2002 interim results 12 august 2002. © 2002 management consulting group plc all rights reserved 2...

2002 interim results

12 August 2002

© 2002 Management Consulting Group PLC All rights reserved

2

Important notice

This presentation is directed at and should be distributed only to the persons of the kind specified in the exemptions contained in articles 19 and 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001. Any person in receipt of this document who does not fall within the exemptions referred to above should return this document to Stephen Purse at Management Consulting Group PLC (“MCG”) immediately and take no other action.


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Agenda

• Introduction

• 2002 half year highlights

• Profit and loss account

• Balance sheet

• Issues

• Outlook


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Project management

Peoplesolutions

Process improvement

The enhancement and design of processes to increase sales and reduce costs, overheads and capital expenditure

Behavioural analysis, training and communications to enhance skillsand embrace change

Tight, structured approach with measurable payback in predetermined timescales

‘We are obsessed by measuring improvementsand your earnings enhancement’

Proudfoot Consulting - core service

Proudfoot installation


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Parson Consulting - project approach

Plan & analyse Design & build Implement

•Analyse root cause

•Develop business case

•Conduct benchmarking

•Develop project plan

•Provide financial analysis

•Implement and test new processes and systems

•Provide knowledge transfer:

documentation, methods, and training

•Identify best practices

•Design future state

•Identify gaps and recommend solutions

•Develop work plan

•Design prototype and pilot test

•Maintain current state

•Supportaccounting cycle

•Establish“steady state”

Support & enhance

S u p p o r t d e v e l o p i n g s t a t e


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Parson Consulting – core services

Finance

Management reporting

Financial reporting

Process improvement

Budgeting and forecasting

Treasury management

Capital project control

Expense reduction

Activity based costing

Solutions to audit lettersand due diligence reports

Technology applications

Design

Selection

Software upgrades

Software implementations

Optimisation

Technology infrastructure

Maximise benefits fromcurrent systems

Process change

Organisational change

Org

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ch

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Finance and support services

Fin

ance an

d su

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ort s ervi ces

Pro

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s c

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Representative clients


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Agenda

• Introduction



• Balance sheet

• Issues

• Outlook


9

2002 half year highlights

• Turnover from continuing operations up 79% to £55.7 million (2001: H1 £31.0 million; H2 £41.1 million; year £72.1 million)

• Like-for-like turnover of Proudfoot Consulting up 53% (2001: H1 +25%; H2 +42%; year: +34%). Market growth of 5% to 10% (2001 year: 10.0%)

• EBITDA of £6.3 million (2001: H1 loss £0.8 million; H2 plus £3.1 million; 2001 year plus £2.3 million)

• Operating profit before goodwill of £5.2 million (2001 excluding exceptional credit: H1 loss £1.9 million; H2 profit £3.7 million; year profit £1.8 million)

• Acquisition of Parson Consulting on 28 May 2002 for £38.6 million and associated equity issue of £38.8 million

• Employees: 931 (2001:H1 520; year end 562)• Net cash of £26.0 million (2001:H1 £17.4 million; year end £18.9 million) • Board optimistic regarding prospects in context of seasonality and exchange

rates


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Agenda

• Introduction



• Balance sheet

• Issues

• Outlook


11

TurnoverProudfoot Consulting 53.3 31.0 72%

72.1Parson Consulting 2.4 -

-55.7 31.0 79% 72.1

Cost of sales (27.5) (15.7)(35.9)

Gross profit 28.2 15.336.2

Selling costs (14.5) (9.7) 49%(20.9)

Administrative expenses (8.5) (7.5) 13%(15.5)

Goodwill (1.1) (0.7)(1.6)

Exceptional credit - -2.0

Operating profit/(loss)Before goodwill 5.2 (1.9)

1.8After goodwill 4.1 (2.6)

0.2Interest (net) - 0.3

0.4Profit before tax 4.1 (2.3)

0.6Tax (0.4) (0.4) (0.5)

Profit/(loss) after tax 3.7 (2.7)0.1

Gross profit margin 51% 49%50%

Selling costs to turnover 26% 31%29%

Adjusted headline EPS 4.1p (1.2)p0.9p

(excludes goodwill, share schemes)

Profit and loss accountHalf Year

2002 2001 2001£m £m Change £m


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Geographical analysis: turnover

Year

2002 2001 2001

£m £m Change £m

Proudfoot Consulting

North America 29.1 14.2 105%37.2

Europe 21.3 14.2 50%30.1

Africa 1.7 1.6 6%3.3

Asia Pacific 1.2 1.0 20%1.5

53.3 31.0 72% 72.1

Parson Consulting 2.4 - -

55.7 31.0 79% 72.1

Total Proudfoot 53.3 31.0 72.1

Czipin prior period - 3.8 3.8

Like-for-like – Proudfoot 53.3 34.8 53%75.9

Half


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DepreciationOperating and share Operatingprofit/(loss) Goodwill schemes EBITDA (loss) EBITDA£m £m £m £m £m £m

Geographical analysis: operating profit

Proudfoot Consulting

North America 4.8 - 0.5 5.3 (0.2)0.3

Europe (0.1) 0.9 0.4 1.2 (1.9)(0.8)

Africa - - 0.1 0.1 (0.2)(0.1)

Asia Pacific (0.3) - 0.1 (0.2) (0.3)(0.2)

4.4 0.9 1.1 6.4 (2.6) (0.8)

Parson Consulting (0.3) 0.2 - (0.1) - -

Total 4.1 1.1 1.1 6.3 (2.6) (0.8)

H1 2002 H1 2001


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Results commentary

• Continued growth significantly faster than the market

• Effect of operational gearing clearly visible

• Costs well controlled

• Tax charge small and benefits from accumulated tax losses

• Proudfoot North America and Europe now cash generative

• Proudfoot North America twice the size of a year ago, Europe grown by 18% on a like-for-like basis

• EBITDA £6.3 million (2001: H1 loss £0.8 million; H2 +£3.1 million; year +£2.3 million)


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Agenda

• Introduction



• Balance sheet

• Issues

• Outlook


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Balance sheet

Intangible assets 74.2 37.9

Tangible assets 3.0 1.8

Investments 1.0 1.0

78.2 40.7

Current assets

Debtors 11.8 7.8

Cash and cash equivalents (net) 26.0 17.9

37.8 25.7

Creditors due within one year (30.5) (25.3)

Net current assets 7.3 0.4

Creditors due after one year (5.4) (4.9)

Provisions for liabilities & charges (3.1) (4.6)

Retirement benefits liability (14.7) (11.6)

Net assets 62.3 20.0

As at 30 June

2002 2001

Fixed assets £m £m


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Commentary on balance sheet

• Goodwill on acquisition of Parson Consulting - £39.5 million

• Net cash of £26.0 million remains partly available for acquisitions

• Strong working capital management

• Retirement benefits liability of £14.7 million reflected on balance sheet (June 2001 £11.6 million; December 2001 £12.2 million). Increase in liability reflects underlying investment performance - retirement benefit plans are closed


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Agenda

• Introduction



• Balance sheet

• Issues

• Outlook


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Issues addressed in first half of 2002

• Continued maturing of sales organisation

• Targeted churn of sales executives to improve quality

• Improved marketing – P3 magazine for potential clients

• Administrative costs tightly controlled, flat on a like-for-like basis compared to second half of 2001

• Extended training and development of people

• Developed middle management in line with the growth in the business and appointed CEO for Proudfoot Consulting

• Replaced president of Proudfoot Europe

• Acquired Parson Consulting in May 2002


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Issues to be addressed in second half 2002

• Continue to strengthensales executives

• Close monitoring of market requirements

• Mail shots to increasemeeting counts

• Increase focus on past clients• Train and coach second tier

management in line withexpansion requirements

• Position to capitalise on marketopportunity

• Clearer marketing material• Emphasise performance

management• New incentive plans• Recruit more sales executives• Increase prices• Manage sales pipeline

• Cross referral programme between Parson and Proudfoot• Build order book for Q1 2003


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Agenda

• Introduction



• Balance sheet

• Issues

• Outlook


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Outlook for 2002

• Continuing increase in focus on sales and procurement

• Expectations for the year need to factor in that: Second half is seasonally weaker Appreciation of sterling against dollar will adversely affect

second half

• Order book and prospects stream is strong

• Directors expect turnover growth to continue to out-perform consulting market

• Directors remain optimistic about future prospects

2002 interim results 12 august 2002. © 2002 management consulting group plc all rights reserved 2...

Documents

t e slide

half year highlights

half year highlights

support services process

organisational change

project plan

financial services

design of processes