REG - FDM Group plc - Final Results
17/03/2022 07:00
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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 2021 31 December 2020 % change
Revenue £267.4m £267.7m Unchanged
Adjusted operating profit(1) £47.3m £42.7m +11%
Profit before tax £41.4m £41.0m +1%
Adjusted profit before tax(1) £46.7m £42.0m +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 £52.1m £66.1m -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 £53.1m £64.7m -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 £47.3 million (2020: £42.7
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 £53.1 million of cash at year end
(2020: £64.7 million), after dividend payments during the year of £46.8
million (2020: £20.1 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 £5.3 million (2020: £1.0 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 07850 127526
(financial public relations)
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
£267.4 million and delivered an adjusted operating profit(1) of £47.3
million.
We maintain a strong focus on cash management and cash collection, ending the
year with £53.1 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 % change
31 December 2021 31 December 2020
Revenue £267.4m £267.7m Unchanged
Adjusted operating profit(1 ) £47.3m £42.7m +11%
Operating profit £42.0m £41.7m +1%
Adjusted profit before tax(1 ) £46.7m £42.0m +11%
Profit before tax £41.4m £41.0m +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 £267.4 million (2020: £267.7 million), adjusted operating profit(1)
increased by 10.8% to £47.3 million (2020: £42.7 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 £53.1 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 £267.4 million (2020: £267.7
million); on a constant currency basis revenue increased by £5.6 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 2021 31 December 2020 Mounties Mounties
Revenue Revenue assigned to clients assigned to clients
£m £m 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 £84.7 million (2020: £87.0 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 £3.0 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
21 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 £5.3 million was
recognised in the year to 31 December 2021 relating to Performance Share Plan
expenses including social security costs (2020: £1.0 million).
Net finance expense
The finance expense costs include lease liability interest of £0.6 million
(2020: £0.7 million). The Group continues to have no borrowings.
Taxation
The Group's total tax charge for the year was £9.6 million, equivalent to an
effective tax rate of 23.2%, on profit before tax of £41.4 million (2020:
effective tax rate of 25.0% based on a tax charge of £10.2million and a
profit before tax of £41.0 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 £46.8 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 £51.2 million. This statement does not form part of the audited
financial statements and the distributable reserves figure of £51.2 million
is therefore not audited by PwC.
Cash flow and Statement of Financial Position
The Group's cash balance decreased to £53.1 million (2020: £64.7 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 £46.8 million (2020: £20.1 million). Net
capital expenditure was £0.4 million (2020: £0.6 million) and tax paid was
£10.6 million (2020: £11.5 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
£121.8 million (2020: £116.7 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 £28.4 million (2020: £24.1 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 £2.0 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 £81.4 million (2020: £97.1
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 £13.1 million (2020: £12.5
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 £25.0 million (2020: £23.9 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 £3.4 million (2020: £4.5
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 £39.2
million (2020: £30.0 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 £2.4 million (2020: £1.6
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
£000 £000
Revenue 4 267,356 267,737
Cost of sales (140,641) (138,957)
Gross profit 126,715 128,780
Administrative expenses (84,700) (87,040)
Operating profit 5 42,015 41,740
Finance income 6 58 99
Finance expense 6 (650) (815)
Net finance expense (592) (716)
Profit before income tax 41,423 41,024
Taxation 7 (9,594) (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
£000 £000
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 £000 £000
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
£000 £000
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 capital Share All Other reserves Retained Total
premium earnings equity
£000 £000 £000 £000 £000
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 for the year - - (47) - (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 Retained Total
capital premium All Other reserves earnings equity
£000 £000 £000 £000 £000
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 £3.0 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
£000 £000 £000 £000 £000
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
£000 £000 £000 £000 £000
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
£000 £000 £000 £000 £000
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
£000 £000 £000 £000 £000
31 December 2020 27,405 2,812 888 9,108 40,213
Information about major customer
2021 revenue from customer A is attributed across all four operating segments.
Customer A represents 10% or more of the Group's 2021 and 2020 revenues.
2021 2020
£000 £000
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
£000 £000
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 1,866 1,950
software licences
Expense relating to short-term leases 78 177
6 Finance income and expense
2021 2020
£000 £000
Bank interest 58 99
Finance income 58 99
2021 2020
£000 £000
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
£000 £000
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
£000 £000
Profit before income tax 41,423 41,024
Profit before income tax multiplied by UK standard rate of corporation tax of 7,870 7,795
19% (2020: 19%)
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
Profit for the year £000 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) £000 31,829 30,775
Share-based payment expense (including social security costs) £000 5,261 988
Tax effect of share-based payment expense £000 (837) (341)
Adjusted profit for the year £000 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) £000 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
£000 £000
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
£000 £000
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
£000 £000
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 £000 Number of £000
shares shares
Ordinary shares of £0.01 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 £18,000 being recognised in share premium with £49.30 recognised as an
increase in issued share capital.
13 Dividends
2021 2020
£000 £000
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 £19,655,000. 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 £14,146,000, 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 £16,322,000.
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