REG - FDM Group plc - Preliminary Results
20/03/2024 08:30
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RNS Number : 5836H FDM Group (Holdings) plc 20 March 2024
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
2023.
31 December 2023 31 December 2022 % change
Revenue £334.0m £330.0m +1%
Adjusted operating profit(1) £49.6m £52.2m -5%
Profit before tax £55.6m £45.7m +22%
Adjusted profit before tax(1) £50.2m £52.0m -3%
Basic earnings per share 37.3p 32.0p +17%
Adjusted basic earnings per share(1) 32.9p 37.3p -12%
Cash flow generated from operations £61.5m £49.7m +24%
Cash conversion(2) 111.8% 108.3% +3%
Adjusted cash conversion(1) 124.1% 95.1% +30%
Cash position at period end £47.2m £45.5m +4%
Effective income tax rate 26.7% 23.5% +14%
Dividend per share 36.0p 36.0p +0%
· Resilient performance in 2023 against a backdrop of very
challenging market conditions, with macroeconomic and geopolitical
uncertainties.
· FDM's agile business model enabled us to take the action required
to align recruitment, training and resource levels appropriately, a programme
which continues into the current year.
· Consultants assigned to clients at week 52(3) stood at 3,892
(2022: 4,905), down 21% against the prior year and training completions were
1,338 (2022: 3,179), down 58%.
· Global Consultant utilisation rate(4) was 92.8%, down from the
prior year (2022: 97.5%) due to the Group carrying a higher number of
undeployed Consultants.
· We secured 47 new clients globally (2022: 74), of which 68% were
outside the financial services sector.
· Group revenue increased 1% against the prior year (up 2% on a
constant currency basis); adjusted operating profit(1) decreased by 5% to
£49.6 million (2022: £52.2 million).
· We maintained our robust balance sheet, with £47.2 million of
cash at year end (2022: £45.5 million) and no debt.
· Cash conversion was 111.8% (2022: 108.3%), reflecting continuing
strong working capital management.
· We propose a final dividend of 19.0 pence per share, following an
interim dividend of 17.0 pence per share declared in July 2023, a total
dividend for the year of 36.0 pence per share (2022: 36.0 pence per share).
(1 ) Adjusted operating profit and adjusted profit before
tax are calculated before Performance Share Plan credit/ expense (including
social security costs) of £5.4 million (2022: expense £6.4 million).
Adjusted basic earnings per share are calculated before the impact of
Performance Share Plan credit/ expense (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 ) Week 52 in 2023 commenced on 25 December 2023 (2022:
week 52 commenced on 19 December 2022).
(4 ) Utilisation is calculated as the ratio of cost of
utilised Consultants to the total Consultant payroll cost.
Rod Flavell, Chief Executive Officer, said:
"Reflecting continuing worldwide macroeconomic and geopolitical uncertainties,
market conditions in the early months of the current year have remained soft.
As we highlighted in January, levels of client engagement remain
encouraging. It is however difficult to predict when this will gain
sufficient strength to deliver meaningful increases in our Consultants placed
with clients.
Group-wide, our activity levels in the year to date are below our previous
expectations, with 3,703 Consultants assigned to clients as at 18 March 2024.
This, coupled with our strategy to maintain appropriate levels of Consultant
resource, and capacity in our internal teams, to meet clients' needs promptly
when our markets improve, means that the Board believes that the Group's
financial performance for 2024 is likely to be materially below its earlier
expectations.
FDM is a robust and agile business, with a strong balance sheet and
experienced management team and Board, operating in fundamentally strong
markets across a diversified portfolio of clients, sectors and geographies,
and we remain confident that our business is well positioned to return to
growth as more usual market conditions return."
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 be correct. Because these statements involve
risks and uncertainties, actual results may differ materially from those
expressed or implied by these forward-looking statements.
Inside information
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No 596/2014 (as it forms part of Retained EU
Law as defined in the European Union (Withdrawal) Act 2018).
( )
We are FDM
FDM Group (Holdings) plc ("the Company" or "FDM") and its subsidiaries
(together "the Group" or "FDM") form a global professional services provider
with a focus on IT.
We are a global consultancy powering the people behind tech and innovation for
over 30 years. We help our clients stay ahead of the latest tech trends and
thrive in a rapidly changing world.
INTRODUCTION
FDM delivered a resilient performance in 2023 against a backdrop of very
challenging market conditions, returning a robust financial performance
overall and continuing our investment in programmes to support future growth
as and when market conditions improve.
The Group delivered an adjusted profit before tax(1) of £50.2 million (2022:
£52.0 million). FDM's balance sheet remains strong with closing cash balances
of £47.2 million (2022: £45.5 million) and no debt. The Group made dividend
payments during the year of £39.3 million (2022: £38.2 million).
(1) The adjusted operating profit is calculated before Performance Share Plan
credit/ expense (including social security costs).
Overview
Following a strong start to 2023, market conditions became challenging from
the beginning of the second quarter and remained so for the rest of the year.
Macroeconomic and geopolitical uncertainties impacted client confidence,
causing them to defer decisions relating to project commencements and
Consultant placements. We ended the year with 3,892 Consultants placed with
clients (2022: 4,905) and 1,338 Consultants were trained during the year
(2022: 3,179). The Group recorded revenue of £334.0 million (2022: £330.0
million) and delivered an adjusted operating profit(1) of £49.6 million
(2022: £52.2 million).
FDM's scalable business model enabled the Board to respond quickly to the
decrease in client demand and to take appropriate measures to adjust
recruitment, training and internal staffing levels and activities to align
with market conditions, a programme that continues in the current year.
Our strategy
FDM's strategy is straightforward: we aim to deliver client-led, sustainable
and profitable growth on a consistent basis through our well-established and
proven business model, helping clients to stay ahead of the latest tech trends
and unlocking opportunities to help them thrive in a rapidly changing world.
This model has enabled us to deliver a resilient performance in 2023, in the
face of particularly challenging market conditions, by working to fulfil our
four key strategic objectives: attract and develop talented Consultants;
invest in state-of-the-art Skills Labs to provide expert training; grow and
diversify our client base; and expand and consolidate our geographic presence
through sustainable and efficient means.
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 clients, staff and
shareholders, and that they further our objective of launching the careers of
talented people worldwide, which remains core to everything we do.
To reinforce our strategy and leadership position, in early 2024 we engaged in
a major brand refresh project. This followed extensive consultation during
2023 with all our stakeholders to understand their views on FDM, our vision
and our values. The new branding reflects who we are, and what we want to
achieve in the future, enabling us to give a clear message to our investors,
clients and candidates reflecting what we stand for and how this benefits
them.
Strategic objectives
Attract and develop talented Consultants
The strength of our business model is that it allows us to flex recruitment
and training in response to changing levels of client demand, while at the
same time continuing to invest in our workforce so that we are well positioned
to capitalise on opportunities when conditions improve. When market conditions
changed at the beginning of the second quarter, with client demand starting to
decrease and Consultant placements being deferred, we were able to bring this
flexibility and scalability into play, reacting quickly to make adjustments to
our levels of resource. Market conditions remained difficult for the rest of
the year and we therefore delivered a reduced number of training completions
(2023: 1,338; 2022: 3,179), reflecting the change in levels of client demand.
We continue to have an excellent pipeline of already-assessed candidates in
all our territories, which our global recruitment teams have worked hard to
secure. Our ongoing investment in our Ex-Forces, Returners and Apprenticeships
programmes diversify our talent pipeline further. This means that we are well
placed to accelerate recruitment and training as and when market conditions
and client demand improve.
We continue to attract a high number of applicants across all our operating
locations evidencing the appeal that FDM's market-leading, flexible training
has in tech skills and innovation globally.
Invest in state-of-the-art Skills Labs to provide expert training
Our hybrid training model offers high quality and flexible training that is
attractive to our candidates and, while our training schedules were adjusted
in the period in response to client demand, our highly skilled coaches
continued to provide ongoing mentoring and upskilling to our benched
Consultants.
We remain focused on optimising both the appeal of our training programmes to
candidates and of our Consultants to clients. Accreditation of our courses
provides - both to candidates and clients - external validation of FDM's
programme content, delivery, approach and assessment. Through our partnership
with TechSkills, we have now achieved Tech Industry Gold standard
accreditation for ten programmes, with the Ex-Forces Advanced Course and the
Returners (Business) Programme each achieving Tech Industry Gold accreditation
during the year. A total of 325 Consultants completed accredited training in
2023 across the ten available programmes (2022: 653 Consultants completed
accredited training across the eight available programmes). Most of our
accredited courses have been converted to experiential delivery, replacing
traditional academic exams with capability assessments, and transforming the
classroom experience into real-world learning through the use of augmented
digital content. All of the training content is available through a new, easy
to use, and visually-appealing Skills Lab content repository run by our
coaches.
As clients look for more specific, detailed and nuanced skillsets within each
job role, we have adopted a practice-based approach to managing our benched
Consultants. This has enhanced our ability to deploy Consultants whose skill
profiles and areas of expertise are a more precise match for clients'
requirements.
Our Pods, first developed as a response to the challenges of training during
the pandemic, have now become the foundation of our Consultant development.
The Pod experience is designed to simulate a client environment where
Consultants can work on real projects. Our account managers have strong
relationships with our clients which enable them to identify the most
in-demand trends in emerging technologies. Our experienced coaches can then
adapt the work assigned in the Pods to enable our Consultants to develop
skills aligned with these emerging trends.
Grow and diversify our client base
We continue to deliver the highest level of service to our clients and work
closely with them to meet their requirements. Client diversification remains a
key part of our strategy, with an element of the performance bonus for the
Executive Board and senior management being linked to client diversification
targets. We secured 47 new clients in the year (2022: 74), of which 23 were in
the UK, 7 in North America, 9 in APAC and 8 in EMEA. Of these new clients, 68%
were secured from outside the financial services sector. The number of new
clients does not include those clients which re-engaged with us during 2023.
Expand and consolidate our geographic presence through sustainable and
efficient means
The expansion and consolidation of our geographic presence remains a key
growth driver for FDM; whilst global macroeconomic conditions have impacted
trading across all our operating regions, we retain a strong management and
sales presence in each of our key operating regions. In the first quarter of
2023, we opened new sales offices in Tampa, Florida; Melbourne, Australia; and
Limerick, Ireland, each of which contributed promising new business to our
portfolio.
Our services
Our business model is focused on coaching and deploying passionate, energetic
and self-motivated Consultants with skills across five Practices; Software
Engineering; Data & Analytics; IT Operations; Change & Transformation;
and Risk, Regulation & Compliance. These five core areas of specialism
include multiple interconnected sprints within our Skills Labs, building a
versatile and adaptable Consultant workforce.
Consultants acquire skills and develop experience within a diverse range of
disciplines under each Practice and can undertake a number of different roles
when deployed on assignments.
Our core strengths include our agility, prompt design and delivery
capabilities, and, notably, our ability to adapt to the ever-evolving
technology landscape. For instance, our growing expertise in AI has enabled us
to stay ahead of the market, fostering strong capabilities in the AI space. We
established multiple Pods covering diverse scenarios involving the integration
of AI into business operations, complemented by successful workshops. These
included a workshop on Prompt Engineering, which was attended by seven
executives and over 45 engineers from our biggest client and received
exceptionally positive feedback. Not only did it consolidate our existing
clients' perception of our capabilities, but it also opened doors for FDM to
engage with potential new clients regarding opportunities to work together in
the future.
Consultancy Services
Underpinned by our core model, our Consultancy Services team was set up to
provide added expertise and capability. We help our clients to identify
problems, shape change and deliver the right solutions. Using a combination of
senior professionals and those at the beginning of their careers, we have the
ability to quickly mobilise high-performing teams to deliver collaborative
solutions for a wide range of technology problems. Each project is supported
by experienced Senior Delivery Consultants who provide management capability.
Delivery can be alongside the client's workforce or by FDM Consultants. During
2023 our Consultancy Services delivered a number of very successful projects.
Technology Partnerships
Our Technology Partnerships with some of the world's most innovative
organisations ensure that we are at the forefront of technological
advancements. The presence of certified trainers authorised to deliver
official training from these organisations enhances the support and skillsets
we offer to our clients.
In 2023, our Consultants obtained training and certification from Microsoft.
Furthermore, as a Workforce Development Partner to Microsoft, we collaborated
to host Industry Insight events aimed at showcasing our capabilities to
clients - the events, held in our London and Toronto centres, featured panel
discussions with senior leaders in the AI space from Microsoft, our clients,
and FDM. They provided a platform to explore the strategies, challenges and
success stories surrounding the adoption of AI technologies, while
highlighting advice on how AI transformation can align with organisational
goals and objectives. The attendance of a large number of clients added depth
and value to these discussions.
Our Technology Partners include:
· Microsoft - Workforce Development Partner
· Salesforce - Trailhead Academy Authorised Learning
Partner
· ServiceNow - Placement Partner
· AWS - AWS Approved Training Partner & AWS reStart
Collaboration
· Appian - Education Partner
· nCino - Workforce Development Partner
· SAP - Partner Talent Initiative
· ISACA - Accredited Partner
GROUP RESULTS
Summary income statement
Year ending Year ending % change
31 December 2023 31 December 2022
Revenue £334.0m £330.0m +1%
Adjusted operating profit(1 ) £49.6m £52.2m -5%
Operating profit £55.0m £45.8m +20%
Adjusted profit before tax(1 ) £50.2m £52.0m -3%
Profit before tax £55.6m £45.7m +22%
Adjusted basic EPS(1) 32.9p 37.3p -12%
Basic EPS 37.3p 32.0p +17%
Overview
Against a backdrop of challenging market conditions from the beginning of the
second quarter, the Group delivered a resilient performance in 2023. Revenue
increased to £334.0 million, up 1% (2022: £330.0 million), adjusted
operating profit(1) decreased by 5% to £49.6 million (2022: £52.2 million),
with adjusted basic earnings per share(1) down 12%, to 32.9 pence (2022: 37.3
pence). We ended the year with a robust balance sheet, including cash balances
of £47.2 million (2022: £45.5 million), having converted 111.8% 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 increased by £4.0 million to £334.0 million (2022: £330.0 million).
On a constant-currency basis(2) revenue increased by 2%, or £7.4 million.
Consultants assigned to clients at week 52 of 2023 decreased by 21%, totalling
3,892 (week 52 of 2022: 4,905). The average number of Consultants assigned to
clients was broadly similar in 2023 compared with 2022, resulting in revenue
earned in 2023 also being broadly similar to revenue earned in 2022. At week
52 of 2023 our Ex-Forces Programme accounted for 163 Consultants deployed
worldwide (week 52 of 2022: 211). Our Returners Programme had 219 Consultants
deployed at week 52 of 2023 (week 52 of 2022: 220). The Consultant utilisation
rate dropped to 92.8% (2022: 97.5%) as a result of the Group carrying a
higher-than-expected number of undeployed Consultants.
An analysis of revenue and headcount by region is set out in the table below:
Year ending Year ending 2023 2022
31 December 2023 31 December 2022 Consultants Consultants
Revenue Revenue assigned to clients assigned to clients
£m £m at week 52(3) at week 52(3)
UK 127.8 139.6 1,411 1,958
North America 130.2 116.9 1,322 1,618
EMEA 24.1 19.7 327 318
APAC 51.9 53.8 832 1,011
334.0 330.0 3,892 4,905
Adjusted Group operating profit margin decreased to 14.8% (2022: 15.8%), due
primarily to the cost to the Group of carrying more undeployed Consultants.
Administrative expenses, excluding the share-based payment credit/ expense,
increased to £107.0 million (2022: £103.4 million) due to the costs arising
from the higher number of undeployed Consultants.
(1) Adjusted operating profit and adjusted profit before tax are calculated
before Performance Share Plan credit/ expense (including social security
costs). Adjusted basic earnings per share are calculated before the impact of
Performance Share Plan credit/ expense (including social security costs and
associated deferred tax).
(2 ) The constant-currency basis is calculated by translating current-year
and prior-year reported amounts into comparable amounts using the 2023 average
exchange rate for each currency. The presentation of the constant-currency
basis provides a better understanding of the Group's trading performance by
removing the impact on revenue of movements in foreign exchange.
(3) Week 52 in 2023 commenced on 25 December 2023 (2022: week 52 commenced on
19 December 2022).
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
trading performance. The adjusted results are stated before Performance Share
Plan credit including associated taxes which totalled £5.4 million (2022:
expense of £6.4 million). The Directors believe that excluding these costs
provides a more meaningful comparison of the trading performance. These
expenses are based on estimates relating to a vesting which may occur up to
three years after the date of grant and the assumptions underpinning those
estimates can change from year to year.
Net finance expense
The finance expense includes lease liability interest of £0.7 million (2022:
£0.5 million). The Group has no debt.
Taxation
The Group's total tax charge for the year was £14.9 million, equivalent to an
effective tax rate of 26.7%, on profit before tax of £55.6 million (2022:
effective tax rate of 23.5% based on a tax charge of £10.8 million and a
profit before tax of £45.7 million). The effective tax rate in 2023 has
increased from the prior year primarily due to the increase in the UK
corporate tax rate from 19% to 25%, effective from 1 April 2023. The effective
tax rate also reflects the Group's geographical mix of profits and the impact
of items considered to be non-taxable or non-deductible for tax purposes.
Earnings per share
Basic earnings per share increased in the year to 37.3 pence (2022: 32.0
pence), whilst adjusted basic earnings per share were 32.9 pence (2022: 37.3
pence). Diluted earnings per share were 37.2 pence (2022: 31.8 pence).
Dividend
During the year, the Group paid two dividends with a total payment to
shareholders of £39.3 million (2022: £38.2 million).
At the AGM held on 16 May 2023, a final dividend of 19.0 pence per share for
2022 was approved by shareholders and was paid on 30 June 2023. On 25 July
2023, an interim dividend of 17.0 pence per share for 2023 was declared and
was paid on 13 October 2023.
The Board has recommended a final dividend of 19.0 pence per share, subject to
shareholder approval at the 2024 AGM, taking the total dividend arising from
the 2023 financial year to 36.0 pence per share (2022 total dividend: 36.0
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. As at 31 December 2023, the Company had
distributable reserves of £44.7 million. This statement does not form part of
the audited financial statements and the distributable reserves figure of
£44.7 million is therefore not audited by PwC.
Cash flow and Statement of Financial Position
The Group's cash balance increased to £47.2 million (2022: £45.5 million).
Cash conversion was 111.8% (2022: 108.3%) reflecting continuing strong working
capital management. In particular, year-end trade receivables decreased from
£34.9 million to £24.9 million. Dividends paid in the year totalled £39.3
million (2022: £38.2 million). Capital expenditure was £0.7 million (2022:
£1.2 million) and tax paid was £12.7 million (2022: £13.7 million).
SEGMENTAL PERFORMANCE
UK
Macroeconomic uncertainty impacted demand for new Consultants and consequently
UK Consultant headcount at week 52 of 2023 was 1,411, a decrease of 547 (28%)
on the prior year (2022: 1,958). Revenue decreased by 8% to £127.8 million
(2022: £139.6 million); this decrease was less than the decrease in
Consultant headcount due to the phasing of headcount. During the year we
continued to open new business with 23 new clients compared with the 38 that
we added in 2022.
Adjusted operating profit decreased 17% to £25.1 million (2022: £30.3
million) as, although there were fewer training completions, the impact of
this was outweighed by the cost of holding a higher than typical number of
undeployed ("benched") Consultants to service future client demand.
In response to the change in demand, training completions decreased by 68% to
339 (2022: 1,063).
North America
As in the UK, macroeconomic uncertainty hindered demand for new Consultants
and North America Consultant headcount at week 52 of 2023 was 1,322, a
decrease of 296 (18%) on the prior year (2022: 1,618). Despite the reduction
in headcount, revenue increased by 11% to £130.2 million (2022: £116.9
million) due to the phasing of headcount year-on-year (the 2023 average
headcount was 10% higher than 2022). During the year we added seven new
clients compared with the 14 that we added in 2022.
Adjusted operating profit increased 32% to £20.4 million (2022: £15.4
million) which is more than the percentage increase in revenue due to lower
paid training costs arising in 2023 compared to 2022. Training completions
decreased by 74% to 340 (2022: 1,319) as we adjusted our training schedules to
align with client demand.
We continued with our Group strategy to adjust our property footprint to
reflect changes in how we train our Consultants with training now being
delivered predominantly remotely. During the period, we moved our New York
sales office to smaller premises with more flexible tenancy terms and opened a
sales office in Florida to support client activity in the region.
EMEA
EMEA Consultant headcount at week 52 of 2023 was 327, an increase of nine (3%)
on the prior year (2022: 318). Revenue increased by 22% to £24.1 million
(2022: £19.7 million); this increase was more than the increase in Consultant
headcount due to the phasing of headcount. During the year we added eight new
clients, the same number as in 2022.
Adjusted operating profit decreased 9% to £2.1 million (2022: £2.3 million),
reflecting a higher than typical number of undeployed Consultants. Training
completions increased by 15% to 256 (2022: 223).
Ireland experienced good growth in the year with week 52 headcount increasing
by 57% to 69 and during the period we opened a sales office in Limerick,
Ireland.
APAC
APAC Consultant headcount at week 52 of 2023 was 832, a decrease of 179 (18%)
on the prior year (2022: 1,011). Revenue decreased by 4% to £51.9 million
(2022: £53.8 million); the decrease was less than that in the Consultant
headcount due to the phasing of headcount. During the year we added nine new
clients compared with the 14 that we added in 2022.
Adjusted operating profit decreased 52% to £2.0 million (2022: £4.2 million)
reflecting a higher than typical number of undeployed Consultants, as seen
elsewhere in the Group. Training completions decreased by 30% to 403 (2022:
574).
In Australia, we expanded our property footprint outside of Sydney, taking on
a sales office in Melbourne to act as a base to support an increasing
Consultant presence in the region.
THE BOARD
Rowena Murray joined the Board as a Non-Executive Director on 1 August 2023.
Rowena is highly regarded for her experience in investment banking and
corporate broking, and her insight into the public markets. She has a strong
reputation for helping businesses implement their strategies effectively to
generate growth and create value.
OUR PEOPLE AND OTHER STAKEHOLDERS
FDM is a people business, and I am particularly proud of the passion and
commitment which our people across all of our operating regions continued to
demonstrate, despite the uncertain market conditions we faced during 2023.
Our people strategy was designed to enable FDM to maintain its position as a
high-performing and impactful global organisation with a clear focus on
sustainability, scalability, commercial efficiency and flexibility. During
2023 we worked hard to ensure delivery of our strategic aims. Our Consultant
Experience team helps to anticipate our Consultants' needs, so that we can
deliver a positive experience for them. We have worked hard to put in place a
clear structure of career pathways for our Consultants throughout their FDM
journey. Optimising our Consultants' performance in this way, and using our
close relationships with clients to understand their business needs, ensures
that each Consultant deployment has the best chance of success for all
stakeholders.
We remain committed to promoting diversity, social mobility and inclusion
within our workplaces.
The wellbeing of all our people remains a key priority for the Board. The
People Team continues to engage with staff to ensure that their wellbeing is
monitored and safeguarded.
The Board extends its thanks to every FDM employee for the quality of their
work during 2023, which has enabled us to deliver a resilient performance,
while operating in challenging market conditions. Our results reflect their
dedication, hard work and commitment.
THE ENVIRONMENT
We maintain our focus on reducing our impact on the environment whilst further
developing the Group's response to climate-related risks and opportunities.
This year we have been able to gather more emissions data from our suppliers,
which means that our reported Scope 3 emissions from purchased goods and
services are more accurate.
CURRENT TRADING AND OUTLOOK
Reflecting continuing worldwide macroeconomic and geopolitical uncertainties,
market conditions in the early months of the current year have remained soft.
As we highlighted in January, levels of client engagement remain
encouraging. It is however difficult to predict when this will gain
sufficient strength to deliver meaningful increases in our Consultants placed
with clients.
Group-wide, our activity levels in the year to date are below our previous
expectations, with 3,703 Consultants assigned to clients as at 18 March 2024.
This, coupled with our strategy to maintain appropriate levels of Consultant
resource, and capacity in our internal teams, to meet clients' needs promptly
when our markets improve, means that the Board believes that the Group's
financial performance for 2024 is likely to be materially below its earlier
expectations.
FDM is a robust and agile business, with a strong balance sheet and
experienced management team and Board, operating in fundamentally strong
markets across a diversified portfolio of clients, sectors and geographies,
and we remain confident that our business is well positioned to return to
growth as more usual market conditions return.
Consolidated Income
Statement
for the year ended 31 December 2023
Note 2023 2022
£000 £000
Revenue 3 333,975 329,972
Cost of sales (177,449) (174,353)
Gross profit 156,526 155,619
Administrative expenses (101,500) (109,772)
Operating profit 4 55,026 45,847
Finance income 1,396 418
Finance expense (796) (604)
Net finance income/ (expense) 600 (186)
Profit before income tax 55,626 45,661
Taxation 5 (14,861) (10,753)
Profit for the year 40,765 34,908
Earnings per ordinary share
2023 2022
pence pence
Basic 6 37.3 32.0
Diluted 6 37.2 31.8
The results for the year shown above arise from continuing operations.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2023
2023 2022
£000 £000
Profit for the year 40,765 34,908
Other comprehensive (expense)/ income
Items that may be subsequently reclassified to profit or loss
Exchange differences on retranslation of foreign operations (net of tax) (1,329) 2,148
Total other comprehensive (expense)/ income (1,329) 2,148
Total comprehensive income for the year 39,436 37,056
Consolidated Statement of Financial Position
as at 31 December 2023
2023 2022
Note £000 £000
Non-current assets
Right-of-use assets 18,215 10,073
Property, plant and equipment 2,616 3,666
Intangible assets 19,571 19,729
Deferred income tax assets 552 2,316
40,954 35,784
Current assets
Trade and other receivables 32,613 45,473
Income tax receivables 3,384 3,450
Cash and cash equivalents 8 47,226 45,523
83,223 94,446
Total assets 124,177 130,230
Current liabilities
Trade and other payables 9 25,638 32,962
Lease liabilities 4,512 4,643
Current income tax liabilities 1,428 1,172
31,578 38,777
Non-current liabilities
Lease liabilities 15,669 8,250
Provisions 228 -
Deferred income tax liability 31 -
15,928 8,250
Total liabilities 47,506 47,027
Net assets 76,671 83,203
Equity attributable to owners of the parent
Share capital 10 1,096 1,092
Share premium 9,705 9,705
All Other reserves 1,567 13,525
Retained earnings 64,303 58,881
Total equity 76,671 83,203
Consolidated Statement of Cash Flows
for the year ended 31 December 2023
Note 2023 2022
£000 £000
Cash flows from operating activities
Group profit before tax for the year 55,626 45,661
Adjustments for:
Depreciation and amortisation 4 5,742 6,423
Loss on disposal of non-current assets 155 130
Finance income (1,396) (418)
Finance expense 796 604
Share-based payment (credit)/ charge (including associated social security (5,340) 6,727
costs)
Decrease/ (increase) in trade and other receivables 11,386 (11,334)
(Decrease)/ increase in trade and other payables (5,470) 1,872
Cash flows generated from operations 61,499 49,665
Interest received 1,396 418
Income tax paid (12,741) (13,665)
Net cash inflow from operating activities 50,154 36,418
Cash flows from investing activities
Acquisition of property, plant and equipment (651) (1,204)
Net cash used in investing activities (651) (1,204)
Cash flows from financing activities
Proceeds from issuance of ordinary shares 4 -
Proceeds from sale of shares from EBT 468 484
Principal elements of lease payments (4,807) (5,470)
Interest elements of lease payments (718) (472)
Proceeds from sale of own shares 16 24
Payment for shares bought back (2,525) -
Finance costs paid (72) (132)
Dividends paid 11 (39,320) (38,153)
Net cash used in financing activities (46,954) (43,719)
Exchange (losses)/ gains on cash and cash equivalents (846) 908
Net increase/ (decrease) in cash and cash equivalents 1,703 (7,597)
Cash and cash equivalents at beginning of year 45,523 53,120
Cash and cash equivalents at end of year 8 47,226 45,523
Consolidated Statement of Changes in Equity
for the year ended 31 December 2023
Share capital Share All Other reserves Retained Total
premium earnings equity
£000 £000 £000 £000 £000
Balance at 1 January 2023 1,092 9,705 13,525 58,881 83,203
Profit for the year - - - 40,765 40,765
Other comprehensive expense for the year - - (1,329) - (1,329)
Total comprehensive income for the year - - (1,329) 40,765 39,436
Share-based payments - - (4,434) - (4,434)
Transfer to retained earnings - - (4,673) 4,673 -
Own shares sold - - 1,003 (496) 507
Own shares purchased - - (2,525) - (2,525)
Recharge of net settled share options - - - (200) (200)
Dividends (note 11) - - - (39,320) (39,320)
Issue of new shares (note 10) 4 - - - 4
Total transactions with owners, recognised directly in equity 4 - (10,629) (35,343) (45,968)
Balance at 31 December 2023 1,096 9,705 1,567 64,303 76,671
Share Share Retained Total
capital premium All Other reserves earnings equity
£000 £000 £000 £000 £000
Balance at 1 January 2022 1,092 9,705 5,126 62,207 78,130
Profit for the year - - - 34,908 34,908
Other comprehensive income for the year - - 2,148 - 2,148
Total comprehensive income for the year - - 2,148 34,908 37,056
Share-based payments - - 5,844 - 5,844
Transfer to retained earnings - - (454) 454 -
Own shares sold - - 861 (353) 508
Recharge of net settled share options - - - (182) (182)
Dividends (note 11) - - - (38,153) (38,153)
Total transactions with owners, recognised directly in equity - - 6,251 (38,234) (31,983)
Balance at 31 December 2022 1,092 9,705 13,525 58,881 83,203
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.
The financial statements of the Group have been prepared in accordance with
UK-adopted International Accounting Standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those standards.
The Consolidated Financial Statements have been prepared on a historical cost
basis. The Consolidated Financial Statements are presented in Pounds Sterling
and all values are rounded to the nearest thousand (£000), except where
otherwise indicated.
2 Basis of preparation
The financial information set out in this preliminary announcement does not
constitute statutory accounts for the years ended 31 December 2023 and 31
December 2022, for the purpose of the Companies Act 2006, but is derived from
those accounts. The audited statutory accounts for 2021 have been delivered to
the Registrar of Companies and those for 2023 were approved for issue on 19
March 2024. The Group's auditor reported on the Annual Report and Accounts for
the year ended 31 December 2023 on 19 March 2024. 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 2022 with the exception of the following standards and amendments
which were effective from 1 January 2023 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:
IFRS 17, 'Insurance contracts'
Amendments
Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12)
Definition of Accounting Estimates (Amendments to IAS 8)
Disclosure of Accounting policies (Amendments to IAS 1 and IFRS Practice
Statement 2)
International Tax Reform-Pillar Two Model Rules (Amendments to IAS 12)
3 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'.
As of 31 December 2023, 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 2023
North
UK America EMEA APAC Total
£000 £000 £000 £000 £000
Revenue 127,770 130,167 24,093 51,945 333,975
Depreciation and amortisation 2,420 1,324 362 1,636 5,742
Segment operating profit 28,608 21,641 2,398 2,379 55,026
Finance income¹ 1,334 260 24 11 1,629
Finance costs¹ (401) (55) (61) (512) (1,029)
Profit before income tax 29,541 21,846 2,361 1,878 55,626
As at 31 December 2023
Total assets 71,625 21,147 13,766 17,639 124,177
Total liabilities (11,093) (8,629) (5,479) (22,305) (47,506)
(¹) 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 America EMEA APAC Total
£000 £000 £000 £000 £000
31 December 2023 32,358 1,409 911 5,724 40,402
The following foreign entities, which are 100% owned subsidiaries, are
material by their size at 31 December 2023:
Entity Name FDM Group Inc. FDM Group Canada Inc. FDM Group
Australia Pty Ltd
Country of registration USA Canada Australia
£000 £000 £000
Revenue 71,884 58,283 21,665
Non-current assets (excluding deferred tax) 1,185 224 4,377
For the year ended 31 December 2022
North
UK America EMEA APAC Total
£000 £000 £000 £000 £000
Revenue 139,560 116,937 19,665 53,810 329,972
Depreciation and amortisation 2,599 1,698 291 1,835 6,423
Segment operating profit 25,856 14,111 2,039 3,841 45,847
Finance income(¹) 515 152 2 5 674
Finance costs(¹) (196) (59) (86) (519) (860)
Profit before income tax 26,175 14,204 1,955 3,327 45,661
As at 31 December 2022
Total assets 69,706 26,915 11,983 21,626 130,230
Total liabilities (8,602) (9,775) (4,906) (23,744) (47,027)
(¹) 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 America EMEA APAC Total
£000 £000 £000 £000 £000
31 December 2022 23,124 1,654 1,112 7,578 33,468
The following foreign entities, which are 100% owned subsidiaries, are
material by their size at 31 December 2022:
FDM Group Inc. FDM Group Canada Inc. FDM Group
Australia Pty Ltd
Country of registration: USA Canada Australia
£000 £000 £000
Revenue 63,512 53,425 23,552
Non-current assets (excluding deferred tax) 890 764 5,532
Information about major clients
Clients A and B represent 10% or more of the Group's 2023 and 2022 revenues.
Revenue from client A is attributed across all our operating segments, revenue
from client B is attributed to North America.
2023 2022
£000 £000
Revenue from client A 48,960 37,227
Revenue from client B 21,467 40,297
4 Operating profit
Operating profit for the year has been arrived at after charging/ (crediting):
2023 2022
£000 £000
Net foreign exchange differences 174 (415)
Loss on disposal of property, plant and equipment 148 95
Depreciation of right-of-use assets 4,279 4,533
Depreciation of property, plant and equipment and amortisation of software and 1,463 1,890
software licences
Expense relating to short-term leases 600 13
5 Taxation
The major components of income tax expense for the years ended 31 December
2023 and 2022 are:
2023 2022
£000 £000
Current income tax:
Current income tax charge 13,352 11,699
Adjustments in respect of prior periods (249) (592)
Total current income tax 13,103 11,107
Deferred tax:
Relating to origination and reversal of temporary differences 1,758 (354)
Total deferred tax 1,758 (354)
Total tax expense reported in the income statement 14,861 10,753
The standard rate of corporation tax in the UK increased from 19% to 25%
effective 1 April 2023, accordingly, the profits for 2023 are taxed at 23.5%
(2022: 19%). The tax charge for the year is higher (2022: higher) than the
standard rate of corporation tax in the UK. The differences are set out below:
2023 2022
£000 £000
Profit before income tax 55,626 45,661
Profit before income tax multiplied by UK standard rate of corporation tax of 13,072 8,676
23.5% (2022: 19%)
Effect of different tax rates on overseas earnings 1,562 2,090
Effect of expenses not deductible for tax purposes 99 579
Adjustments in respect of prior periods (249) (592)
Effect of unused tax losses not recognised for deferred tax assets 377 -
Total tax charge 14,861 10,753
6 Earnings per ordinary share
Basic earnings per share are 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.
2023 2022
Profit for the year £000 40,765 34,908
Average number of ordinary shares in issue (thousands) 109,151 109,192
Basic earnings per share Pence 37.3 32.0
Adjusted basic earnings per share are 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.
2023 2022
Profit for the year (basic earnings) £000 40,765 34,908
Share-based payment (credit)/ expense (including social security costs) £000 (5,449) 6,356
Tax effect of share-based payment (credit)/ expense £000 563 (522)
Adjusted profit for the year £000 35,879 40,742
Average number of ordinary shares in issue (thousands) 109,151 109,192
Adjusted basic earnings per share Pence 32.9 37.3
Diluted earnings per share
Diluted earnings per share are 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.
2023 2022
Profit for the year (basic earnings) £000 40,765 34,908
Average number of ordinary shares in issue (thousands) 109,151 109,192
Adjustment for share options (thousands) 329 594
Diluted number of ordinary shares in issue (thousands) 109,480 109,786
Diluted earnings per share Pence 37.2 31.8
7 Trade and other receivables
Due to their short-term nature, the Directors consider that the carrying
amount of trade receivables approximates to their transaction price. The
standard credit terms are 30 days.
2023 2022*
£000 £000
Trade receivables 24,944 34,892
Prepayments and accrued income 6,717 9,389
Other receivables 952 1,192
32,613 45,473
*The 2022 comparative has been restated as the income tax receivable balance
has been presented individually on the face of the Consolidated Statement of
Financial Position.
Included within prepayments and accrued income is £2,340,000 of accrued
income (2022: £3,862,000).
8 Cash and cash equivalents
2023 2022
£000 £000
Cash at bank and in hand 47,226 45,523
9 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.
2023 2022
£000 £000
Trade payables 1,435 2,184
Other payables 2,147 1,856
Other taxes and social security 7,031 9,309
Accruals 15,025 19,613
25,638 32,962
10 Share capital
Authorised, called-up, allotted and fully-paid share capital
2023 2023 2022 2022
Number of £000 Number of £000
shares shares
Ordinary shares of £0.01 each
At 1 January 109,191,669 1,092 109,191,669 1,092
Issued in year 420,183 4 - -
__________ ______ _______ ______
At 31 December 109,611,852 1,096 109,191,669 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.
11 Dividends
2023 2022
£000 £000
Dividends paid
Paid to shareholders 39,320 38,153
2023
An interim dividend of 17.0 pence per ordinary share was declared by the
Directors on 25 July 2023 and was paid on 13 October 2023 to holders on the
register on 22 September 2023; the amount paid was £18,539,000.
The Board is proposing a final dividend of 19.0 pence per share in respect of
the year to 31 December 2023, for approval by shareholders at the AGM on 14
May 2024; the amount payable will be £20,724,000. Subject to shareholder
approval the dividend will be paid on 28 June 2024 to shareholders on the
register on 7 June 2024.
This brings the Company's total dividend for the year to 36.0 pence per share
(2022: 36.0 pence per share).
The Board continues to operate its 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.
2022
An interim dividend of 17.0 pence per ordinary share was declared by the
Directors on 27 July 2022 and was paid on 30 September 2022 to holders on the
register on 26 August 2022; the amount paid was £18,533,000.
The Board paid a final dividend of 19.0 pence per share on 30 June 2023, to
shareholders on the register on 9 June 2023; the amount paid was £20,781,000.
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