TIDMFDM
RNS Number : 9027G
FDM Group (Holdings) plc
07 March 2018
FDM Group (Holdings) plc
Preliminary Results
FDM Group (Holdings) plc ("the Company") and its subsidiaries
(together "the Group" or "FDM"), a global professional services
provider with a focus on Information Technology ("IT"), today
announces its results for the year ended 31 December 2017.
Highlights
31 December 31 December % change
2017 2016
------------------------------ ------------ ------------ ---------
Revenue GBP233.6m GBP189.4m +23%
------------------------------ ------------ ------------ ---------
Mountie revenue(1) GBP207.3m GBP167.3m +24%
------------------------------ ------------ ------------ ---------
Adjusted operating profit(2) GBP47.3m GBP37.6m +26%
------------------------------ ------------ ------------ ---------
Profit before tax GBP43.7m GBP35.3m +24%
------------------------------ ------------ ------------ ---------
Adjusted profit before
tax(2) GBP47.2m GBP37.5m +26%
------------------------------ ------------ ------------ ---------
Basic earnings per share 29.8p 24.4p +22%
------------------------------ ------------ ------------ ---------
Adjusted basic earnings
per share(2) 32.6p 25.8p +26%
------------------------------ ------------ ------------ ---------
Net cash position at year
end GBP36.8m GBP27.8m +32%
------------------------------ ------------ ------------ ---------
Cash flow generated from
operations GBP48.3m GBP39.4m +23%
------------------------------ ------------ ------------ ---------
Adjusted cash conversion(2) 102.2% 104.9% -3%
------------------------------ ------------ ------------ ---------
Ordinary dividend per
share 26.0p 19.6p +33%
------------------------------ ------------ ------------ ---------
-- Strong operational and financial progress delivered Group-wide
-- Mounties assigned to client sites at week 52(3) were up 17% at 3,170 (2016: 2,705)
-- Mountie utilisation rate for the year to 31 December 2017 was 97.3% (2016: 97.4%)
-- 72 new clients secured globally (2016: 49)
-- Continued sector diversification, with 72% (2016: 67%) of new
clients won during the year outside the financial services
sector
-- Further successful geographic expansion particularly in APAC,
which grew Mounties assigned by 31% compared with week 52 2016
-- Continued investment in training Academies, with global
training capacity at year-end up 9% over December 2016
-- The Group continued to deliver strong cash conversion of over
100% of adjusted profit before tax
-- 2017 saw the Group report a 0.0% differential in its UK Gender Pay Gap reporting
-- Final dividend of 14.0 pence per share giving a total
ordinary dividend for the year of 26.0 pence, an increase of 33% on
2016
-- Group well positioned for continued success in 2018 and beyond
(1) Mountie revenue excludes revenue from contractors.
(2) The adjusted operating profit, adjusted profit before tax
and adjusted cash conversion are calculated before Performance
Share Plan expenses (including social security costs) of GBP3.6m
(2016: GBP2.2m). The adjusted basic earnings per share is
calculated before the impact of Performance Share Plan expenses
(including social security costs and associated deferred tax).
Adjusted cash conversion is calculated by dividing cash flow from
operations by adjusted profit before tax.
(3) Week 52 in 2017 commenced on 18 December 2017 (2016: week 52
commenced on 26 December 2016).
Rod Flavell, Chief Executive Officer, said:
"The Group returned a strong performance in 2017, generating
growth in Mountie numbers, revenue and profit while continuing to
invest, in each of its territories, in sustainable and long term
growth.
During the early part of 2018 FDM has seen continued strong
momentum across all of its markets and I am confident that FDM will
deliver another year of good operational and financial performance
in 2018."
Enquiries
For further information:
FDM Rod Flavell - CEO 020 7067 0000 (today)
Mike McLaren - CFO 0203 056 8240 (thereafter)
Weber Shandwick Nick Oborne/ Tom Jenkins 020 7067 0000
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.
About FDM
FDM is a global professional services provider with a focus on
IT. FDM brings people and technology together; creating and
inspiring exciting careers that shape our digital future.
The Group's principal business activities involve employing,
training and placing its own permanent IT and business consultants
("Mounties") at client sites. The Group also supplies contractors
to clients, either to supplement its own employed consultants'
skill sets or to provide additional experience where required. FDM
specialises in a range of technical and business disciplines
including Development, Testing, IT Service Management, Project
Management Office, Data Services, Business Analysis, Business
Intelligence and Cyber Security.
The FDM Careers Programme bridges the gap for graduates,
ex-Forces and returners to work, providing them with the training
and experience required to successfully launch or re-launch their
career. FDM has dedicated training centres and sales operations
located in London, Leeds, Glasgow, New York, Virginia, Toronto,
Frankfurt, Singapore and Hong Kong. FDM also operates in China,
Ireland, France, Switzerland, Austria, Denmark, Spain, Australia
and South Africa.
FDM is a strong advocate of diversity and inclusion in the
workplace, with over 75 nationalities working together as a team.
The Group became an early adopter of the UK's Gender Pay Gap
reporting policy, being the sixth company in the UK to release its
figures and reporting a median pay gap of 0%. FDM was featured as
one of the Best Employers for Race by Business in the Community and
in the first Social Mobility Employer Index by the Social Mobility
Foundation and Social Mobility Commission in 2017. FDM was also
recognised as Company of the Year at the TechWomen50 Awards
2017.
INTRODUCTION
The Group recorded a strong performance for 2017, with a 17%
growth in Mountie headcount, including growth of at least 15% in
Mountie headcount in each of our operating regions, and ending the
year with a record 3,170 Mounties placed on client site. The
Group's financial position remains strong with a closing cash
balance GBP9.0 million higher than 2016 at GBP36.8 million and no
debt.
STRATEGY
FDM's strategy is to deliver customer led, sustainable,
profitable growth on a consistent basis, through its
well-established Mountie model. This strategy requires that all
activities and investments produce the appropriate level of profit
and return on cash, that they deliver sustained and measurable
improvements for all our stakeholders including customers, staff
and shareholders, and that they further FDM's objective of
launching the careers of talented people worldwide.
GROUP RESULTS
2017 was a year of strong financial performance and continued
growth as we delivered 23% growth in revenue to GBP233.6 million
(2016: GBP189.4 million) and a 26% increase in both adjusted
operating profit, to GBP47.3 million (2016: GBP37.6 million) and
adjusted basic earnings per share, to 32.6 pence (2016: 25.8
pence). We are well-positioned for future growth with a healthy
balance sheet and a proven business model.
Mountie revenue increased by 24% to GBP207.3 million (2016:
GBP167.3 million), a 21% increase at constant currencies.
Contractor revenue increased by 19% to GBP26.3 million (2016:
GBP22.1 million), the result of meeting specific customer needs
during the first three quarters of 2017. Reflecting this mix of
revenues, gross margin was lower at 44.6% (2016: 45.5%). The
Group's strategy remains focussed on growing Mountie numbers and
revenues whilst contractor revenues remain ancillary to the Group
and will continue, over the longer term, in managed decline.
2017 2016 2017 2016
Mountie Mountie Mounties Mounties
revenue revenue assigned assigned
GBPm GBPm to client to client
site site
at week at week
52 52
UK and Ireland 106.7 93.9 1,744 1,505
North America 73.8 54.2 965 832
EMEA 13.1 12.0 155 135
APAC 13.7 7.2 306 233
---------------- --------- --------- ----------- -----------
207.3 167.3 3,170 2,705
---------------- --------- --------- ----------- -----------
The Group has used cash generated from operations to continue
significant investment in people and infrastructure. Overheads have
increased to GBP60.5 million (2016: GBP50.7 million), reflecting
the Group's investment in its management, support, recruitment,
sales and training teams during the year with average headcount in
these areas of the business increasing to 447 in 2017 compared with
371 in 2016. Despite the increase in overheads, adjusted operating
margin in 2017 has increased to 20.2% (2016: 19.9%).
Brexit has created some uncertainty in the economy and it is
difficult to predict the medium to long term potential impact on
the Group. FDM has a global footprint and is diversified from a
geographic perspective as it operates from well-established,
self-contained operating units. Although the risks associated with
the uncertainty in the UK and the potential impact across Europe
remain, to date no material negative impact on trading has been
noted.
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. The Performance Share Plan expenses including
social security costs were GBP3.6 million in 2017 (2016: GBP2.2
million). The Directors believe that, as these excluded costs are
non-cash items, it better allows a comparison of performance and
cash generation.
Net finance costs
As the Group has no borrowings, finance costs are minimal. The
net charge for the year comprises GBP29,000 (2016: GBP28,000) of
finance income and a finance expense of GBP130,000 (2016:
GBP128,000) representing non-utilisation charges on the undrawn
element of the Group's revolving credit facility.
Taxation
The Group's total tax charge for the year was GBP11.6 million,
equivalent to an effective tax rate of 26.7%, on profit before tax
of GBP43.7 million (2016: effective tax rate of 25.9% based on a
tax charge of GBP9.1 million and a profit before tax of GBP35.3
million). The effective tax rate in 2017 is higher than the
underlying UK tax rate of 19.25% primarily due to Group profits
earned in higher tax jurisdictions.
Earnings per share
The basic earnings per share increased in the year to 29.8 pence
(2016: 24.4 pence) whilst adjusted basic earnings per share was
32.6 pence (2016: 25.8 pence). Diluted earnings per share was 29.4
pence (2016: 24.2 pence).
Dividends
Subject to shareholders' approval of the final dividend of 14.0
pence per share, the Group's total dividend for the year will be
26.0 pence per share (2016: 19.6 pence per share). The total
ordinary dividends of 26.0 pence per share will be covered 1.15
times by basic earnings per share (2016: 1.2 times covered).
The Group has adopted a progressive dividend policy. The aim of
this policy is to steadily increase the Group's base dividend, on
an annual basis, approximately in line with growth in the Group's
earnings per share. The Board reviews the Group's dividend policy
on a regular basis and is confident that there are currently no
significant constraints which would impact this policy. The Group
is debt free, has no significant capital commitments (its
properties are all leasehold) and has sufficient distributable
reserves and cash balances to continue to apply this policy. As at
31 December 2017, the Company had distributable reserves of GBP35.4
million.
Cash flow and net funds
Net cash inflow generated from operating activities increased
from GBP30.7 million in 2016 to GBP35.0 million in 2017. Adjusted
cash conversion was 102%, with the reduction from 105% in 2016
attributable to movements in working capital. At the end of the
financial year, the Group had cash balances of GBP36.8 million
(2016: GBP27.8 million) and undrawn facilities of GBP20.0 million
available until 31 August 2018 (2016: GBP20.0 million).
Balance sheet
The Group has a robust balance sheet with no debt and GBP36.8
million of cash and cash equivalents.
SEGMENTAL PERFORMANCE
UK and Ireland
We closed the year with 1,744 Mounties placed on client sites,
an increase of 16% on the 1,505 at week 52 2016. Adjusted operating
profit(2) increased by 13% to GBP31.5 million (2016: GBP27.8
million). The UK and Ireland gained 43 new clients in 2017, 77% of
which were from outside the financial services and banking sector.
Growth in government work continued in 2017, with 315 Mounties
placed with UK government clients at the end of the year (2016 week
52: 206).
Our geographic presence in the UK increased with the opening of
a temporary training centre in Birmingham, allowing us to meet and
generate client demand and tap into the local graduate market. At
week 52, 55% of UK placements were based outside of London (2016:
57%).
2017 saw 839 Mounties complete their training (2016: 1,068).
While there was no material change to training capacity, this
reflects phasing of courses during the year, including an update to
the training timetable, to better align training completions with
the increase in client demand which follows the traditional end of
year break and a varying mix of the disciplines trained.
The number of ex-Forces Mounties placed with clients grew by 55%
to 239; this represents 14% of total UK and Ireland Mountie
headcount at week 52 (2016 week 52: 154 representing 10% of total
Mountie headcount). FDM has been a signatory to the Ministry of
Defence ("MoD") Armed Forces Covenant since 2015. This was
recognised in 2017 when the MoD awarded FDM the prestigious
Employer Recognition Scheme Gold Award, for "Outstanding support
for those who serve and have served".
Getting Back to Business courses were run from our London and
Glasgow Academies, as we introduced the programme to our Scottish
clients. The number of Getting Back to Business Mounties deployed
on client sites at week 52 2017 was 44 (2016: 7). In 2017 FDM in
Scotland won 'Best Employer Training and Development 2017' at the
s1 Recruitment Awards and the 'Diversity Star Performer 2017' at
the Scottish Diversity Awards.
As highlighted above, contractor revenue increased by 19% on the
prior year, the result of meeting specific customer needs primarily
during the first three quarters of 2017.
North America
North America Mountie revenue grew 36%, with demand from both
existing and new clients. 12 new clients were won in the year.
Adjusted operating profit(2) increased by 65% to GBP15.3 million
(2016: GBP9.3 million), benefiting from operational gearing as we
scaled the business.
Following the significant investment in training capacity in
2016, 2017 saw a modest 4% increase in capacity, achieved through
internal reorganisation of existing classrooms. In October 2017 FDM
committed to an additional lease allowing us to double the floor
space of our Toronto Academy in 2018. The work to design and
develop the new space, including the addition of six new
classrooms, commenced in January 2018 and has an expected
completion date of mid-2018.
FDM was recognised as Fastest Growing Company at the Best in Biz
Awards 2017 (silver winner) for its impressive performance.
EMEA (Europe, Middle East and Africa, excluding UK and
Ireland)
Mountie revenue from our EMEA business grew by 9% to GBP13.1
million (2016: GBP12.0 million). Adjusted operating profit(2) was
25% lower at GBP0.9 million (2016: GBP1.2 million) reflecting
investment during the year in facilities and people.
Mounties on client sites increased to 155 at week 52 2017
compared with 135 at week 52 2016. The German business benefitted
from FDM's pro-active approach to the introduction of the new
labour leasing laws. Growth in demand has been supported by a 140%
increase in the training capacity of the Frankfurt Academy in the
first half of the year. The larger Frankfurt office has enabled us
to hire more operational staff, strengthening the foundation for
continued business growth in the future. Swiss Mountie headcount
tailed off in 2017 following changes to client resource planning.
During 2017 FDM's Austrian subsidiary was incorporated; this will
provide a further arm for the EMEA business to develop.
APAC (Asia Pacific)
APAC Mountie revenue increased by 90% over 2016, to GBP13.7
million (2016: GBP7.2 million). Customer growth in 2017 was
generated by eight new customers, as well as diversification of
services provided to existing customers. This led to a healthy
increase in Mountie numbers, with 306 Mounties placed on client
site at week 52 (week 52 2016: 233).
The adjusted operating loss(2) decreased from GBP0.7 million in
2016 to GBP0.3 million in 2017, reflecting the growth of the
business following investment in our two Academies, additional
operational staff in the region as well as the operating costs
associated with development of the Australian facility. The
Singapore Academy and sales office opened in April 2017, and the
Hong Kong Academy and sales office opened in January 2016. These
dedicated facilities, together with our temporary training facility
in Sydney, have resulted in APAC training completions increasing
20% from 129 to 155 during the year. Our first locally sourced and
trained Mounties were placed with clients in Australia during 2017.
In the second half of 2017 APAC recorded a break-even operating
performance.
BOARD
Ivan Martin, FDM's non-executive Chairman, has today informed
the Board that he intends to step down later in the current year
and has asked the Board to start the process to find a new Chairman
to succeed him. The current intention is that he will step down
once that search has been successfully completed.
Ivan has served as Chairman of FDM since October 2006. Since the
Company's IPO in June 2014, FDM has reported four consecutive years
of strong profit performance while continuing to expand overseas
and grow revenue. This has been reflected in the Company's share
price, which has increased by around 280% since the Company's IPO
in June 2014. The continued success of FDM in the period since the
IPO has also resulted in the Company's entry into the FTSE 250 in
June 2017 - marking a key milestone in the Company's evolution.
In recognition of the fact that Ivan is in his 12th year as
Chairman, and having recently adopted a new three-year strategic
plan, the Board is looking ahead to the next phase of the Company's
development and growth. In the light of this, Ivan and the Board
now believe that the time is right to begin the search for a new
independent non-executive Chairman.
The search has commenced and will be led by the Company's
Nomination Committee, to be chaired by the Senior Independent
Director. A further update will be provided to shareholders in due
course.
There were no changes to the Directors of the Company in office
during the year and up to the date of signing the financial
statements.
OUR PEOPLE
Our results this year once again reflect the dedication and
professionalism of all employees across the Group in 2017. We are
very proud that our unique and proven business model enables us to
create and inspire exciting careers that shape our digital future.
The Board would like to thank all our employees for their
significant contribution to the performance of the Group.
CURRENT TRADING AND OUTLOOK
The Board anticipate that 2018 will be another year in which FDM
delivers good operational and financial performances.
Consolidated Income Statement
for the year ended 31 December 2017
Note 2017 2016
GBP000 GBP000
Revenue 4 233,575 189,403
Cost of sales (129,323) (103,291)
Gross profit 104,252 86,112
Administrative expenses (60,496) (50,691)
Operating profit 5 43,756 35,421
Finance income 6 29 28
Finance expense 6 (130) (128)
Net finance expense (101) (100)
Profit before income tax 43,655 35,321
Taxation 7 (11,643) (9,139)
Profit for the year 32,012 26,182
Earnings per ordinary share
2017 2016
pence pence
Basic 8 29.8 24.4
Diluted 8 29.4 24.2
The results for the year shown above arise from continuing
operations.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2017
2017 2016
GBP000 GBP000
Profit for the year 32,012 26,182
Other comprehensive income
Items that may be subsequently reclassified
to profit or loss
Exchange differences on retranslation of
foreign operations (net of tax) (673) 1,388
Total other comprehensive (expense)/ income (673) 1,388
Total comprehensive income for the year 31,339 27,570
Consolidated Statement of Financial Position
as at 31 December 2017
2017 2016
Note GBP000 GBP000
Non-current assets
Property, plant and equipment 4,926 5,011
Intangible assets 19,471 19,533
Deferred income tax assets 2,275 772
26,672 25,316
Current assets
Trade and other receivables 30,716 29,164
Cash and cash equivalents 36,846 27,844
67,562 57,008
Total assets 94,234 82,324
Current liabilities
Trade and other payables 26,616 24,628
Current income tax liabilities 3,239 4,358
29,855 28,986
Total liabilities 29,855 28,986
Net assets 64,379 53,338
Equity attributable to owners of
the parent
Share capital 10 1,075 1,075
Share premium 7,873 7,873
Capital redemption reserve 52 52
Translation reserve 791 1,464
Other reserves 6,148 2,470
Retained earnings 48,440 40,404
Total equity 64,379 53,338
Consolidated Statement of Cash Flows
for the year ended 31 December 2017
Note 2017 2016
GBP000 GBP000
Cash flows from operating activities
Group profit before tax for the
year 43,655 35,321
Adjustments for:
Depreciation and amortisation 1,408 1,180
Loss on disposal of non-current
assets 4 -
Finance income 6 (29) (28)
Finance expense 6 130 128
Share-based payment charge (including
associated social security costs) 3,576 2,217
Increase in trade and other receivables (1,552) (4,571)
Increase in trade and other payables 1,088 5,126
Cash flows generated from operations 48,280 39,373
Interest received 29 28
Income tax paid (13,263) (8,751)
Net cash flow from operating
activities 35,046 30,650
Cash flows from investing activities
Acquisition of property, plant
and equipment (1,350) (1,735)
Acquisition of intangible assets (18) (60)
Net cash used in investing activities (1,368) (1,795)
Cash flows from financing activities
Finance costs paid (130) (128)
Dividends paid 9 (23,976) (24,514)
Net cash used in financing activities (24,106) (24,642)
Exchange (losses)/ gains on cash
and cash equivalents (570) 1,271
Net increase in cash and cash
equivalents 9,002 5,484
Cash and cash equivalents at
beginning of year 27,844 22,360
Cash and cash equivalents at
end of year 36,846 27,844
Consolidated Statement of Changes in Equity
for the year ended 31 December 2017
Capital Other
Share Share redemption Translation reserves Retained Total
capital premium reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 January
2017 1,075 7,873 52 1,464 2,470 40,404 53,338
Profit for the year - - - - - 32,012 32,012
Other comprehensive
expense
for the year - - - (673) - - (673)
Total comprehensive
(expense)/ income
for the year - - - (673) - 32,012 31,339
Share-based payments - - - - 3,678 - 3,678
Dividends (Note
9) - - - - - (23,976) (23,976)
Total transactions
with owners, recognised
directly in equity - - - - 3,678 (23,976) (20,298)
Balance at 31 December
2017 1,075 7,873 52 791 6,148 48,440 64,379
Capital Other
Share Share redemption Translation reserves Retained Total
capital premium reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 January
2016 1,075 7,873 52 76 589 38,736 48,401
Profit for the year - - - - - 26,182 26,182
Other comprehensive
income for the year - - - 1,388 - - 1,388
Total comprehensive
income for the year - - - 1,388 - 26,182 27,570
Share-based payments - - - - 1,881 - 1,881
Dividends (Note
9) - - - - - (24,514) (24,514)
Total transactions
with owners, recognised
directly in equity - - - - 1,881 (24,514) (22,633)
Balance at 31 December
2016 1,075 7,873 52 1,464 2,470 40,404 53,338
Notes to the Consolidated Financial Statements
1 General information
The Company is a public limited company incorporated and
domiciled in the UK 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 2017 and 31 December 2016, for the purpose of the
Companies Act 2006, but is derived from those accounts. The audited
statutory accounts for 2016 have been delivered to the Registrar of
Companies and those for 2017 were approved for issue on 6 March
2018. The Group's auditor reported on the Annual Report and
Accounts for the year ended 31 December 2017 on 6 March 2018. 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 the International
Financial Reporting Standards (IFRSs) as adopted for the use in the
European Union and as issued by the International Accounting
Standards Board, this announcement does not itself contain
sufficient information to comply with IFRS. The accounting policies
applied in preparing this financial information are consistent with
the Group's financial statements for the year ended 31 December
2016 with the exception of the following amendments which were
effective during the year and were adopted by the Group in
preparing the financial statements. The adoption of these
amendments has not had a material impact on the Group's financial
statements in the year:
* Amendments to IAS 7, 'Statement of cash flows'
(effective 1 January 2017)
* Amendments to IAS 12,'Income taxes' on recognition of
deferred tax assets for unrealised losses (effective
1 January 2017)
3 Going concern
The Group's continued and forecast global growth, positive
operating cash flow and liquidity position, together with its
distinctive business model and infrastructure, enable the Group to
manage its business risks. The Group's forecasts and projections
show that it will continue to operate with adequate cash resources
and within the current working capital facilities. The Group passed
all bank covenants tested in the year and forecasts that all
covenants will be passed for a period of at least twelve months
from the date of signing this Annual Report.
The Directors therefore have a reasonable expectation that the
Company and the Group will have adequate resources to continue in
operational existence for the foreseeable future. Accordingly the
Directors continue to adopt the going concern basis for preparing
the financial statements.
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 2017, the Board of Directors consider that the
Group is organised on a worldwide basis into four core geographical
operating segments:
(1) UK and Ireland;
(2) North America;
(3) Rest of Europe, Middle East and Africa, excluding UK and Ireland ("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 2017
UK and North
Ireland America EMEA APAC Total
GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 131,479 75,069 13,077 13,950 233,575
Depreciation and amortisation (792) (447) (57) (112) (1,408)
Segment operating profit/
(loss) 28,694 14,700 765 (403) 43,756
Finance income 24 3 1 1 29
Finance costs (110) (5) (10) (5) (130)
Profit/ (loss) before
income tax 28,608 14,698 756 (407) 43,655
Total assets 66,565 17,601 4,563 5,505 94,234
Total liabilities (16,426) (6,253) (1,534) (5,642) (29,855)
Included in total assets above are non-current assets (excluding
deferred tax) as follows:
UK and North
Ireland America EMEA APAC Total
GBP000 GBP000 GBP000 GBP000 GBP000
31 December 2017 22,431 1,322 384 260 24,397
For the year ended 31 December 2016
UK and North
Ireland America EMEA APAC Total
GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 112,912 56,782 12,082 7,627 189,403
Depreciation and amortisation (762) (334) (18) (66) (1,180)
Segment operating profit/
(loss) 26,058 8,909 1,199 (745) 35,421
Finance income 20 - 7 1 28
Finance costs (106) (4) (14) (4) (128)
Profit/ (loss) before income
tax 25,972 8,905 1,192 (748) 35,321
Total assets 60,232 14,265 4,974 2,853 82,324
Total liabilities (17,791) (6,686) (1,862) (2,647) (28,986)
Included in total assets above are non-current assets (excluding
deferred tax) as follows:
UK and North
Ireland America EMEA APAC Total
GBP000 GBP000 GBP000 GBP000 GBP000
31 December 2016 22,755 1,551 26 212 24,544
Information about major customers
Customers A and B each represent 10% or more of the Group's 2017
revenues from all four operating segments and are presented below.
Customers A and C each represent 10% or more of the Group's 2016
revenues.
2017 2016
GBP000 GBP000
Revenue from customer A 40,328 26,126
Revenue from customer B 23,718 15,761
Revenue from customer C 8,861 19,647
5 Operating profit
Operating profit for the year has been arrived at after
charging/ (crediting):
2017 2016
GBP000 GBP000
Hire of property - operating leases 3,946 3,515
Net foreign exchange differences (153) 3
Depreciation and amortisation 1,408 1,180
6 Finance income and expense
2017 2016
GBP000 GBP000
Bank interest 29 28
Finance income 29 28
2017 2016
GBP000 GBP000
Non utilisation fees on revolving
credit facility (80) (80)
Finance fees and charges (50) (48)
Finance expense (130) (128)
7 Taxation
The major components of income tax expense for the years ended
31 December 2017 and 2016 are:
2017 2016
GBP000 GBP000
Current income tax:
Current income tax charge 12,619 9,956
Adjustments in respect of prior
periods (474) 64
Total current tax 12,145 10,020
Deferred tax:
Relating to origination and reversal
of temporary differences (502) (881)
Total deferred tax (502) (881)
Total tax expense reported in the
income statement 11,643 9,139
The standard rate of corporation tax in the UK is 19%. The rate
changed from 20% to 19% with effect from 1 April 2017. Accordingly,
the profits for the respective accounting periods are taxed at an
effective rate of 19.25% (2016: 20%). The tax charge for the year
is higher (2016: higher) than the standard rate of corporation tax
in the UK. The differences are set out below:
2017 2016
GBP000 GBP000
Profit before income tax 43,655 35,321
Profit multiplied by UK standard rate of corporation tax of 19.25% (2016: 20%) 8,404 7,064
Effect of different tax rates on overseas earnings 3,267 1,893
Expenses not deductible for tax purposes 446 118
Adjustments in respect of prior periods (474) 64
Total tax charge 11,643 9,139
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.
In 2015 the UK government announced legislation setting out that
the main UK corporation tax rate will be 17% with effect from 1
April 2020. At 31 December 2017 and 31 December 2016, deferred tax
assets and liabilities have been calculated based upon the rate at
which the temporary difference is expected to reverse. During the
year it was announced that the US Federal tax charge will drop from
35% to 21% effective 1 January 2018. These reductions may also
reduce the Group's future current tax charges accordingly.
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.
2017 2016
GBP0
Profit for the year 00 32,012 26,182
Average number of ordinary shares in
issue (thousands) 107,518 107,518
Basic earnings per share Pence 29.8 24.4
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.
2017 2016
Profit for the year (basic
earnings) GBP000 32,012 26,182
Share-based payment expense
(including social security
costs) GBP000 3,576 2,217
Tax effect of share-based
payment expense GBP000 (483) (672)
Adjusted profit for the
year GBP000 35,105 27,727
Average number of ordinary shares in issue
(thousands) 107,518 107,518
Adjusted basic earnings per share Pence 32.6 25.8
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.
2017 2016
Profit for the year (basic earnings) GBP000 32,012 26,182
Average number of ordinary shares
in issue (thousands) 107,518 107,518
Adjustment for share options (thousands) 1,465 585
Diluted number of ordinary shares
in issue (thousands) 108,983 108,103
Diluted earnings per share Pence 29.4 24.2
9 Dividends
2017 2016
GBP000 GBP000
Dividends paid
Paid to shareholders 23,976 24,514
2017
An interim dividend of 12.0 pence per ordinary share was
declared by the Directors on 28 July 2017 and was paid on 22
September 2017 to holders of record on 25 August 2017.
The Board is proposing a final dividend of 14.0 pence per share
in respect of the year to 31 December 2017, for approval by
shareholders at the AGM on 26 April 2018.
Subject to shareholder approval the dividend will be paid on 15
June 2018 to shareholders of record on 25 May 2018.
This brings the Company's total dividend for the year to 26.0
pence per share (2016: 19.6 pence per share). The total ordinary
dividends of 26.0 pence per share will be covered 1.15 times by
basic earnings per share.
The Board has adopted a 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.
2016
An interim dividend of 9.3 pence per ordinary share was declared
by the Directors on 26 July 2016 and was paid on 23 September 2016
to holders of record on 26 August 2016. The final dividend of 10.3
pence per share in respect of the year to 31 December 2016 was
approved by shareholders at the AGM on 27 April 2017, the dividend
was paid on 16 June 2017 to shareholders of record on 26 May
2017.
10 Share capital
Authorised, called up, allotted and fully
paid share capital
2017 2017 2016 2016
Number of GBP000 Number GBP000
shares of
shares
Ordinary shares of GBP0.01
each 107,517,506 1,075 107,517,506 1,075
11 Directors' remuneration
Details of the Directors' (who also represent the key management
personnel of the Group) remuneration in respect of the year ended
31 December 2017 is set out below:
2017 2016
GBP000 GBP000
Short term employee benefits 2,490 2,712
Post-employment benefits 32 32
Share-based payments 566 241
3,088 2,985
12 Financial instruments
There are no differences between the fair value of the financial
assets and liabilities included within the following categories in
the Consolidated Statement of Financial Position and their carrying
value:
-- Trade and other receivables
-- Cash and cash equivalents
-- Trade and other payables
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BIGDXUXGBGIL
(END) Dow Jones Newswires
March 07, 2018 02:00 ET (07:00 GMT)
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