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MCG optimistic despite big falls in first half profit and revenue

Nick Stagg

London: Management Consulting Group PLC, MCG, says it expects a strong second half to the year, after posting big falls in profit and revenue for the six months to 30 June 2013.

  • Revenue 16% lower at £123.4m (H1 2012: £146.8m)
  • Underlying (before non-recurring items) operating profit 41% lower at £7.0m (H1 2012: £11.8m)
  • Underlying operating profit margin lower at 5.7% (H1 2012: 8.0%)
  • Profit for the half-year of £1.9m (H1 2012: £4.1m restated)
  • Alexander Proudfoot underlying operating profit margin lower at 3.1% (H1 2012: 11.8%) reflecting revenues which are 35% lower than the same period in 2012
  • Kurt Salmon underlying operating profit margin maintained at 6.4% in spite of 7.5% reduction in revenue versus the same period in 2012
  • Current Alexander Proudfoot order book is at twice the level at the 2012 year end, and in both businesses is higher than at the same time last year

Nick Stagg, Chief Executive commented, "As previously guided, our first half results reflect a reduced level of activity in Alexander Proudfoot, which started the year with a weak order book. Proudfoot's order input has however improved significantly in the last few months and the business is well placed to deliver a much better second half.

"Whilst Kurt Salmon's revenue performance in the first half was affected by continuing weakness in the French market, elsewhere the performance of the business has been encouraging and it is well positioned for the second half. The Group remains in a strong financial position and we have a healthy order book and a good pipeline going into the second half of the year."

Alan Barber, in his Chairman's statement, commented, "The performance of the Group in the first six months of 2013 has been affected by a reduced level of activity in the first half of the year in Alexander Proudfoot, which largely accounts for the 16% fall in Group revenues compared with the same period last year. The results also reflect the continuing impact of macroeconomic weakness on demand for Kurt Salmon's services in the French market, although in other markets, in North America and Asia in particular, Kurt Salmon has made good progress. The second half has started well and is expected to be materially stronger than the first six months.

"Alexander Proudfoot's individual client engagements are usually on a substantial scale, and as a result there can be an inherent lumpiness in the revenues of the business from half-year to half-year. This year we have suffered from the low level of order input that was seen in the latter part of 2012 and in the early part of 2013, which has reduced first half revenues. I am pleased to report that the rate of order intake has increased significantly in the last few months and that the current order book level is more than twice that at the start of the 2013, providing a promising start to the second half of the year.

"Kurt Salmon continues to face difficult conditions in France, and we will continue to manage our resource levels in the French business to match expected market demand. Elsewhere in Europe Kurt Salmon has made good progress so far this year, and in North America and Asia, where the businesses is mainly focused on the retail and consumer goods sector, it has performed well."

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