TIDMFDM

RNS Number : 0592F

FDM Group (Holdings) plc

17 March 2022

FDM Group (Holdings) plc

Preliminary Results

FDM Group (Holdings) plc ("the Company") and its subsidiaries (together "the Group" or "FDM"), today announces its results for the year ended 31 December 2021.

 
                                  31 December   31 December    % change 
                                         2021          2020 
 Revenue                            GBP267.4m     GBP267.7m   Unchanged 
                                 ------------  ------------  ---------- 
 Adjusted operating profit(1)        GBP47.3m      GBP42.7m        +11% 
                                 ------------  ------------  ---------- 
 Profit before tax                   GBP41.4m      GBP41.0m         +1% 
                                 ------------  ------------  ---------- 
 Adjusted profit before tax(1)       GBP46.7m      GBP42.0m        +11% 
                                 ------------  ------------  ---------- 
 Basic earnings per share               29.1p         28.2p         +3% 
                                 ------------  ------------  ---------- 
 Adjusted basic earnings 
  per share(1)                          33.2p         28.8p        +15% 
                                 ------------  ------------  ---------- 
 Cash flow generated from 
  operations                         GBP52.1m      GBP66.1m        -21% 
                                 ------------  ------------  ---------- 
 Cash conversion(2)                    124.1%        158.4%        -22% 
                                 ------------  ------------  ---------- 
 Adjusted cash conversion(1)           110.3%        154.8%        -29% 
                                 ------------  ------------  ---------- 
 Dividend per share(3)                  33.0p         46.5p        -29% 
                                 ------------  ------------  ---------- 
 Cash position at period 
  end                                GBP53.1m      GBP64.7m        -18% 
                                 ------------  ------------  ---------- 
 

-- FDM made good progress in 2021, delivering a strong operational and financial performance, comfortably in line with the Board's expectations.

   --       Strong levels of demand for our Mounties and high deal volumes across most of our regions. 

-- Mounties assigned to clients at week 52(4) were 4,033 (2020: 3,580), with the UK and APAC delivering the strongest growth in Mounties deployed. In North America, Canada performed well with a more subdued performance in the US, where we are introducing a number of initiatives that should enable us to respond better to strong demand.

   --       Mountie utilisation rate(5) improved to 97.3% (2020: 94.8%). 

-- Group revenue was flat against the prior year (up 2% on a constant currency basis), reflecting the phasing of headcount year on year; adjusted operating profit increased by 10.8% to GBP47.3 million (2020: GBP42.7 million).

-- Mountie training completions during the year of 2,410 (2020: 1,341) were the highest in FDM's history and the Group ended the year with a record number in training.

-- 78 new clients secured globally (2020: 52) of which 66 were outside the financial services sector; progress in the software and IT services, government, and commercial and professional services sectors.

-- Continued investment in the Academy Transformation and Accreditation Programmes to underpin the future growth of the business.

-- Strong balance sheet, with GBP 53.1 million of cash at year end (2020: GBP64.7 million), after dividend payments during the year of GBP46.8 million (2020: GBP20.1 million).

-- Cash conversion of 124.1% (2020: 158.4%), in line with the Board's expectations. Cash conversion in the prior year reflected a higher level of accruals.

-- Final dividend of 18.0 pence per share, following an interim dividend of 15.0 pence per share declared in July 2021, giving a total dividend for the year of 33.0 pence.

-- FDM is committed to reducing its carbon footprint; the Group's Carbon Reduction Plan was approved in 2021 and will be published later this year.

-- 2022 has started well, with very strong demand for our Mounties across all our geographies and excellent levels of deal volumes.

(1) The adjusted operating profit and adjusted profit before tax are calculated before Performance Share Plan expense (including social security costs) of GBP5.3 million (2020: GBP1.0 million). The adjusted basic earnings per share is calculated before the impact of Performance Share Plan expenses (including social security costs and associated deferred tax). The adjusted cash conversion is calculated by dividing cash flow generated from operations by adjusted operating profit.

(2) Cash conversion is calculated by dividing cash flow generated from operations by operating profit.

(3) See note 13 .

(4) Week 52 in 2021 commenced on 20 December 2021 (2020: week 52 commenced on 21 December 2020).

(5) Utilisation is calculated as the ratio of cost of utilised Mounties to the total Mountie payroll cost.

Rod Flavell, Chief Executive Officer, said:

"FDM made good progress in 2021, with the numbers of Mounties trained during the year and of Mounties in training at the year-end both a record high.

The Group continued with its significant investment in Academy transformation and accreditation programmes to underpin the future growth of the business. This year we are targeting a significant increase in the numbers of Mounties that we train and deploy and plan to accelerate our internal staff recruitment and other internal development programmes, with a particular focus on our sales and Academy training teams.

During these first weeks of 2022, demand for our people across all our operating territories has been very strong and we are achieving excellent levels of deal volumes. We have seen client ordering patterns at greater levels than ever before with established and new clients of the Group looking for very significant quantities of Mounties, across a broad range of skill sets.

Notwithstanding the wider geopolitical issues ongoing in the world, the Group is well placed to deliver a good performance in 2022 and beyond."

Enquiries

For further information:

 
 FDM                              Rod Flavell - CEO      0203 056 8240 
   Mike McLaren - CFO                                     0203 056 8240 
 Nick Oborne 
  (financial public relations)                           07850 127526 
 

Forward-looking statements

This announcement contains statements which constitute 'forward-looking statements'. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.

We are FDM

FDM Group (Holdings) plc ("the Company") and its subsidiaries (together "the Group" or "FDM") form a global professional services provider with a focus on IT. Our mission is to bring people and technology together, creating and inspiring exciting careers that shape our digital future.

The Group's principal business activities involve recruiting, training and deploying its own permanent IT and business consultants ("Mounties" or "consultants") to clients, either on site or remotely. FDM specialises in a range of technical and business disciplines including Development, Testing, IT Service Management, Project Management Office, Data Engineering, Cloud Computing, Risk, Regulation and Compliance, Business Analysis, Business Intelligence, Cyber Security, AI (Artificial Intelligence), Machine Learning and Robotic Process Automation.

The FDM Careers Programme bridges the gap for graduates, ex-Forces, returners to work and apprentices, providing the training and experience required to make a success of launching or relaunching their careers. We have dedicated training centres and sales operations located in London, Leeds, Glasgow, New York NY, Arlington VA, Charlotte NC, Austin TX, Toronto, Frankfurt, Singapore, Hong Kong, Shanghai and Sydney. We also operate in Ireland, Luxembourg, the Netherlands, Poland, Switzerland, Austria, Spain, South Africa, and New Zealand.

The physical and mental health and wellbeing of our people and stakeholders is central to who we are and what we do. As such, our outreach programmes for our Mounties and in-house staff have grown and broadened during the pandemic, becoming key to our support and care for all of our people globally.

FDM is a collective of over 5,500 people, from a multitude of different backgrounds, life experiences and cultures. We are a strong advocate of diversity and inclusion in the workplace and the strength of our brand arises from the talent within.

INTRODUCTION

FDM made good progress in 2021, delivering a strong operational and financial performance. The Group continued its significant investment in Academy transformation and accreditation programmes to underpin the future growth of the business, and the numbers of Mounties trained during the year and of trainees at the year-end were both a record high. The strength of our response to the many challenges presented by the COVID-19 pandemic has been pleasing.

Throughout the year, we consistently saw average weekly deal volumes exceed expectations. We experienced strong client demand across the majority of our markets, most notably in the UK and APAC, and the levels of beached and signed-off Mounties returned to pre-pandemic levels. To meet this growth in demand, 2,410 Mounties were trained during the year (2020: 1,341 training completions; 2019: 2,115 training completions) which is the highest in the Group's history, and the Group ended the year with a record number in training.

We ended the year with 4,033 Mounties placed with clients, ahead of the pre-pandemic closing 2019 headcount of 3,924. The Group recorded revenue of GBP267.4 million and delivered an adjusted operating profit(1) of GBP47.3 million.

We maintain a strong focus on cash management and cash collection, ending the year with GBP53.1 million of cash and no debt.

Our strategy

FDM's strategy is straightforward: to deliver customer-led, sustainable, profitable growth on a consistent basis, through our well-established and proven Mountie model. The resilience and agility of our business model has enabled us to deliver a very strong performance in the year and to continue to deliver on our four key strategic objectives: attract, train and develop high-calibre Mounties; invest in leading-edge training capabilities; grow and diversify our client base; and expand and consolidate our geographic presence.

Our strategy requires that all activities and investments produce the appropriate level of return on investment, that they deliver sustained and measurable improvements for all our stakeholders including customers, staff and shareholders, and that they further our objective of launching the careers of talented people worldwide, which remains core to everything we do.

Strategic objectives

Attract, train and develop high-calibre Mounties

As client demand increased throughout 2021, we were able to ramp up recruitment and training and delivered a record number of training completions in the year. The efforts made by our Recruitment teams globally throughout the pandemic to maintain engagement with potential candidates and our university partners benefited our recruitment significantly. Our Academy Transformation Programme, which is discussed in more detail below, offers market-leading, flexible training to increasing numbers of trainees, using the latest technologies and training methods, further enhancing the quality and efficiency of training and making our offering more attractive than ever to candidates, and further differentiating FDM in the current high-wage inflationary environment.

Our Ex-forces and Returners programmes remain an important source of talent for the business and we continue to invest in those programmes. We are also investing in our programme of apprenticeships, which will further diversify our talent pipeline.

In total, there were 2,410 training completions in 2021, an increase of 80% on the previous year (2020: 1,341), and the highest number in the Group's history. In 2022 we shall target a significant increase in the numbers of Mounties that we train.

Invest in leading-edge training capabilities

As previously reported, one of our key responses to the pandemic was the introduction of remote training. Realising the benefits that remote training brings to our business, we have been heavily focussed on developing our strategy for the longer-term delivery of our training programmes and in June 2021 we formally started our Academy Transformation Programme. This consists of five key areas:

Accreditation - External validation of FDM's programme content, delivery approach, and assessment

Standardisation - Ensuring the programmes we deliver are consistent across the global business

Academy Change - Trials of new ways of working within the Academy - including larger classes, cross-regional deliveries, hybrid training (remote and classroom-based training) and agile training delivery

Physical Infrastructure - Understanding the needs and configuration of the physical space of the FDM Academy of the future

Technological Infrastructure - Updating our existing IT systems to better support remote training delivery

Working with our accreditation partner, TechSkills, we achieved the Tech Industry Gold Standard accreditation for seven of our programmes - Business Analysis, Business Consulting (accredited as 'Project Management Office'), Business Intelligence, Software Testing, Software Development, RRC (Risk Regulation and Compliance) and Robotic Process Automation. This accreditation provides assurance for candidates and clients that the content that we deliver meets industry standards for job readiness. Once the initial FDM training has been completed, our Mounties receive their Foundation Certification, with digital credentials provided by Credly. Mounties will also have the opportunity to undertake their Practitioner Certification, which is based on the successful completion of learning outcomes during their first two years in industry with our clients.

Alongside accreditation, we are standardising our programmes globally, allowing us to offer accredited programmes in more locations. We have already reduced the impact of regional borders with UK trainers delivering to Frankfurt trainees, and North American and APAC trainers delivering throughout their respective regions. Standardising our content will enable this model to become more widespread over time.

With trainees able to join training remotely, we have seen a reduction in the number of trainees who leave within the initial 14-day cooling off period, and an increase in average class sizes. Remote training also offers greater accessibility to those with travel restrictions, children and other caring responsibilities. Reinforcing inclusivity in this way will enable our trainee population to become more diverse.

We have implemented hybrid training trials in the UK, utilising a combination of classroom-based and remote training. These trials will continue throughout 2022 as we work towards the best training delivery solution for the post-COVID world of work. Our permanent Academies, of which we have nine, remain a key part of our training model as we trial and assess the benefits of bringing trainees into physical classrooms for some elements of their training.

Grow and diversify our client base

We continue to deliver the highest level of service to our clients and have worked closely with them as demand for our Mounties increased throughout in the year. We secured 78 new clients in the year (2020: 52), of which 33 were in the UK, 20 in North America, 17 in APAC and 8 in EMEA. 85% were secured from outside the financial services sector. We have made good progress in the software and IT services, government, and commercial and professional services sectors.

Expand and consolidate our geographic presence

The expansion and consolidation of our geographic presence is a key growth driver for FDM. APAC Mountie headcount at week 52 increased to 880 compared to 633 in 2020 and 497 in 2019. The UK also delivered a very strong performance, increasing Mountie headcount by 232 over 2020. Headcount in North America increased by nine overall, led by a strong performance from our Canadian operation; our performance in the US was more subdued, primarily reflecting continued pandemic-related uncertainties, but demand improved during the second half and has strengthened further in the opening months of 2022, and we have introduced a number of new initiatives in the US which should enable us to meet that demand as it continues to grow. EMEA, which now includes Ireland (please see 'Segmental performance' section), closed with 252 Mounties deployed, down 35 compared with 2020 after the completion of a major client project in Luxembourg during the second half; we saw good activity levels in our nascent location of Poland.

With high client engagement and high demand for Mounties in all territories, we anticipate continued growth of our international footprint in 2022 and beyond, both in our longer-established territories and our newer locations.

Our service offerings

We continually review our training content to ensure we deliver, at scale, a consultant workforce that meets our clients' current and future requirements. We have numerous exciting client projects in progress across the mainstream cloud providers including AWS, GCP, and Microsoft Azure. As the financial regulators gain increasing confidence in the security that cloud providers offer, we have seen our banking clients look to accelerate their cloud-specific programmes of work. Software Engineering continues to be a strong area of demand, with clients making the most of this skillset's adaptable nature. We have also seen strong interest across our Data products, especially around hard-to-source-skillsets such as Data Engineering. Further, we have supported our clients' regulatory programmes of work with large order fulfilment across KYC (Know Your Customer) and programmes of work related to specific regulatory deadlines.

Throughout 2021 we have also developed deeper partnerships with technology providers such as AWS and their 'AWS re/Start programme', A Cloud Guru, Microsoft, and Salesforce, providing additional strength to our industry-accredited training.

Following the success of our Agile Pods in 2020, we have continued to develop this initiative, which allows our Mounties to develop skills remotely in a multi-disciplinary and collaborative setting which closely simulates the client environments in which they will be placed.

GROUP RESULTS

Summary income statement

 
                        Year ending    Year ending 
                        31 December    31 December 
                               2021           2020    % change 
 Revenue                 GBP 267.4m      GBP 267.7   Unchanged 
                                                 m 
 Adjusted operating 
  profit(1)               GBP 47.3m     GBP 42.7 m        +11% 
 Operating profit         GBP42.0 m       GBP41.7m         +1% 
 Adjusted profit 
  before tax(1)           GBP 46.7m     GBP 42.0 m        +11% 
 Profit before 
  tax                      GBP41.4m     GBP 41.0 m         +1% 
--------------------  -------------  -------------  ---------- 
 Adjusted basic 
  EPS(1)                      33.2p          28.8p        +15% 
 Basic EPS                    29.1p          28.2p         +3% 
 

Overview

The Group delivered a solid performance in 2021, evidencing good recovery from the impact of the pandemic. Whilst revenue was flat in comparison to the prior year at GBP267.4 million (2020: GBP267.7 million), adjusted operating profit(1) increased by 10.8% to GBP47.3 million (2020: GBP42.7 million), with adjusted basic earnings per share(1) up 15%, to 33.2 pence (2020: 28.8 pence). We ended the year with a robust balance sheet, including cash of GBP53.1 million and converted 124% of our operating profit into operating cash flow. We remain well positioned for future growth with a proven and agile business model that allows us to respond rapidly and effectively to market fluctuations.

Revenue was flat against the prior year at GBP267.4 million (2020: GBP267.7 million); on a constant currency basis revenue increased by GBP5.6 million. The change in revenue is less than the increase in Mountie headcount due to the phasing of headcount year on year. Mounties assigned to clients at week 52 2021 increased by 13%, totalling 4,033 (week 52 2020: 3,580; week 52 2019: 3,924). At week 52 2021 our Ex-Forces Programme accounted for 196 Mounties deployed worldwide (week 52 2020: 194). Our Returners Programme had 156 Mounties deployed at week 52 2021 (week 52 2020: 112). The Mountie utilisation rate improved to 97.3% (2020: 94.8%).

An analysis of revenue and headcount by region is set out in the table below:

 
                   Year ending    Year ending             2021             2020 
                   31 December    31 December         Mounties         Mounties 
                          2021           2020         assigned         assigned 
                       Revenue        Revenue       to clients       to clients 
                          GBPm           GBPm    at week 52(2)    at week 52(2) 
 UK(3)                   121.8          116.7            1,806            1,574 
 North America            81.4           97.1            1,095            1,086 
 EMEA(3)                  25.0           23.9              252              287 
 APAC                     39.2           30.0              880              633 
                 -------------  -------------  ---------------  --------------- 
                         267.4          267.7            4,033            3,580 
                 -------------  -------------  ---------------  --------------- 
 

Adjusted Group operating profit margin increased to 17.7% (2020: 16.0%) with overheads decreasing to GBP84.7 million (2020: GBP87.0 million). As previously disclosed, the prior year adjusted operating profit margin was impacted by an increase in overheads after the Board took the pragmatic and commercial decision in 2020 to settle for GBP3.0 million a long-standing legal claim which the Board considered to be unmeritorious.

1 The adjusted operating profit and adjusted profit before tax are calculated before Performance Share Plan expenses (including social security costs). The adjusted basic earnings per share is calculated before the impact of Performance Share Plan expenses (including social security costs and associated deferred tax).

2 Week 52 in 2021 commenced on 20 December 2021 (2020: week 52 commenced on 2 1 December 2020).

3 Reflecting internal management and reporting, performance and headcount results for Ireland, previously included within 'UK and Ireland' region, are included within EMEA. All results, including prior year comparatives, have been updated to reflect this change. Ireland Mountie headcount was 20 at the end of 2021 (2020: 51).

Adjusting items

The Group presents adjusted results, in addition to the statutory results, as the Directors consider that they provide a useful indication of underlying performance. The adjusted results are stated before Performance Share Plan expenses including associated taxes. An expense of GBP5.3 million was recognised in the year to 31 December 2021 relating to Performance Share Plan expenses including social security costs (2020: GBP1.0 million).

Net finance expense

The finance expense costs include lease liability interest of GBP0.6 million (2020: GBP0.7 million). The Group continues to have no borrowings.

Taxation

The Group's total tax charge for the year was GBP9.6 million, equivalent to an effective tax rate of 23.2%, on profit before tax of GBP41.4 million (2020: effective tax rate of 25.0% based on a tax charge of GBP10.2 million and a profit before tax of GBP41.0 million). The effective tax rate in 2021 is higher than the underlying UK tax rate of 19% primarily due to Group profits earned in higher tax jurisdictions. The effective tax rate reflects the Group's geographical mix of profits and the impact of items considered to be non-taxable or non-deductible for tax purposes, with the decrease year-on-year primarily due to changes in these factors.

Earnings per share

Basic earnings per share increased in the year to 29.1 pence (2020: 28.2 pence), whilst adjusted basic earnings per share were 33.2 pence (2020: 28.8 pence). Diluted earnings per share were 28.8 pence (2020: 28.1 pence).

Dividend

During the year, the Group paid three dividends totalling GBP46.8 million, representing 43.0 pence per share.

On 27 January 2021, taking into account the decision not to recommend a final dividend in 2020 in respect of the 2019 financial year, the Board declared a second interim dividend for 2020 of 13.0 pence per share which was paid to shareholders on 26 February 2021. On 28 April 2021, a final dividend of 15.0 pence per share for 2020 was approved by shareholders at the AGM and was paid on 4 June 2021. On 27 July 2021, an interim dividend of 15.0 pence per share for 2021 was declared which was paid on 3 September 2021.

The Board has recommended a final dividend of 18 pence per share, subject to shareholder approval at the forthcoming AGM, taking the total dividend to 33.0 pence per share.

The Board has set a minimum consistent cash buffer at a Group level and will always consider the ongoing needs for the funding of organic growth across the business and the distributable reserves available to the Group when considering dividend levels. At 31 December 2021 the Company had distributable reserves of GBP51.2 million. This statement does not form part of the audited financial statements and the distributable reserves figure of GBP51.2 million is therefore not audited by PwC.

Cash flow and Statement of Financial Position

The Group's cash balance decreased to GBP53.1 million (2020: GBP64.7 million) with the variation of the timing of dividends bolstering the prior year end financial position. Cash conversion remained good at 124.1% (2020: 158.4%) reflecting strong cash generation and cash collection performance by our credit control team.

Dividends paid in the year totalled GBP46.8 million (2020: GBP20.1 million). Net capital expenditure was GBP0.4 million (2020: GBP0.6 million) and tax paid was GBP10.6 million (2020: GBP11.5 million).

SEGMENTAL PERFORMANCE

UK(1)

The UK experienced strong growth in Mountie headcount with Mounties deployed at week 52 increasing 15% to 1,806 (2020: 1,574). Revenue increased by 4.4% to GBP121.8 million (2020: GBP116.7 million), less than the increase in Mountie headcount due to the phasing of headcount year-on-year, and adjusted operating profit(2) increased 17.8% to GBP28.4 million (2020: GBP24.1 million). We progressively increased training during the year to meet client demand with 1,035 training completions during the year, an increase of 150% over the previous year (2020: 414).

In 2020, in response to reduced client demand we decreased our number of trainees, instead focussing on upskilling those already onsite and those who were signed off. Demand returned in 2021 and the proportion of consultants who are within their first year increased to 49% (2020: 21%), while the proportion who have completed their first two years with FDM reduced to 33% (2020: 41%); we anticipate that this will continue to rebalance to more normal levels over the next two to three years.

In the second half of the year we introduced paid training in the UK, recognising a cost of GBP2.0 million in 2021. Trainees are now employed and paid a salary from the first day of training, in line with our operations elsewhere in the world.

(1) 2020 results for both the UK region and EMEA region have been restated to show results for Ireland as part of EMEA. Previously, results for Ireland were included in the region "UK and Ireland".

(2) The adjusted operating profit is calculated before Performance Share Plan expenses (including social security costs).

North America

North America Mounties deployed at week 52 increased slightly to 1,095 from 1,086 in 2020. Revenue decreased by 16.2% to GBP81.4 million (2020: GBP97.1 million) due to the phasing of headcount year-on-year as during 2020 North America headcount was largely resilient to the effects of the pandemic until the last quarter. During 2021, we increased our training output by 27%, with 661 training completions compared with 520 in 2020.

Despite Canada's strict lockdown for much of 2021, client demand has been good; US trading was more subdued, primarily reflecting continued pandemic-related uncertainties. However, demand for our Mounties in the US improved during the third and fourth quarters and has strengthened further in the opening months of 2022, and we have introduced a number of new initiatives in our recruitment, training and sales processes which should enable us to optimise the throughput of quality talent to meet that demand as it continues to grow. We continued to focus on expanding our client base and added a further 20 new clients during the year (2020: 10), a record for the region.

Adjusted operating profit decreased by 4.8% to GBP13.1 million (2020: GBP12.5 million).

EMEA (Europe, Middle East and Africa, excluding UK) (1)

EMEA Mounties deployed decreased by 12.2% to 252 at week 52 (2020: 287), reflecting the anticipated completion of a major Risk, Regulation and Compliance project for a client in Luxembourg. We had 197 training completions in the period, a record for the region and double the prior year (2020: 96), while revenue increased 4.6% to GBP25.0 million (2020: GBP23.9 million).

During the year we established a presence in Poland, where we have seen good initial demand and we ended the year with 38 consultants deployed with clients.

Adjusted operating profit decreased 24.4% to GBP3.4 million (2020: GBP4.5 million).

APAC (Asia Pacific)

APAC continued to grow at a rapid pace in 2021, led by growth in Australia, which now holds the largest headcount in the region. Mounties deployed at week 52 increased 39.0% to 880 (2020: 633) and revenue increased by 30.7% to GBP39.2 million (2020: GBP30.0 million). During the year we trained 517 consultants, an increase of 66% (2020: 311).

We continued to expand our client base, adding a further 17 clients in the year (2020: 16). During the year we established a trading entity in New Zealand, to meet client demand and benefit from the reciprocal visa arrangements between Australia and New Zealand.

Adjusted operating profit increased 50.0% to GBP2.4 million (2020: GBP1.6 million).

THE BOARD

There have been no changes to the Board since the publication of our last Annual Report.

Jacqueline de Rojas (independent Non-Executive Director) was appointed as an additional member of the Nomination Committee with effect from 1 March 2021, and Rod Flavell (CEO) stepped down as a member of that Committee with effect from 27 April 2021. Following those changes, the Committee now comprises three independent Non-Executive Directors (Jacqueline de Rojas, Michelle Senecal de Fonseca and Peter Whiting), in addition to David Lister as the Committee Chair.

OUR PEOPLE

FDM is a people business and looking after our people has remained our top priority this year. Our results reflect the dedication and hard work of all our colleagues; our consultants working with clients and our recruiters, trainers, internal staff and those in support roles. Our people understand that our clients' success is our success, and the Board would like to thank them again for their great contribution to our performance during the year.

The People Team continues to engage with staff to ensure that their wellbeing is monitored and safeguarded. The People Team continues to work closely with the Board on succession planning and people development whilst progress on the implementation of our Group People Strategy has continued during the year.

As in 2020, we have not accessed the UK Coronavirus Job Retention Scheme (commonly known as furlough), nor have we taken any UK government funding.

CURRENT TRADING AND OUTLOOK

During these first weeks of 2022, demand for our Mounties across all operating territories has been very strong and we are achieving excellent levels of deal volumes. We have seen client ordering patterns at greater levels than ever before with established and new clients of the Group looking for very significant quantities of Mounties, across a broad range of skill sets.

Notwithstanding the wider geopolitical issues ongoing in the world, the Group is well placed to deliver a good performance in 2022 and beyond.

Consolidated Income Statement

for the year ended 31 December 2021

 
                           Note       2021       2020 
                                    GBP000     GBP000 
Revenue                       4    267,356    267,737 
 
Cost of sales                    (140,641)  (138,957) 
 
Gross profit                       126,715    128,780 
 
                                  ( 84,700 
Administrative expenses                  )   (87,040) 
 
Operating profit              5     42,015     41,740 
 
Finance income                6         58         99 
Finance expense               6      (650)      (815) 
 
                                     ( 592 
Net finance expense                      )      (716) 
 
Profit before income tax            41,423     41,024 
 
                                   ( 9,594 
Taxation                      7          )   (10,249) 
 
Profit for the year                 31,829     30,775 
 
 

Earnings per ordinary share

 
            2021   2020 
           pence  pence 
 
Basic     8 29.1   28.2 
 
Diluted   8 28.8   28.1 
 
 

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2021

 
                                                  2021           2020 
                                                GBP000         GBP000 
 
Profit for the year                             31,829         30,775 
Other comprehensive expense 
Items that may be subsequently reclassified 
 to profit or loss 
Exchange differences on retranslation of 
 foreign operations (net of tax)                  (47)          (635) 
 
Total other comprehensive expense                 (47)  (635) 
 
Total comprehensive income for the year         31,782         30,140 
 
 
 

Consolidated Statement of Financial Position

 
 as at 31 December 2021 
                                             2021      2020 
                                  Note     GBP000    GBP000 
Non-current assets 
Right-of-use assets                        11,631    14,774 
Property, plant and equipment               4,069     5,554 
Intangible assets                          19,597    19,885 
Deferred income tax assets                  2,484     2,123 
 
                                           37,781    42,336 
 
Current assets 
Trade and other receivables          9     35,841    31,048 
Cash and cash equivalents           10     53,120    64,725 
 
                                           88,961    95,773 
 
Total assets                              126,742   138,109 
 
Current liabilities 
Trade and other payables            11     31,235    28,563 
Lease liabilities                           5,413     5,502 
Current income tax liabilities              2,147     2,094 
 
                                           38,795    36,159 
 
Non-current liabilities 
Lease liabilities                           9,817    13,986 
 
Total liabilities                          48,612    50,145 
 
Net assets                                 78,130    87,964 
 
Equity attributable to owners 
 of the parent 
Share capital                       12      1,092     1,092 
Share premium                               9,705     9,705 
All other reserves                          5,126      (57) 
Retained earnings                          62,207    77,224 
 
Total equity                               78,130    87,964 
 
 
 

Consolidated Statement of Cash Flows

for the year ended 31 December 2021

 
                                            Note       2021      2020 
                                                     GBP000    GBP000 
Cash flows from operating activities 
Group profit before tax for the 
 year                                                41,423    41,024 
   Adjustments for: 
   Depreciation and amortisation               5      6,160     6,501 
   Loss on disposal of non-current 
    assets                                                2        19 
   Finance income                              6       (58)      (99) 
   Finance expense                             6        650       815 
   Share-based payment charge (including 
    associated social security costs)                 5,622     2,187 
   (Increase)/ decrease in trade 
    and other receivables                           (5,123)     9,802 
   Increase in trade and other payables               3,471     5,885 
 
Cash flows generated from operations                 52,147    66,134 
   Interest received                                     58        99 
   Income tax paid                                 (10,606)  (11,464) 
 
Net cash inflow from operating 
 activities                                          41,599    54,769 
 
Cash flows from investing activities 
   Acquisition of property, plant 
    and equipment                                     (368)     (536) 
   Acquisition of intangible assets                       -      (79) 
 
Net cash used in investing activities                 (368)     (615) 
 
Cash flows from financing activities 
   Proceeds from sale of shares 
    from EBT                                            450       349 
   Principal elements of lease payments             (5,294)   (5,294) 
   Interest elements of lease payments                (564)     (746) 
   Proceeds from sale of own shares                      50       405 
   Finance costs paid                                  (85)      (68) 
   Dividends paid                             13   (46,820)  (20,085) 
 
Net cash used in financing activities              (52,263)  (25,439) 
 
Exchange losses on cash and cash 
 equivalents                                          (573)     (969) 
 
 
Net (decrease)/ increase in cash 
 and cash equivalents                              (11,605)      27,746 
 
Cash and cash equivalents at 
 beginning of year                                   64,725      36,979 
 
Cash and cash equivalents at 
 end of year                                  10     53,120      64,725 
 
 
 
 
 
 

Consolidated Statement of Changes in Equity

for the year ended 31 December 2021

 
                                    Share     Share    All Other   Retained     Total 
                                  capital   premium     reserves   earnings    equity 
                                   GBP000    GBP000       GBP000     GBP000    GBP000 
Balance at 1 January 
 2021                               1,092     9,705         (57)     77,224    87,964 
 
Profit for the year                     -         -            -     31,829    31,829 
Other comprehensive expense                                                      ( 47 
 for the year                           -         -         (47)          -         ) 
 
Total comprehensive income 
 for the year                           -         -         (47)     31,829    31,782 
 
Share-based payments                    -         -        5,320          -     5,320 
Transfer to retained 
 earnings                               -         -      (1,530)      1,530         - 
Own shares sold                         -         -        1,440      (938)       502 
Recharge of net settled 
 share options                          -         -            -      (618)     (618) 
Dividends (note 13 )                    -         -            -  (46,820)   (46,820) 
 
Total transactions with 
owners, recognised directly 
in equity                               -         -        5,230   (46,846)  (41,616) 
 
Balance at 31 December 
 2021                               1,092     9,705        5,126     62,207    78,130 
 
 
 
                                    Share     Share    All Other   Retained     Total 
                                  capital   premium     reserves   earnings    equity 
                                   GBP000    GBP000       GBP000     GBP000    GBP000 
Balance at 1 January 
 2020                               1,092     9,687      (3,241)     67,526    75,064 
 
Profit for the year                     -         -            -     30,775    30,775 
Other comprehensive expense 
 for the year                           -         -        (635)          -     (635) 
 
Total comprehensive income 
 for the year                           -         -        (635)     30,775    30,140 
 
Share-based payments                    -         -        2,092          -     2,092 
Transfer to retained 
 earnings                               -         -      (2,642)      2,642         - 
New share issue                         -        18            -          -        18 
Own shares bought back                  -         -         (25)          -      (25) 
Own shares sold                         -         -        4,394    (3,634)       760 
Dividends (note 13 )                    -         -            -   (20,085)  (20,085) 
 
Total transactions with 
owners, recognised directly 
in equity                               -        18        3,819   (21,077)  (17,240) 
 
Balance at 31 December 
 2020                               1,092     9,705         (57)     77,224    87,964 
 
 
 
 

Notes to the Consolidated Financial Statements

   1          General information 

The Group is an international professional services provider focussing principally on IT, specialising in the recruitment, training and deployment of its own permanent IT and business consultants.

The Company is limited by shares, incorporated and domiciled in the UK and registered as a public limited company in England and Wales with a Premium Listing on the London Stock Exchange. The Company's registered office is 3rd Floor, Cottons Centre, Cottons Lane, London, SE1 2QG and its registered number is 07078823.

   2          Basis of preparation 

The financial information set out in this preliminary announcement does not constitute statutory accounts for the years ended 31 December 2021 and 31 December 2020, for the purpose of the Companies Act 2006, but is derived from those accounts. The audited statutory accounts for 2020 have been delivered to the Registrar of Companies and those for 2021 were approved for issue on 16 March 2022. The Group's auditor reported on the Annual Report and Accounts for the year ended 31 December 2021 on 16 March 2022. Their report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under Section 498(2) or (3) of the Companies Act 2006.

Whilst the financial information included in this preliminary announcement has been prepared in accordance with UK-adopted International Financial Reporting Standards, this announcement does not itself contain sufficient information to comply with UK-adopted International Financial Reporting Standards. The accounting policies applied in preparing this financial information are consistent with the Group's financial statements for the year ended 31 December 2020 with the exception of the following standards and amendments which were effective from 1 January 2021 and were adopted by the Group in preparing the financial statements. The adoption of these standards and amendments has not had a material impact on the Group's financial statements in the year:

   --       Revised Conceptual Framework for Financial Reporting 
   --       COVID-19-related Rent Concessions - Amendments to IFRS 16 

-- Amendments to IAS 1 'Presentation of Financial Statements' and IAS 8 'Accounting policies' on Definition of Material

   --       Amendment to IFRS 3 'Business Combinations' on Definition of a Business 

-- Amendment to IFRS 9 'Financial Instruments', IAS 39 'Financial Instruments recognition and measurement' and IFRS 7 'Financial Instruments disclosures' on Interest rate benchmark reform

   --       Interest Rate Benchmark Reform - Phase 2 - Amendments to IFRS 7, IFRS 4 and IFRS 16 
   3          Settlement of legal claim 

On 25 February 2021, the Group paid GBP3.0 million in full satisfaction of the agreed settlement in respect of the long-standing legal claim. The claim was provided in full at 31 December 2020.

   4          Segmental reporting 

Management has determined the operating segments based on the operating reports reviewed by the Board of Directors that are used to assess both performance and strategic decisions. Management has identified that the Executive Directors are the chief operating decision maker in accordance with the requirements of IFRS 8 'Operating segments'.

At 31 December 2021, the Board of Directors consider that the Group is organised on a worldwide basis into four core geographical operating segments:

   (1)   UK; 
   (2)   North America; 
   (3)   Europe, Middle East and Africa, excluding UK  ("EMEA"); and 
   (4)   Asia Pacific ("APAC"). 

Each geographical segment is engaged in providing services within a particular economic environment and is subject to risks and returns that are different from those of segments operating in other economic environments.

All segment revenue, profit before taxation, assets and liabilities are attributable to the principal activity of the Group, being a global professional services provider with a focus on IT .

For the year ended 31 December 2021

 
                                            North 
                                   UK(1)  America  EMEA(1)      APAC     Total 
                                  GBP000   GBP000   GBP000    GBP000    GBP000 
 
Revenue                          121,846   81,387   24,963    39,160   267,356 
 
Depreciation and amortisation      2,489    1,714      241     1,716     6,160 
 
Segment operating profit          24,570   12,215    3,237     1,993    42,015 
 
Finance income(2)                    159      174        -         4       337 
Finance costs(2)                   (231)     (60)     (88)     (550)     (929) 
 
Profit before income tax          24,498   12,329    3,149     1,447    41,423 
 
As at 31 December 2021 
Total assets                      75,995   21,038   11,937    17,772   126,742 
 
Total liabilities               (13,053)  (8,669)  (6,193)  (20,697)  (48,612) 
 
 

(1) Reflecting internal management and reporting changes, the results for FDM Group Ireland Limited are now included within the EMEA segment, The results were previously included within segment 'UK & Ireland' which is now presented as 'UK'. All results, including prior year comparatives, have been updated to reflect this change.

(2) Finance income and finance costs include intercompany interest which is eliminated upon consolidation

Included in total assets above are non-current assets (excluding deferred tax) as follows:

 
                             North 
                   UK (1)  America  EMEA(1)    APAC   Total 
                   GBP000   GBP000   GBP000  GBP000  GBP000 
 
31 December 2021   24,839    2,144    1,030   7,284  35,297 
 
 

For the year ended 31 December 2020

 
                                              North 
                                    UK(1)   America    EMEA(1)      APAC             Total 
                                 Restated             Restated 
                                   GBP000    GBP000     GBP000    GBP000            GBP000 
 
Revenue                           116,744    97,082     23,928    29,983           267,737 
 
Depreciation and amortisation     (2,648)   (1,873)      (239)   (1,741)           (6,501) 
 
Segment operating profit           23,465    12,279      4,474     1,522            41,740 
 
Finance income(2)                     168       193          3         3               367 
Finance costs(2)                    (314)     (103)       (71)     (595)           (1,083) 
 
Profit before income tax           23,319    12,369      4,406       930            41,024 
 
As at 31 December 2020 
Total assets                       82,517    24,431     11,494    19,667         138,109 
 
Total liabilities                 (9,163)  (12,861)    (5,806)  (22,315)          (50,145) 
 
 

(1) Reflecting internal management and reporting changes, the results for FDM Group Ireland Limited are now included within the EMEA segment, The results were previously included within segment 'UK & Ireland' which is now presented as 'UK'. All results, including prior year comparatives, have been updated to reflect this change.

(2) Finance income and finance costs include intercompany interest which is eliminated upon consolidation

Included in total assets above are non-current assets (excluding deferred tax) as follows:

 
                                North 
                       UK(1)  America    EMEA(1)    APAC   Total 
                    Restated            Restated 
                      GBP000   GBP000     GBP000  GBP000  GBP000 
 
31 December 2020      27,405    2,812        888   9,108  40,213 
 
 

Information about major customer

2021 revenue from c ustomer A is attributed across all four operating segments . Customer A represents 10% or more of the Group's 2021 and 2020 revenues.

 
                                     2021          2020 
                                   GBP000        GBP000 
 
Revenue from customer A            35,942      31,488 
 
 
 
   5   Operating profit 

Operating profit for the year has been arrived at after charging /(crediting):

 
                                                  2021    2020 
                                                GBP000  GBP000 
 
Net foreign exchange differences                    39    (59) 
Depreciation of right-of-use assets              4,294   4,551 
Depreciation of property, plant and equipment 
 and amortisation of software and software 
 licences                                        1,866   1,950 
Expense relating to short-term leases               78     177 
 
 
 
   6    Finance income and expense 
 
                                    2021    2020 
                                  GBP000  GBP000 
 
Bank interest                         58      99 
 
Finance income                        58      99 
 
 
                                    2021    2020 
                                  GBP000  GBP000 
 
Interest on lease liabilities      (564)   (746) 
Finance fees and charges            (86)    (69) 
 
Finance expense                    (650)   (815) 
 
 
   7    Taxation 

The major components of income tax expense for the years ended 31 December 2021 and 2020 are:

 
                                              2021    2020 
                                            GBP000  GBP000 
Current income tax: 
Current income tax charge                    9,904  11,536 
Adjustments in respect of prior periods      (418)   (577) 
 
Total current income tax                     9,486  10,959 
Deferred tax: 
Relating to origination and reversal of 
 temporary differences                         108   (710) 
 
Total deferred tax                             108   (710) 
 
Total tax expense reported in the income 
 statement                                   9,594  10,249 
 
 

The standard rate of corporation tax in the UK is 19% (2020: 19%), accordingly, the profits for 2020 and 2021 are taxed at 19%. The tax charge for the year is higher (2020: higher) than the standard rate of corporation tax in the UK. The differences are set out below:

 
                                                                                                   2021    2020 
                                                                                                 GBP000  GBP000 
 
Profit before income tax                                                                         41,423  41,024 
 
 
Profit before income tax multiplied by UK standard rate of corporation tax of 19% (2020: 19%)     7,870   7,795 
Effect of different tax rates on overseas earnings                                                1,695   2,051 
Effect of expenses not deductible for tax purposes                                                  143     128 
Adjustments in respect of prior periods                                                           (418)   (577) 
Effect of unused tax losses not recognised for deferred tax assets                                  304     852 
 
 
Total tax charge                                                                                  9,594  10,249 
 
 

Factors affecting future tax charges

Deferred tax assets and liabilities are measured at the rate that is expected to apply to the period when the asset is realised or the liability is settled, based on the rates that have been enacted or substantively enacted at the reporting date. Therefore, at each year end, deferred tax assets and liabilities have been calculated based on the rates that have been substantively enacted by the reporting date.

The Finance Act 2021 confirmed an increase of UK corporation tax rate from 19% to 25% with effect from 1 April 2023 and this was substantively enacted by the statement of financial position date and therefore included in these financial statements.

   8    Earnings per ordinary share 

Basic earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the Parent Company by the weighted average number of ordinary shares in issue during the year.

 
                                                     2021     2020 
                                            GBP0 
Profit for the year                           00   31,829   30,775 
Average number of ordinary shares in 
 issue (thousands)                                109,192  109,191 
 
 
Basic earnings per share                   Pence     29.1     28.2 
 
 

Adjusted basic earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the Parent Company, excluding Performance Share Plan expense (including social security costs and associated deferred tax), by the weighted average number of ordinary shares in issue during the year.

 
                                                            2021       2020 
 
Profit for the year (basic 
 earnings)                                     GBP000     31,829     30,775 
Share-based payment expense 
 (including social security 
 costs)                                        GBP000      5,261        988 
Tax effect of share-based 
 payment expense                               GBP000      (837)      (341) 
 
Adjusted profit for the 
 year                                          GBP000     36,253     31,422 
 
 
Average number of ordinary shares in issue 
 (thousands)                                             109,192    109,191 
 
Adjusted basic earnings per share             Pence         33.2       28.8 
 
 

Diluted earnings per share

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has one type of dilutive potential ordinary shares in the form of share options; the number of shares in issue has been adjusted to include the number of shares that would have been issued assuming the exercise of the share options.

 
                                               2021        2020 
 
Profit for the year (basic 
 earnings)                       GBP000      31,829      30,775 
 
Average number of ordinary 
 shares in issue (thousands)                109,192     109,191 
Adjustment for share options 
 (thousands)                                  1,386         207 
 
Diluted number of ordinary 
 shares in issue (thousands)                110,578     109,398 
 
 
Diluted earnings per share      Pence       28.8           28.1 
 
 

9 Trade and other receivables

Due to their short-term nature, the Directors consider that the carrying amount of trade receivables approximates to their fair value. The standard credit terms are 30 days.

 
                              2021    2020 
                            GBP000  GBP000 
 
Trade receivables           26,727  24,118 
Other receivables            3,464   1,477 
Prepayments and accrued 
 income                      5,650   5,453 
 
                            35,841  31,048 
 
 
   10        Cash and cash equivalents 
 
                               2021    2020 
                             GBP000  GBP000 
 
Cash at bank and in hand     53,120  64,725 
 
 
   11        Trade and other payables 

Due to their short-term nature, the Directors consider that the carrying amount of trade payables approximates to their fair value.

 
                                   2021    2020 
                                 GBP000  GBP000 
 
Trade payables                    1,113   1,153 
Other payables                    1,725   2,029 
Other taxes and social 
 security                         8,444   6,502 
Accruals and deferred income     19,953  18,879 
 
                                 31,235  28,563 
 
 
   12        Share capital 
 
Authorised, called up, allotted and fully 
 paid share capital 
                                         2021    2021         2020            2020 
                                    Number of  GBP000       Number          GBP000 
                                       shares                   of 
                                                            shares 
Ordinary shares of GBP0.01 
 each 
At 1 January                      109,191,669   1,092  109,186,739           1,092 
 
New issues                                  -       -        4,930               - 
 
 
At 31 December                    109,191,669   1,092  109,191,669           1,092 
 
 
 

Ordinary shares

All ordinary shares rank equally for all dividends and distributions that may be declared on such shares. At general meetings of the Company, each shareholder who is present (in person, by proxy or by representative) is entitled to one vote on a show of hands and, on a poll, to one vote per share.

There were no changes in the authorised, called up, allotted and fully paid share capital during the year. During 2020 4,930 shares were issued, the difference between market value and par value at issue resulted in an amount of GBP18,000 being recognised in share premium with GBP49.30 recognised as an increase in issued share capital.

   13        Dividends 
 
                                                    2021     2020 
                                                  GBP000   GBP000 
 Dividends paid 
 Paid to shareholders                             46,820   20,085 
 
 
 

2021

An interim dividend of 15.0 pence per ordinary share was declared by the Directors on 27 July 2021 and was paid on 3 September 2021 to holders of record on 6 August 2021.

The Board is proposing a final dividend of 18.0 pence per share in respect of the year to 31 December 2021, for approval by shareholders at the AGM on 24 May 2022, the total amount payable will be GBP19,655,000. Subject to shareholder approval the dividend will be paid on 10 June 2022 to shareholders of record on 20 May 2022.

This brings the Company's total dividend for the year to 33.0 pence per share (2020: 46.5 pence per share).

The Board has resumed its progressive dividend policy; the Group will retain sufficient capital to fund ongoing operating requirements, maintain an appropriate level of dividend cover and sufficient funds to invest in the Group's longer-term growth.

2020

An interim dividend of 18.5 pence per ordinary share was declared by the Directors on 28 July 2020 and was paid on 4 September 2020 to holders of record on 7 August 2020.

The Board declared a second interim dividend of 13.0 pence per ordinary share on 27 January 2021, the amount payable was GBP14,146,000, which was paid to shareholders on 26 February 2021 to holders of record on 5 February 2021.

The Board paid a final dividend of 15.0 pence per share on 4 June 2021, the total amount payable was GBP16,322,000.

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END

FR DBGDXGUBDGDL

(END) Dow Jones Newswires

March 17, 2022 03:00 ET (07:00 GMT)

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