Management Consulting Group PLC Trading statement and update on escrow funds (8191L)
24 April 2018 - 12:02AM
UK Regulatory
TIDMMMC
RNS Number : 8191L
Management Consulting Group PLC
23 April 2018
This announcement contains inside information for the purposes
of article 7 of Regulation 596/2014 (the "Market Abuse
Regulation").
23 April 2018
Management Consulting Group PLC
Trading statement and update on the Kurt Salmon escrow funds
Management Consulting Group PLC (the "Group") gives the
following update on trading and the Kurt Salmon escrow funds.
Outturn for the year ended 31 December 2017
Underlying operating results for the year ended 31 December 2017
("FY2017") are expected to be in line with management expectations
at the time of the trading statement on 3 November 2017. Reported
revenues for FY2017 are expected to be GBP35.1m (2016: GBP45.2m)
resulting in an expected underlying operating loss of GBP8.3m (2016
loss: GBP8.8m).
After non-recurring items, including impairments against
intangible assets (notably goodwill and deferred tax), the Group
expects to report a retained net loss of GBP31.0m for FY2017 (2016
retained net loss: GBP0.1m).
The performance in 2017 reflects the investment in and progress
made at Proudfoot implementing our new offering and strategy in
Europe, Asia and key sectors such as Natural Resources but also, as
indicated in November, a continued slower pace of change across
some areas of the business, notably in the Americas. At the same
time, the Group has pursued its cost reduction programmes and the
Board estimates that operating costs were reduced by around 20%
during the year.
Cash balances at 31 December 2017 were GBP21m (30 June 2017:
GBP28.4m) including GBP8.5m of cash reserved for contingent
creditors of the Group. Cash balances at 31 March 2018 were
GBP16.1m including GBP6 million in respect of the Kurt Salmon
escrow funds.
Current trading and outlook
Proudfoot grew revenues in Q1 2018 compared with a particularly
low Q4 in 2017 and early indications are for a continuation of this
trend into Q2. The customer reaction to our offering continues to
be strong where we win work. We are building up the necessary sales
and marketing teams and infrastructure to push our offering more
effectively and the Board remains confident in the power of the
Proudfoot model to deliver sustainable improvement and change for
our customers. Nonetheless, revenues for the year ending 31
December 2018 are likely to be lower than revenue reported in
FY2017. In addition, Management is continuing its work to reduce
costs across the Group as a whole.
Update on the Kurt Salmon escrow funds
Several of the Group's businesses, including Kurt Salmon in
Europe, were disposed of through a series of transactions in 2015
and 2016. At present the Board is in ongoing negotiations over the
release of funds held under the escrow arrangements which guarantee
certain contingent liabilities relating to the disposal of parts of
the Kurt Salmon business in 2016.
While the Board remains confident as to the Group's overall
position in terms of the release of the outstanding Kurt Salmon
escrow funds, it considers that the ongoing negotiations create
undue risk to the Group's short term funding position and therefore
it is actively considering options to manage this including raising
new funds for the Company.
BlueGem Capital Partners LLP, which currently holds 24.38% of
the Group's issued share capital and has two representatives on the
Board, has confirmed in writing its support for a fundraising and
its intention, in principle and subject to certain conditions, to
commit new funds of up to EUR4 million (approximately GBP3.5
million) to the Company as part of such a fundraising in a form and
amount to be agreed. The Board is now working to finalise its plans
for the fundraising on an expedited basis.
The Board will provide further updates on these matters as
appropriate.
Management Consulting Group PLC
Tel: +44 20 7710 5000
Nick Stagg, Chairman and Chief Executive
Market Abuse Regulation
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
Market Abuse Regulation. Upon the publication of this announcement
via a regulatory information service, this inside information is
now considered to be in the public domain.
The person responsible for arranging for the release of this
announcement on behalf of the Group is Nick Stagg, Chairman and
Chief Executive.
Forward-looking statements
Certain information contained in this announcement constitutes
forward looking information. This information relates to future
events or occurrences or the Company's future performance. All
information other than information of historical fact is forward
looking information. The use of any of the words "anticipate",
"plan", "continue", "estimate", "expect", "may", "will", "project",
"should", "believe", "predict" and "potential" and similar
expressions are intended to identify forward looking information.
This information involves known and unknown risks, uncertainties
and other factors that may cause actual results or events to differ
materially from those anticipated in such forward looking
information. No assurance can be given that this information will
prove to be correct and such forward looking information included
in this announcement should not be relied upon. Forward-looking
information speaks only as of the date of this announcement.
The forward looking information included in this announcement is
expressly qualified by this cautionary statement and is made as of
the date of this announcement. The Group does not undertake any
obligation to publicly update or revise any forward looking
information except as required by applicable securities laws.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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