year 9,123 10,390
------------------------------------------------- -------- --------
Items that will not be subsequently reclassified
to profit and loss:
Actuarial gains/ (losses) on defined benefit
post-retirement obligations 5,205 (3,434)
Tax on comprehensive income items 1,124 11
------------------------------------------------- -------- --------
6,329 (3,423)
Items that may be subsequently reclassified
to profit and loss:
(Loss)/ gain on available-for-sale investments (83) 154
Exchange differences on translation of foreign
operations 1,912 (5,826)
------------------------------------------------- -------- --------
1,829 (5,672)
------------------------------------------------- -------- --------
Total comprehensive income the year attributable
to owners of the company 17,281 1,295
------------------------------------------------- -------- --------
Group statement in changes of equity
Shares
Share held
by
Share Share Merger compensation employee Translation Other Retained
benefits
capital premium reserve reserve trust reserve reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- --------- --------- ------------ ---------- ----------- -------- ----------- ----------
Balance at
1 January
2013 84,504 82,040 32,513 5,732 (3,627) 23,214 6,383 (36,193) 194,566
--------------- --------- --------- --------- ------------ ---------- ----------- -------- ----------- ----------
Profit for the
year - - - - - - - 9,123 9,123
Exchange
differences - - - - - 1,912 - - 1,912
Actuarial
movements - - - - - - - 5,205 5,205
Loss on AFS
investments - - - - - - (83) - (83)
Tax on
comprehensive
income items - - - - - - - 1,124 1,124
Tax on equity
items - - - - - - - (195) (195)
Share-based
payments - - - 3,039 - - - - 3,039
Lapsed/ vested
shares - - - (2,532) 140 - - 2,069 (323)
Shares
acquired
by employee
benefits
trust - - - - (718) - - - (718)
Shares
transferred
from employee
benefits
trust - - - - 94 - - - 94
Dividends paid
to
shareholders - - - - - - - (2,878) (2,878)
--------------- --------- --------- --------- ------------ ---------- ----------- -------- ----------- ----------
Balance at
31 December
2013 84,504 82,040 32,513 6,239 (4,111) 25,126 6,300 (21,745) 210,866
--------------- --------- --------- --------- ------------ ---------- ----------- -------- ----------- ----------
Balance at
1 January
2012 84,504 82,040 32,513 3,388 (3,739) 29,040 6,229 (39,237) 194,738
--------------- --------- --------- --------- ------------ ---------- ----------- -------- ----------- ----------
Profit for the
year -
restated - - - - - - - 10,390 10,390
Exchange
differences - - - - - (5,826) - - (5,826)
Actuarial
movements
- restated - - - - - - - (3,434) (3,434)
Gain on AFS
investments - - - - - - 154 - 154
Tax on
comprehensive
income items - - - - - - - 11 11
Tax on equity
items - - - - - - - (138) (138)
Share-based
payments - - - 2,344 - - - - 2,344
Shares
acquired
by employee
benefits
trust - - - - (284) - - - (284)
Shares
transferred
from employee
benefits
trust - - - - 396 - - - 396
Dividends paid
to
shareholders - - - - - - - (3,785) (3,785)
--------------- --------- --------- --------- ------------ ---------- ----------- -------- ----------- ----------
Balance at
31 December
2012 84,504 82,040 32,513 5,732 (3,627) 23,214 6,383 (36,193) 194,566
--------------- --------- --------- --------- ------------ ---------- ----------- -------- ----------- ----------
Group balance sheet
2013 2012
GBP'000 GBP'000
--------------------------------------- --------- ---------
Non--current assets
Intangible assets and goodwill 266,806 266,397
Property, plant and equipment 2,724 2,646
Investments 2,444 2,025
Deferred tax assets 16,486 19,985
--------------------------------------- --------- ---------
Total non--current assets 288,460 291,053
--------------------------------------- --------- ---------
Current assets
Trade and other receivables 68,709 63,988
Current tax receivable 1,941 2,376
Cash and cash equivalents 14,669 14,863
--------------------------------------- --------- ---------
Total current assets 85,319 81,227
--------------------------------------- --------- ---------
Total assets 373,779 372,280
--------------------------------------- --------- ---------
Current liabilities
Trade and other payables (70,787) (82,374)
Current tax liabilities (9,014) (12,147)
--------------------------------------- --------- ---------
Total current liabilities (79,801) (94,521)
--------------------------------------- --------- ---------
Net current assets/ (liabilities) 5,518 (13,294)
--------------------------------------- --------- ---------
Non--current liabilities
Financial liabilities (54,481) (45,150)
Retirement benefit obligations (19,582) (24,761)
Non--current tax liabilities (3,764) (4,516)
Long-term provisions (5,285) (8,766)
--------------------------------------- --------- ---------
Total non--current liabilities (83,112) (83,193)
--------------------------------------- --------- ---------
Total liabilities (162,913) (177,714)
--------------------------------------- --------- ---------
Net assets 210,866 194,566
--------------------------------------- --------- ---------
Equity
Share capital 84,504 84,504
Share premium account 82,040 82,040
Merger reserve 32,513 32,513
Share compensation reserve 6,239 5,732
Shares held by employee benefits trust (4,111) (3,627)
Translation reserve 25,126 23,214
Other reserves 6,300 6,383
Retained earnings (21,745) (36,193)
--------------------------------------- --------- ---------
Total equity attributable to owners of
the company 210,866 194,566
--------------------------------------- --------- ---------
Group cash flow statement
2013 2012
Note GBP'000 GBP'000
--------------------------------------------- ---- -------- --------
Net cash inflow from operating activities 11 1,842 4,609
--------------------------------------------- ---- -------- --------
Investing activities
Interest received 30 29
Purchases of property, plant and equipment (1,213) (778)
Purchases of intangible assets (1,333) (2,713)
Proceeds on disposal of fixed assets - 908
Purchase of financial assets (362) (90)
Proceeds on financial assets - 1,426
Disposal of subsidiaries 98 -
Acquisition of subsidiaries (320) (295)
--------------------------------------------- ---- -------- --------
Net cash used in investing activities (3,100) (1,513)
--------------------------------------------- ---- -------- --------
Financing activities
Interest paid (2,067) (2,295)
Dividends paid (3,890) (3,632)
Proceeds from borrowings 29,543 70,612
Repayment of borrowings (20,617) (70,659)
Proceeds on issue of shares - 600
Share buyback (718) (284)
--------------------------------------------- ---- -------- --------
Net cash generated from/ (used in) financing
activities 2,251 (5,658)
--------------------------------------------- ---- -------- --------
Net increase/ (decrease) in cash and cash
equivalents 993 (2,562)
Cash and cash equivalents at beginning
of year 14,863 19,762
Effect of foreign exchange rate changes (1,187) (2,337)
--------------------------------------------- ---- -------- --------
Cash and cash equivalents at end of year 14,669 14,863
--------------------------------------------- ---- -------- --------
Notes
1. Basis of preparation
The financial information included in this statement does not
constitute the Company's statutory accounts for the years ended 31
December 2013 or 2012, but is derived from those accounts.
Statutory accounts for 2012 have been delivered to the Registrar of
Companies and those for 2013 will be delivered following the
Company's annual general meeting. The auditor has reported on those
accounts; their reports were unqualified, did not draw attention to
any matters by way of emphasis without qualifying their reports and
did not contain statements under Section 498 Companies Act
2006.
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 IFRS.
The Group's Annual Report and Accounts and notice of Annual
General Meeting will be sent to shareholders on 21 March 2014 and
will be available at the Company's registered office at 10 Fleet
Place, London, EC4M 7RB, United Kingdom and on our website:
www.mcgplc.com.
The Annual General Meeting will be held at 2.30pm on 25 April
2014 at the offices of Baker & McKenzie LLP, 100 New Bridge
Street, London, EC4V 6JA.
2. Accounting policies
The financial information has been prepared in accordance with
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 (as at 31 December 2013). The policies have been
consistently applied to all the periods presented.
2012 results have been restated to reflect amendments to IAS 19
"Employee Benefits". The most significant change relates to the
accounting for changes in defined benefit obligations and scheme
assets. Under the restatement the 2012 consolidated income
statement is GBP1,271,000 lower and the statement of comprehensive
income is GBP1,271,000 higher. Further details regarding the
retrospective application of IAS 19 are available in note 2 of the
2013 Annual Report.
Full details of the Group's accounting policies can be found in
note 2 to the 2012 Annual Report which is available on our website:
www.mcgplc.com.
3. Going concern
The Group can draw up to GBP85 million under its fully revolving
credit facility which runs until July 2016. The Group prepares
regular business forecasts and monitors its projected compliance
with its banking covenants, which are reviewed by the Board.
Forecasts are adjusted for reasonable sensitivities which address
the principal risks to which the Group is exposed. Consideration is
given to the potential actions available to management to mitigate
the impact of one or more of these sensitivities, in particular the
discretionary nature of a significant amount of cost incurred by
the Group. On this basis the Board has concluded that it is
appropriate to continue to adopt the going concern basis in the
Group's financial statements.
4. Segmental information
The Group's operating segments are defined as the two
professional services practices, Alexander Proudfoot and Kurt
Salmon. This is the basis on which information is provided to the
Board of Directors for the purposes of allocating certain resources
within the Group and assessing the performance of the business. All
revenues are derived from the provision of professional
services.
Inter-segmental sales are not significant.
(a) Geographical analysis
The Group operates in three geographical areas; the Americas,
Europe and the Rest of World. The following is an analysis of
financial information by geographic segment:
(i) Revenue and underlying operating profit by geography
Rest of
Americas Europe World Group
-------------------------------------------- -------- ------- ------- -------
Year ended 31 December 2013 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- -------- ------- ------- -------
Revenue - continuing operations 108,426 129,662 19,216 257,304
Profit from operations before non-recurring
expenses and amortisation of acquired
intangibles 13,079 6,268 1,833 21,180
Non-recurring expenses and amortisation
of acquired intangibles (1,239) (2,447) - (3,686)
-------------------------------------------- -------- ------- ------- -------
Profit from operations 11,840 3,821 1,833 17,494
-------------------------------------------- -------- ------- ------- -------
Investment income 121
Finance costs (3,595)
-------------------------------------------- -------- ------- ------- -------
Profit before tax 14,020
-------------------------------------------- -------- ------- ------- -------
Rest of
Americas Europe World Group
-------------------------------------------- -------- ------- ------- -------
Year ended 31 December 2012 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- -------- ------- ------- -------
Revenue - continuing operations 106,136 156,016 23,607 285,759
Profit from operations before non-recurring
expenses and amortisation of acquired
intangibles 9,510 12,559 3,677 25,746
Non-recurring expenses and amortisation
of acquired intangibles (2,031) (5,518) (10) (7,559)
-------------------------------------------- -------- ------- ------- -------
Profit from operations 7,479 7,041 3,667 18,187
-------------------------------------------- -------- ------- ------- -------
Investment income (restated) 239
Finance costs (restated) (3,732)
-------------------------------------------- -------- ------- ------- -------
Profit before tax (restated) 14,694
-------------------------------------------- -------- ------- ------- -------
The revenue and underlying profit for Europe includes the
Group's operations in the UK, which represented less than 5% of
total Group revenue in 2013 (2012: 5%).
(ii) Net assets by geography
Rest of
Americas Europe World Group
At 31 December 2013 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- -------- -------- -------- ---------
Assets
Intangibles, including goodwill 110,426 153,089 3,291 266,806
Other segment assets 43,913 55,586 5,708 105,207
---------------------------------- -------- -------- -------- ---------
154,339 208,675 8,999 372,013
Unallocated corporate assets 1,766
---------------------------------- -------- -------- -------- ---------
Consolidated total assets 373,779
---------------------------------- -------- -------- -------- ---------
Liabilities
Segment liabilities (66,661) (87,065) (6,261) (159,987)
Unallocated corporate liabilities (2,926)
---------------------------------- -------- -------- -------- ---------
Consolidated total liabilities (162,913)
---------------------------------- -------- -------- -------- ---------
Net assets 210,866
---------------------------------- -------- -------- -------- ---------
Rest of
Americas Europe World Group
At 31 December 2012 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- -------- -------- -------- ---------
Assets
Intangibles, including goodwill 113,525 149,582 3,290 266,397
Other segment assets 42,182 55,218 4,871 102,271
---------------------------------- -------- -------- -------- ---------
155,707 204,800 8,161 368,668
Unallocated corporate assets 3,612
---------------------------------- -------- -------- -------- ---------
Consolidated total assets 372,280
---------------------------------- -------- -------- -------- ---------
Liabilities
Segment liabilities (71,025) (90,886) (7,161) (169,072)
Unallocated corporate liabilities (8,642)
---------------------------------- -------- -------- -------- ---------
Consolidated total liabilities (177,714)
---------------------------------- -------- -------- -------- ---------
Net assets 194,566
---------------------------------- -------- -------- -------- ---------
(iii) Capital additions, depreciation and amortisation by
geography
Rest of
Americas Europe World Group
Year ended 31 December 2013 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- ------- ------- -------
Capital additions 1,907 387 231 2,525
Unallocated corporate additions 21
-------------------------------- -------- ------- ------- -------
Total capital additions 2,546
-------------------------------- -------- ------- ------- -------
Depreciation and amortisation 2,631 2,340 91 5,062
-------------------------------- -------- ------- ------- -------
Rest of
Americas Europe World Group
Year ended 31 December 2012 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- ------- ------- -------
Capital additions 2,970 464 45 3,479
Unallocated corporate additions 12
-------------------------------- -------- ------- ------- -------
Total capital additions 3,491
-------------------------------- -------- ------- ------- -------
Depreciation and amortisation 1,937 2,698 63 4,698
-------------------------------- -------- ------- ------- -------
(b) Revenue and underlying operating profit by operating
segment
The two operating segments are combined into one reportable
segment owing to similar underlying economic characteristics across
the practices. Not all significant non-recurring items and
financial items can be allocated to the practices and are therefore
disclosed for the reportable segment as a whole. Assets and
liabilities by practice are not reviewed by the Board and are
therefore not disclosed.
Alexander
Proudfoot Kurt Salmon Total
----------------------------------------- ----------- -------------- --------
Year ended 31 December 2013 GBP'000 GBP'000 GBP'000
----------------------------------------- ----------- -------------- --------
Revenue - continuing operations 68,760 188,544 257,304
----------------------------------------- ----------- -------------- --------
Underlying operating profit 7,352 13,828 21,180
Non-recurring expenses and amortisation
of acquired intangibles (3,686)
----------------------------------------- ----------- -------------- --------
Profit from operations 17,494
Investment income 121
Finance costs (3,595)
----------------------------------------- ----------- -------------- --------
Profit before tax 14,020
----------------------------------------- ----------- -------------- --------
Alexander
Proudfoot Kurt Salmon Total
----------------------------------------- ----------- -------------- ---------
Year ended 31 December 2012 GBP'000 GBP'000 GBP'000
----------------------------------------- ----------- -------------- ---------
Revenue - continuing operations 86,749 199,010 285,759
----------------------------------------- ----------- -------------- ---------
Underlying operating profit 12,205 13,541 25,746
Non-recurring expenses and amortisation
of acquired intangibles (7,559)
----------------------------------------- ----------- -------------- ---------
Profit from operations 18,187
Investment income (restated) 239
Finance costs (restated) (3,732)
----------------------------------------- ----------- -------------- ---------
Profit before tax (restated) 14,694
----------------------------------------- ----------- -------------- ---------
5. Profit before tax
Profit before tax has been arrived at after (crediting)/
charging the following:
2013 2012
Note GBP'000 GBP'000
---------------------------------------------- ---- ------- -------
Net foreign exchange gains (269) (210)
Amortisation of intangible assets 4,073 3,607
Depreciation of property, plant and equipment 989 1,091
Gain on disposal of fixed assets (116) (571)
Non--recurring items 1,525 5,304
Staff costs 7 159,816 173,421
---------------------------------------------- ---- ------- -------
Non-recurring items in 2013 comprise of GBP1.2m in relation to
restructuring costs within Kurt Salmon and GBP0.3m in respect of a
loss on disposal of a subsidiary.
Non-recurring items in 2012 comprised of GBP2.9m in relation to
restructuring within Kurt Salmon, which included GBP2.9m for
redundancy and related expenses and a write down of GBP0.4m in
respect of assets held for disposal offset by GBP0.4m income from
asset disposals, and GBP2.4m in respect of property costs.
6. Dividends
2013 2012
GBP'000 GBP'000
------------------------------------------------ ------- -------
Amounts recognised as distributions to equity
holders in the year
Final dividend for the year ended 31 December
2012 of 0.595p per share (2011: 0.55p) 2,878 2,670
Interim dividend for the year ended 31 December
2012 of 0.23p per share - 1,115
------------------------------------------------ ------- -------
2,878 3,785
------------------------------------------------ ------- -------
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 2013 (in respect of the interim dividend for
the year ended 31 December 2012) was GBP32,934 (2012:
GBP27,943).
The 2012 final dividend of 0.595p per share was paid on 2 July
2013.
The 2013 interim dividend of 0.23p per share was paid on 7
January 2014.
The directors propose a final dividend of 0.595 p per share for
the year ended 31 December 2013.
7. Staff numbers and costs
The average number of persons employed by the Group (including
executive directors) during the year, analysed by category, was as
follows:
2013 2012
Number Number
-------------------- ------- -------
Sales and marketing 124 98
Consultants 1,238 1,356
Support staff 219 240
-------------------- ------- -------
1,581 1,694
-------------------- ------- -------
The number of Group employees at the yearend was 1,490 (2012:
1,697).
The aggregate payroll costs of these persons were as
follows:
2013 2012
GBP'000 GBP'000
---------------------- ------- -------
Wages and salaries 129,039 139,677
Social security costs 26,184 29,191
Other pension costs 4,593 4,553
---------------------- ------- -------
159,816 173,421
---------------------- ------- -------
8. Investment revenues and finance costs
Investment revenues 2013 2012
GBP'000 GBP'000
restated
Interest receivable on bank deposits and
similar income 30 29
Gain in relation to financial instruments 91 210
------------------------------------------- --------- ----------
121 239
------------------------------------------- --------- ----------
Finance costs 2013 2012
GBP'000 GBP'000
restated
------------------------------------------ ------- --------
Interest payable on bank overdrafts and
loans and similar charges (2,435) (2,746)
Finance costs on retirement benefit plans (1,160) (986)
------------------------------------------ ------- --------
(3,595) (3,732)
------------------------------------------ ------- --------
9. Tax
UK corporation tax is calculated at 23.25% (2012: 24.5%) of the
estimated assessable profit for the year. Taxation for other
jurisdictions is calculated at the rates prevailing in the
respective jurisdictions.
The tax expense for the year can be reconciled to the pre-tax
profit from continuing operations per the income statement as
follows:
Recognised in the Before Non-underlying Before Non-underlying Total
income statement: Non-underlying items Non-underlying items 2012 GBP'000
Income tax expense on items 2013 GBP'000 Total items 2012 GBP'000
continuing 2013 GBP'000 2013 2012
operations GBP'000 GBP'000
---------------------- --------------- --------------- -------- --------------- ---------------- ---------------
Current tax
Current year 5,665 (418) 5,247 7,279 (774) 6,505
Adjustment in respect
of prior
years (3,287) - (3,287) 473 - 473
---------------------- --------------- --------------- -------- --------------- ---------------- ---------------
Current tax
expense/(credit) 2,378 (418) 1,960 7,752 (774) 6,978
---------------------- --------------- --------------- -------- --------------- ---------------- ---------------
Deferred tax
Current year 6,547 (780) 5,767 (1,069) (1,605) (2,674)
Adjustment in respect
of prior
years (2,830) - (2,830) - - -
---------------------- --------------- --------------- -------- --------------- ---------------- ---------------
Deferred tax
expense/(credit) 3,717 (780) 2,937 (1,069) (1,605) (2,674)
---------------------- --------------- --------------- -------- --------------- ---------------- ---------------
Total income tax
Income tax
expense/(credit) on
continuing activities 6,095 (1,198) 4,897 6,683 (2,379) 4,304
---------------------- --------------- --------------- -------- --------------- ---------------- ---------------
10. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
2013 2012
Earnings GBP'000 GBP'000
restated
------------------------------------------------------- --------- ---------
Earnings for the purposes of basic earnings per
share and diluted earnings per share being net
profit attributable to equity holders of the parent 9,123 10,390
Non--recurring items 1,525 5,304
Amortisation of acquired intangibles 2,161 2,255
Taxation on non-recurring items and amortisation
of acquired intangibles (1,198) (2,379)
Earnings for the purpose of basic earnings per
share excluding non--recurring items and amortisation
of acquired intangibles 11,611 15,570
------------------------------------------------------- --------- ---------
Number Number
Number of shares (million) (million)
------------------------------------------------------- --------- ---------
Weighted average number of ordinary shares for
the purposes of basic earnings per share, and
basic excluding non--recurring items and amortisation
of acquired intangibles 484.0 485.5
Effect of dilutive potential ordinary shares:
Restricted share plans 14.4 12.5
------------------------------------------------------- --------- ---------
Weighted average number of ordinary shares for
the purposes of diluted earnings per share 498.4 498.0
------------------------------------------------------- --------- ---------
Pence Pence
------------------------------------------------------ ----- -----
Basic earnings per share attributable to owners
of the company 1.9 2.1
Diluted earnings per share attributable to owners
of the company 1.8 2.1
Basic earnings per share - excluding non--recurring
items and amortisation of acquired intangibles 2.4 3.2
Diluted earnings per share - excluding non--recurring
items and amortisation of acquired intangibles 2.3 3.1
The average share price for the year ended 31 December 2013 was
27.4p (2012: 28.5p).
11. Notes to the cash flow statement
2013 2012
GBP'000 GBP'000
------------------------------------------------- -------- --------
Profit from operations 17,494 18,187
Adjustments for:
Depreciation of property, plant and equipment 989 1,091
Amortisation of intangible assets 4,073 3,607
Profit on disposal of fixed assets (116) (571)
Adjustment for share awards 3,928 3,146
Loss on disposal of subsidiary 279 -
(Decrease)/ increase in provisions (4,692) 1,151
Other non-cash items (33) (197)
------------------------------------------------- -------- --------
Operating cash flows before movements in working
capital 21,922 26,414
(Increase)/ decrease in receivables (4,625) 3,168
Decrease in payables (10,634) (14,730)
------------------------------------------------- -------- --------
Cash generated by operations 6,663 14,852
Income taxes paid (4,821) (10,243)
------------------------------------------------- -------- --------
Net cash inflow from operating activities 1,842 4,609
------------------------------------------------- -------- --------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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