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MCG on track, despite difficult market; launches share buy-back

Nick Stagg

London: Management Consulting Group PLC, MCG, is making "good progress in a difficult market it said today in an interim management statement, in which it also announced plans for a share buy-back programme to make market purchases of up to £5m 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.

MCG says, 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, MCG says, 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.

In June, MCG stated its belief that its 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 £5m in aggregate over the buyback period.

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."

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