2002 interim results 12 August 2002 Important notice

2002 interim results 12 August 2002

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. © 2002 Management Consulting Group PLC All rights reserved 2

Agenda • • • Introduction 2002 half year highlights Profit and loss account Balance sheet Issues Outlook © 2002 Management Consulting Group PLC All rights reserved 3

Proudfoot Consulting - core service The enhancement and design of processes to increase sales and reduce costs, overheads and capital expenditure Behavioural analysis, training and communications to enhance skills and embrace change Process improvement People solutions Project management Tight, structured approach with measurable payback in predetermined timescales Proudfoot installation ‘We are obsessed by measuring improvements and your earnings enhancement’ © 2002 Management Consulting Group PLC All rights reserved 4

Parson Consulting - project approach Support & enhance • Maintain current state • Support accounting cycle • Establish “steady state” Plan & analyse Design & build • Analyse root cause • Identify best practices • Develop business case • Design future state • Conduct benchmarking • Identify gaps and recommend solutions • Develop work plan • Develop project plan • Provide financial analysis Implement • Implement and test new processes and systems • Provide knowledge transfer: documentation, methods, and training • Design prototype and pilot test Support developing state © 2002 Management Consulting Group PLC All rights reserved 5

Parson Consulting – core services Finance and support services Organisational change Technology infrastructure Maximise benefits from current systems Process change Financial reporting Process improvement Budgeting and forecasting Treasury management Capital project control Expense reduction Activity based costing Solutions to audit letters and due diligence reports Technology applications Design Selection Software upgrades Software implementations Optimisation Process change Finance Management reporting Finance and support services Process change Organisational change © 2002 Management Consulting Group PLC All rights reserved 6

Representative clients © 2002 Management Consulting Group PLC All rights reserved 7

Agenda • • • Introduction 2002 half year highlights Profit and loss account Balance sheet Issues Outlook © 2002 Management Consulting Group PLC All rights reserved 8

2002 half year highlights • Turnover from continuing operations up 79% to £ 55. 7 million (2001: H 1 £ 31. 0 million; H 2 £ 41. 1 million; year £ 72. 1 million) • Like-for-like turnover of Proudfoot Consulting up 53% (2001: H 1 +25%; H 2 +42%; year: +34%). Market growth of 5% to 10% (2001 year: 10. 0%) • EBITDA of £ 6. 3 million (2001: H 1 loss £ 0. 8 million; H 2 plus £ 3. 1 million; 2001 year plus £ 2. 3 million) • Operating profit before goodwill of £ 5. 2 million (2001 excluding exceptional credit: H 1 loss £ 1. 9 million; H 2 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: H 1 520; year end 562) • Net cash of £ 26. 0 million (2001: H 1 £ 17. 4 million; year end £ 18. 9 million) • Board optimistic regarding prospects in context of seasonality and exchange rates © 2002 Management Consulting Group PLC All rights reserved 9

Agenda • • • Introduction 2002 half year highlights Profit and loss account Balance sheet Issues Outlook © 2002 Management Consulting Group PLC All rights reserved 10

Profit and loss account Half Turnover Proudfoot Consulting Parson Consulting Cost of sales Gross profit Selling costs Administrative expenses Goodwill Exceptional credit Operating profit/(loss) Before goodwill After goodwill Interest (net) Profit before tax Tax Profit/(loss) after tax Gross profit margin Selling costs to turnover Adjusted headline EPS (excludes goodwill, share schemes) 11 2002 £m 2001 £m 53. 3 2. 4 55. 7 (27. 5) 28. 2 (14. 5) (8. 5) (1. 1) 31. 0 (15. 7) 15. 3 (9. 7) (7. 5) (0. 7) 72% 79% 49% 13% - 2. 0 5. 2 4. 1 Change Year 2001 £m 72. 1 (35. 9) 36. 2 (20. 9) (15. 5) (1. 6) - 4. 1 (0. 4) 3. 7 (1. 9) (2. 6) -0. 3 (2. 3) (0. 4) (2. 7) 1. 8 0. 2 0. 4 0. 6 (0. 5) 0. 1 51% 26% 49% 31% 50% 29% 4. 1 p (1. 2)p 0. 9 p © 2002 Management Consulting Group PLC All rights reserved

Geographical analysis: turnover Half Year 2002 £m Proudfoot Consulting North America Europe 21. 3 Africa 1. 7 Asia Pacific 53. 3 Parson Consulting 55. 7 2001 £m Change £m 29. 1 14. 2 1. 6 1. 2 31. 0 2. 4 31. 0 14. 2 50% 6% 1. 0 72% 79% 105% 30. 1 3. 3 20% 72. 1 Total Proudfoot 53. 3 Czipin prior period Like-for-like – Proudfoot 31. 0 3. 8 53. 3 37. 2 1. 5 - 72. 1 34. 8 72. 1 3. 8 53% 75. 9 © 2002 Management Consulting Group PLC All rights reserved 12

Geographical analysis: operating profit H 1 2002 Operating profit/(loss) £m Proudfoot Consulting North America Europe Africa Asia Pacific Parson Consulting Total 13 H 1 2001 Depreciation and share Goodwill schemes EBITDA £m £m £m 4. 8 0. 3 (0. 1) 0. 9 0. 4 Operating (loss) £m EBITDA £m 0. 5 5. 3 (0. 2) 1. 2 (1. 9) (0. 8) 0. 1 - - 0. 1 (0. 3) (0. 2) 4. 4 (0. 2) (0. 3) 0. 2 4. 1 1. 1 0. 9 (0. 1) 1. 1 -0. 1 (0. 2) (0. 3) 6. 4 (2. 6) (0. 8) - (0. 1) -- 6. 3 (2. 6) (0. 8) © 2002 Management Consulting Group PLC All rights reserved

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: H 1 loss £ 0. 8 million; H 2 +£ 3. 1 million; year +£ 2. 3 million) © 2002 Management Consulting Group PLC All rights reserved 14

Agenda • • • Introduction 2002 half year highlights Profit and loss account Balance sheet Issues Outlook © 2002 Management Consulting Group PLC All rights reserved 15

Balance sheet As at 30 June 2002 2001 Fixed assets Intangible assets Tangible assets £m 74. 2 3. 0 £m 37. 9 1. 8 Investments 1. 0 78. 2 40. 7 11. 8 26. 0 37. 8 (30. 5) 7. 3 7. 8 17. 9 25. 7 (25. 3) 0. 4 (5. 4) (4. 9) (3. 1) (14. 7) 62. 3 (4. 6) (11. 6) 20. 0 Current assets Debtors Cash and cash equivalents (net) Creditors due within one year Net current assets Creditors due after one year Provisions for liabilities & charges Retirement benefits liability Net assets © 2002 Management Consulting Group PLC All rights reserved 16

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 © 2002 Management Consulting Group PLC All rights reserved 17

Agenda • • • Introduction 2002 half year highlights Profit and loss account Balance sheet Issues Outlook © 2002 Management Consulting Group PLC All rights reserved 18

Issues addressed in first half of 2002 • • Continued maturing of sales organisation Targeted churn of sales executives to improve quality Improved marketing – P 3 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 © 2002 Management Consulting Group PLC All rights reserved 19

Issues to be addressed in second half 2002 • • • Continue to strengthen sales executives Close monitoring of market requirements Mail shots to increase meeting counts Increase focus on past clients Train and coach second tier management in line with expansion requirements • • Position to capitalise on market opportunity 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 Q 1 2003 © 2002 Management Consulting Group PLC All rights reserved 20

Agenda • • • Introduction 2002 half year highlights Profit and loss account Balance sheet Issues Outlook © 2002 Management Consulting Group PLC All rights reserved 21

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 Management Consulting Group PLC All rights reserved 22