RNS Number : 5678B
FDM Group PLC
19 August 2008
FOR IMMEDIATE RELEASE 19 August 2008
FDM Group plc
(*FDM*, the *Group* or the *Company*)
Unaudited interim results for the six months ended 30 June 2008
FDM (AIM: FDMG), the international IT services business, today announces its interim results
for the six month period to 30 June 2008.
Financial highlights
· Revenue increased 4.0% to £25.42m (£24.44m)
· Gross profit increased 27.2% to £6.50m (£5.11m)
· Gross profit margins moving to 25.6% (20.9%)
· Profit before tax increased 30.7% to £2.39m (£1.83m)
· Conversion ratio (the ratio of EBITA to gross profit) increased to 34.9% (34.2%)
· Diluted earnings per share increased 28.8% to 6.7p (5.2p per share)
· Interim dividend of 1.0p per share (0.8p)
· Net cash position of £5.28m (£5.16m)
Operational highlights
· Continuation of FDM*s growth strategy:
- To transform FDM into a high-margin IT services provider
- Aggressively expand the Mountie offering
- Pursue organic growth complemented by selective acquisition assessment programme
· Growing demand for Mounties as demand for Sun Microsystems* Java and Microsoft*s .Net
programming skills increases
· New customers in the period include EADS, BT, SciSys and HSBC Retail
· Academy development * London expansion and Manchester nearing full capacity in less
than a year
· Opened new office in Zurich to promote commercial offering within Europe and relocated
US office to Manhattan
Rod Flavell, Chief Executive Officer of FDM commented:
*Despite the backdrop of economic uncertainty, today*s results demonstrate not only the
resilience of our Mountie offering but the
tremendous growth opportunity facing FDM.
We believe the Mountie model has the potential to generate significant growth for our
shareholders at a time when many IT service providers
continue to disappoint. We are fast becoming the outsourced IT partner of choice in our core
disciplines and I believe demand for our
services will continue to remain strong.*
For further information please contact:
FDM GroupRod Flavell, Chief Executive Tel No: + 44 (0) 870 060 3100
OfficerDavid Templeman, Group Finance Director
Brewin Dolphin Investment BankingMatt Davis / Tel No: + 44 (0) 845 213 3219
Alison Barrow
Buchanan Communications LimitedLisa Baderoon / Tel No: + 44 (0) 207 466 5000
Jeremy Garcia
Notes to Editors
About FDM Group plc
With over 350 employees and revenues of £50mFDM Group Plc (LSE AIM: FDMG) is an international
IT services company specialising in consulting
and training solutions. Founded in 1984, with its HQ in the UK and a further five
international offices, FDM works with over 200 blue-chip
clients including the BBC, Barclays, HSBC, AA, RBS and British Airways. Over two thirds of
FDM*s employees are IT consultants, termed
*Mounties*, who have been trained as Developers in the Sun Microsystems Java, Microsoft Cž.and Net toolsets, or who have joined the
Application Support or Test Analyst streams.
Chairman and Chief Executive*s Statement
Interim results for the six months ended 30 June 2008
Introduction
We are pleased to report further operational progress across the Group despite the well
documented economic slowdown. Our strong performance
has predominately been driven by our key strategic objective to transform FDM into a
high-margin IT services provider by aggressively
expanding our Mountie offering, the primary driver for growth in our business.
As a direct consequence, the results for the six-months ended 30 June 2008 are a clear
indication that further significant progress has been
made as margins continue to grow across our operations.
Results
The gross profitability of our business operations has increased to £6.50m, up 27.2% over the
comparable period (H1 2007: £5.11m) with gross
profit margins moving to 25.6% (H1 2007: 20.9%). Profit before tax amounted to £2.39m up
30.7% on the comparable period (H1 2007: £1.83m)
and our conversion ratio (the ratio of EBITA to gross profit) increased to 34.9% from 34.2% in
H1 2007. Diluted earnings per share increased
by 28.8% to 6.7p (H1 2007: 5.2p per share).
The Board is maintaining its dividend policy and is pleased to announce an interim dividend of
1.0p per share (H1 2007: 0.8p). The interim
dividend will be paid on 26 September 2008 to shareholders on the register as at 29 August
2008.
The Mountie model
Since FDM*s flotation in April 2005, we have delivered a consistent message to investors that
we will transform the business into a
high-margin IT services provider and move away from a freelance model.
The key driver for the success of this strategy is our unique *Mountie* offering which
delivers highly trained technical IT resources to
meet the ever-growing demand for Sun*s Java technology and Microsoft*s .Net programming
platforms. These two core technical competencies
underlie the majority of modern IT resource demand and FDM has an unmatched programme of
attracting, training and delivering expert
resources in these disciplines.
Our Mounties undergo an intensive training programme with us which culminates in accreditation
to a recognised industry standard. Once
accredited, the Mountie is tied to FDM under a two-year employment contract, enabling us to
place our Mountie resources within our blue-chip
client base.
We have experienced continued strong growth in Mountie numbers being placed with our clients.At 30 June 2008 we had a record-number of 246
Mounties on-billing (H1 2007: 190) and have maintained high utilisation levels during this
period of growth at 97.8% (H1 2007: 98.5%).
As a result of this demand-led growth for Mountie resources we opened our second metropolitan
training centre in Manchester in December 2007
following on from the opening of our London-based Academy in January 2007. Demand is such that
our Manchester centre is now nearing full
training capacity less than a year after opening and we will be significantly increasing
training capacity at our London centre later this
year.
The success of these metropolitan training centres and the strong demand for the highly
skilled Mounties which they are producing is
continuing evidence of the scalability of our Mountie model. With the skills-shortage in
numerical science graduates worsening in the UK and
our ability to source and train ambitious young graduates, we are well placed to continue a
sustained drive in Mountie numbers. Given that
the IT industry in the UK alone is worth tens of billions of pounds and is second only to
financial services as the largest business sector,
it is clear that our growth potential is enormous.
The demand for our Mountie offering continues to rise despite the general malaise in the
world*s economic markets. The move by many
corporates over the past six months to instigate tighter controls of expensive IT budgets and
move to restrict headcount numbers within IT
operations, we believe, merely helps foster greater demand for the Mountie offering.
Many of our larger clients are consistently increasing Mountie levels. This is due to our
Mounties delivering technical excellence at a cost
that is comparable to offshoring solutions within our operational jurisdictions but with a
true onshore capability and delivery service.
We believe FDM is now addressing a *sweet spot* in client requirements which has produced
record levels of Mountie demand.
New Clients
We made good progress during the first six months with regards to expanding our customer base
including some notable successes in sectors
not historically associated with the Group. Wins include EADS, BT, SciSys and HSBC Retail. We
believe this trend will continue as we attract
more organisations with large IT infrastructures which have Java and .Net at the heart of
their applications.
International focus
Outside of the UK FDM operates from offices in Frankfurt, Luxembourg, New York and a newly
established Zurich office. Given the
international nature of our blue-chip client base we have been able to successfully develop a
number of cross-selling opportunities around
our international network and we are now beginning to experience greater traction from these
efforts.
FDM currently services over 30 corporates from its overseas offices and we believe our
international proposition will make a valuable
contribution to revenues in the current year. In the longer term we expect to see these
centres as key components of FDM*s growth.
Freelance business
FDM evolved from a traditional freelance model and the placement of IT contractors with
clients remains an important part of our business.Our strategy regarding the freelance market has remained clear since flotation in 2005: we
find the freelance offering of our business an
excellent route to clients and while we value this entry point, we have maintained a
progressive policy of shedding low-margin business and
driving gross margins. Gross profits from the Freelance business were £2.73m in the
first-half of 2008, up 9.2% from £2.5m in the comparable
period of 2007. In line with our stated strategy our top-line revenues are down and our gross
profit margins are ahead, they now stand at
15.4% up 2% year-on-year (H1 2007: 13.4%).
Strategic development
The key component of our business success is the Mountie model and we will continue to
scale-up our delivery capability by investing in
training centres. Investment in our London Academy will at least double the number of training
seats and we will continue to assess the
potential for demand-led growth in other locations, both within the UK and internationally.
We have also embarked on a systematic process of identifying potential acquisition targets
that could yield significant margin upside when
combined with the Mountie model. We will however, carefully assess the balance of continued
investment in our organic growth programme
against investment in external targets.
Business outlook
Our ability to deploy ever growing numbers of Mounties trained in the modern technologies of
Java and .Net provides significant confidence
in the resilience of our business model, even in today*s current uncertain economic times.
Our Mountie model continues to gain traction within client organisations and as a direct
consequence, demand for our services has
increased.
We believe that the potential demand for Mounties far out-strips our current supply
capabilities and we will continue to invest in our
training centres to deliver increasing numbers of these highly skilled technical resources.
The Board therefore remains confident in trading for the current year.
We are focussed on delivering a high-margin business for investors and this process continues
with margin led growth being the key to our
future strategy.
In closing, FDM would not be in this position of strength were it not for its professional and
dedicated team of employees. The Board would
therefore like to take this opportunity of thanking its staff for their significant
contribution to the development of the Company and our
shareholders for their continued support.
Ivan Martin
Chairman
&
Rod Flavell
Chief Executive
19 August 2008
Consolidated Income Statement (unaudited)
for the six months ended 30 June 2008
Unaudited Unaudited Audited
Six Months ended Six Months ended Year ended
30 June 2008 30 June 2007 31 December 2007
Note £'000 £'000
£'000
Revenue from continuing 2 25,416 24,437 49,826
operations
Cost of Sales (18,919) (19,329) (38,595)
Gross Profit 6,497 5,108 11,231
Administrative Expenses (4,230) (3,361) (7,182)
Operating profit before 2,267 1,747 4,049
financing costs
Financial Income 118 86 212
Financial Expenses - (8) (7)
Net financing costs 118 78 205
Profit Before Tax 2 2,385 1,825 4,254
Income Tax expense 3 (807) (613) (1,421)
Profit for the period 1,578 1,212 2,833
Earnings per Share (pence) 5
Basic 6.9 5.3 12.3
Diluted 6.7 5.2 12.0
Consolidated Statement of Recognised Income & Expenditure (unaudited)
for the six months ended 30 June 2008
Unaudited Unaudited Audited
Six Months ended Six Months ended Year ended
30 June 2008 30 June 2007 31 December 2007
£'000 £'000 £'000
Foreign exchange translation (109) (5) 113
differences
Deferred tax on share-based 15 91 89
payments
Income and expense recognised (94) 86 202
directly in equity
Profit for the Period 1,578 1,212
2,833
Total recognised income and 1,484 1,298
expense for the period 3,035
Consolidated Balance Sheet (unaudited)
for the six months ended 30 June 2008
Unaudited Unaudited Audited
Six Months ended Six Months ended Year ended
30 June 2008 30 June 2007 31 December 2007
Note £'000 £'000 £'000
Assets
Property, Plant and Equipment 1 351 316 373
Intangible Assets 1 113 32 110
Deferred Tax Assets 110 184 212
Total Non Current Assets 574 532 695
Trade and other receivables 11,751 8,985 9,527
Income Tax Receivable - 34 -
Cash and Cash Equivalents 5,283 5,156 5,953
Total Current Assets 17,034 14,175 15,480
Total Assets 17,608 14,707 16,175
Current Liabilities
Bank Overdraft - - -
Trade and other payables 5,206 5,233 481
Income Tax Payable 631 604 830
Total Current Liabilities 5,837 5,837 5,671
Net assets 11,771 8,870 10,504
Equity
Share Capital 232 232 232
Share Premium 3,332 3,332 3,332
Capital Redemption Reserve 63 63 63
Currency Translation Reserve 173 (54) 64
Retained Earnings 7,971 5,297 6,813
Total Equity 11,771 8,870 10,504
Consolidated Cashflow Statement
for the six months ended 30 June 2008
Unaudited Unaudited Audited
Six Months ended Six Months ended Year ended
30 June 2008 30 June 2007 31 December 2007
£'000 £'000 £'000
Profit for the period 1,578 1,212 2,833
Adjustments for:
Depreciation and amortisation 130 94 210
Financial income (118) (78) (212)
Financial expense - - 7
Equity-settled share based 15 69 147
payment expenses
Proceeds from sales of 1 - -
non-current assets
Taxation 807 613 1,421
(Increase)/Decrease in trade (2,431) 1,101 665
and other receivables
Increase in trade and other 589 1,133 688
payables
Interest paid - (6) (7)
Tax paid (880) (476) (1,059)
Net Cash from operating (309) 3,662 4,693
activities
Cash flows from investing
activities
Interest received 118 84 212
Acquisition of property, plant - - (380)
and equipment
Acquisition of non-current (113) (240) (109)
assets
Net cash from investing 5 (156) (277)
activities
Cash flows from financing
activities
Net cash flow from sales and 14 (22) (22)
purchases of own shares by
Trust
Dividends paid (434) (299) (482)
Net cash from financing (420) (321) (504)
activities
Net (decrease)/increase in (724) 3,185 3,912
cash and cash equivalents
Cash and Cash equivalents at 5,953 1,975 1,975
beginning of period
Effect of exchange rate 54 (4) 66
fluctuations on cash held
Cash and Cash equivalents at 5,283 5,156 5,953
end of period
Notes to un-audited consolidated financial statements
1. Basis of Accounting
1.1. Reporting Entity
These consolidate interim financial statements comprise of FDM Group plc (the *Company*) and
its subsidiaries (together the *Group*). These
condensed consolidated interim financial statements are presented in pounds sterling, rounded
to the nearest thousand.
1.2. Statement of Compliance
These consolidated interim financial statements have been prepared in accordance with
International Financial Reporting Standard (IFRS) IAS
34 Interim Financial Reporting as adopted by the EU. They do not include all of the
information required for full financial statements and
should be read in conjunction with the consolidated financial statements for the Group for the
year ended 31 December 2007.
1.3 Significant Account Policies
The accounting policies and presentation applied by the Group in these condensed consolidated
interim financial statements are the same as
those applied by the Group in its consolidated financial statements for the year ended 31
December 2007.
1.4 Estimates
The preparation of financial statements in conformity with IFRSs requires management to make
judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets and liabilities, income and
expenses. The estimates and associated
assumptions are based on historical experience and various other factors that are believed to
be reasonable under the circumstances, the
results for which form the basis of making about carrying values of assets and liabilities
that are not readily available from other
sources. Actual results may differ from these estimates.
1.5 Seasonality and Cyclicality
There is no significant seasonality or cyclicality affecting the interim results
of the operations.
2. Segmental Information
The segmental reporting is based on the geographical location of the division. The Group
operates in three geographic areas, the UK being
the predominant area.
Un-audited Un-audited Audited
Six Months ended Six Months ended Year ended
30 June 2008 30 June 2007 31 December 2007
Revenue
UK 20,987 20,706 42,560
Europe 3,103 2,822 5,286
America 1,326 909 1,980
25,416 24,437 49,826
Profit before tax
UK 2,035 1,578 3,796
Europe 203 191 322
America 147 56 136
2,385 1,825 4,254
Depreciation & Amortisation
UK (119) (90) (199)
Europe (9) (2) (8)
America (2) (2) (3)
(130) (94) (210)
Purchase of non-current Assets
UK (112) (238) (479)
Europe (1) (2) (10)
America - - -
(113) (240) (489)
Total non-current assets
UK 559 512 671
Europe 13 16 21
America 2 4 3
574 532 695
Total Assets
UK 14,679 12,664 13,755
Europe 2,435 1,747 2,084
America 905 577 629
* Consolidation adjustments (411) (281) (293)
17,608 14,707 16,175
Total Liabilities
UK (5,011) (5,259) (5,050)
Europe (788) (580) (669)
America (449) (279) (245)
* Consolidation adjustments 411 281 293
(5,837) (5,837) (5,671)
Equity attributable to equity
holders of the parent
UK 9,668 7,405 8,705
Europe 1,647 1,167 1,415
America 456 298 384
11,771 8,870 10,504
* The consolidated adjustments are the removal of inter-company balances.
The revenue and gross profit derived in these geographical locations can be further broken
down into the two divisional sales business units
known as IT Staffing and Global Services, as shown below. It is not possible to segment the
administrative expenses and assets of the
divisions accurately as they are only reportable within the Group*s accounts to the extent
shown.
Un-audited Un-audited Audited
Six Months ended Six Months ended Year ended
30 June 2008 30 June 2007 31 December 2007
Revenue
IT Staffing 17,746 18,286 36,312
Global Services 7,670 6,151 13,514
25,416 24,437 49,826
Gross Profit
IT Staffing 2,732 2,429 5,041
Global Services 3,765 2,679 6,190
6,497 5,108 11,231
3. Taxation
Current Tax
Current tax expenses for the interim periods represents the expected tax payable on the income
for the period, calculated as the estimated
average annual effective income tax rate allied to the pre-tax income of the interim period.Income tax for the current and prior periods is
classified as a current liability to the extent that is unpaid. Amounts paid in excess of
amounts owed are classified as a current asset.
Deferred Tax
Deferred Tax for the interim period represents the expected tax payable, calculated from the
tax differences arising from the carrying
values of assets and the recognition of the deferred tax assets arising from the consideration
of employee share options granted but not yet
exercised at the end of the period. The tax deductible on these options will not be realised
until the options have been exercised. Deferred
tax is classified as a non-current asset or liability dependant on its nature to the extent
that it is not yet realised.
4. Dividends
The Directors recommended an interim dividend of 1.0 per share (June 2007: 0.8p) to be paid on
26 September 2008 to shareholders on the
register at 29 August 2008.
5. Earnings per share
The calculation of basic earnings per share is based on profit after tax.
Earnings per share have been calculated using the weighted average number of shares in issue
during the period 22,961,743 (June 2007:
22,953,283). The diluted earnings per share is based on 23,508,017 (June 2007: 23,490,494) and
reflects the potential exercise of share
options granted.
6. Issued Capital
Issued capital as at 30 June 2008 amounted to £232,220, this equates to 23,220,000 1p
ordinary shares. There were no movements in the issued
capital of the Group in either the current or prior interim reporting period.
7. Circulation to Shareholders
Copies of the consolidated interim statements will be sent to shareholders with further copies
available form the Company Secretary, FDM
Group PLC, 2nd Floor Lanchester House, Trafalgar Place, Brighton, East Sussex, BN1 4FU
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GUUMWRUPRGAR
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