Management Consulting Group PLC Trading Update (4746T)
October 06 2014 - 2:00AM
UK Regulatory
TIDMMMC
RNS Number : 4746T
Management Consulting Group PLC
06 October 2014
6(th) October 2014
Management Consulting Group PLC ("MCG")
Trading Update
Management Consulting Group PLC ('MCG' or 'the Group'), the
international professional services group, today announces a
trading update.
The outlook for the business for the year as a whole has
deteriorated from the position set out in our Interim Results
statement on 31 July 2014, principally as a result of weakness in
Alexander Proudfoot, and as a result the Board has materially
reduced its profit expectations for 2014.
In our Interim Statement at the end of July we noted that whilst
the order book position in Alexander Proudfoot at that stage was
healthy, the improved rate of order input that we had recently seen
needed to be maintained in order to achieve our performance
objectives for the year as a whole. Subsequent order input in the
last two months has been very weak and the Board considers that the
likely conversion of current pipeline opportunities in the
remaining months of the year will not compensate for this weakness
in terms of the impact on the results for 2014. The postponement of
certain significant client projects from 2014 to 2015 affecting the
North American business unit in particular has contributed to the
current position. As a result, the Board currently expects that
Alexander Proudfoot will deliver second half revenues in 2014 close
to those in the first half of the year, and is likely to report a
small operating loss for the year as a whole. As previously
reported, the year on year comparison for Alexander Proudfoot for
2013 and 2014 will be affected by significant negative currency
translation effects.
We continue to make good progress with the change initiatives in
the Alexander Proudfoot business that were announced earlier this
year, but as previously reported these have had an adverse effect
on profitability in 2014, compounding the impact of weaker than
expected revenues. In particular, we have seen a successful start
to the dedicated natural resources business unit that we
established in the second quarter of this year, generating higher
order input from mining projects in the last two quarters than the
whole of 2013.
Kurt Salmon delivered an improved performance in the first half
of 2014. Order input and activity levels in France in the last two
months were slightly weaker than expected, and the North American
business has been affected by some recent project delays. These
factors will have some impact on reported second half revenues and
margins and consequently the Board has reduced its revenue and
profit estimates for Kurt Salmon for 2014. Recent order input and
pipeline activity are encouraging and the Board expects that the
broadly positive underlying trends in the Kurt Salmon business that
were reported in the Interim Statement on 31 July will continue to
apply over the remainder of the financial year and into 2015.
Reported net debt at the half year stage was GBP48.0m. Whilst
levels of indebtedness are currently higher than the half year
position as a result of the slower summer trading period and
weakness in Alexander Proudfoot, the Group continues to focus on
operational cash generation to further reduce net indebtedness over
the course of the current financial year.
Nick Stagg, Chief Executive, commented:
"Recent order input in Alexander Proudfoot has been
disappointing and as a result we have significantly reduced our
performance expectations for the Group for the year as a whole.
This is a transition year for Alexander Proudfoot and the changes
we are making will build a more flexible business model focused on
profitable growth but in the short term, as expected, will
adversely affect our margins and have exacerbated the impact of
weaker revenues this year. We have had some early successes in
expanding the range of revenue opportunities in the Alexander
Proudfoot business by introducing new service lines and offerings.
Kurt Salmon performed well in the first half, and although some
project deferrals and a slow summer period in France will have a
negative impact in the short term, the underlying trends in the
business remain encouraging. The medium term outlook for the Group
remains positive."
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 3727 1000
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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