Interim Results

FDM Group PLC 07 September 2006 Embargoed for release at 7.00am 7 September 2006 FDM Group plc ("FDM" or the "Group") UNAUDITED INTERIM RESULTS The Board of FDM Group plc, (LSE: FDMG), the IT staffing and services business, today announces its unaudited interim results for the six months ended 30 June 2006. Financial highlights * Sales increased by 28% on the comparable period last year to £21.12 million (H1 2005: £16.44 million) * Gross profit (net fee income) rose by 23% to £3.96 million (H1 2005: £3.21 million) * Adjusted profit before tax increased by 42% to £1.33 million (H1 2005: £0.94 million) + * Profit before tax of £1.26 million (H1 2005: £0.40 million) * Adjusted fully diluted earnings per share increased by 0.7p to 3.9p (H1 2005: 3.2p) * Fully diluted earnings per share of 3.6p (H1 2005: 0.6p) * Interim dividend increased to 0.6p per share (H1 2005: 0.5p per share) * Net cash position of £1.46 million at 30 June 2006 (30 June 2005: £2.02 million) + excluding FRS20 Charges and the exceptional costs of the April 2005 flotation Operating highlights * Overall gross margins remain well ahead of industry average at 18.7%, reflecting the value-added nature of the Group's services * Increase in headcount from 465 at start of year to 572 at 30 June 2006 * Increase in number of internally trained, higher margin contractors (known as "Mounties") to 118 at 30 June 2006 (30 June 2005: 91); Mountie utilisation rates steady at 98% * Continued increase in Mountie capacity in response to client demand: over 55 applicants for Mountie training programme received each week * New clients added to blue chip and diverse client base, including Virgin Mobile, British Airways, Xansa, Logica and BNP Paribas * Simplified operating structure: as of 1 July 2006, Professional Services and Commercial Training are merging to form single division, IT Services * Board strengthened by appointment as Chairman (with effect from 1 October 2006) of Ivan Martin, formally head of Misys' Banking Division * FDM currently enjoying healthy levels of trading and the Board remain confident of meeting their expectations for the current year Rod Flavell, FDM's Chief Executive Officer, commented: "The entire Group has performed well. All of our objectives have been met and we are well placed to continue in this manner. We have implemented a simpler, more transparent operating structure which, we believe, both clients and shareholders will appreciate. The market continues to provide a broad range of opportunities to manage demanding IT projects and address the shortage of appropriately skilled staff. Our resource base, supported by a best of breed training programme, is better placed than many organisations to meet these requirements. We look forward to the future with increasing confidence." For further information please contact: FDM Group Plc Noble & Company Limited Pelham PR Tel: 0870 060 3100 Tel: 020 7763 2200 Tel: 020 7743 6679 Rod Flavell, Chief Executive Officer Nick Naylor Archie Berens Julian Divett, Chief Operating Officer Nick Athanas ABOUT FDM FDM is an international IT company providing IT staffing, and IT services to companies for over 20 years. With offices in the UK, USA and Europe, FDM has maintained its leadership in this highly competitive marketplace by investing in a unique, industry-leading training programme (FDM Academy). Like a number of other organisations in this sector, FDM supplies freelance IT contractors to clients. However, FDM also trains, certifies and places its own employed consultants (known as Mounties). This sets FDM apart from the majority of competitors in the IT staffing market, who rely on a shared agency database of IT contractors. STRUCTURE FDM is made up of two business units: IT Staffing - offering a unique mix of freelance contractors and Mounties, ensuring permanent staff will be on site for the duration of clients' projects, whilst reducing staffing costs. IT Services - a low risk, highly scalable services model, that has been designed to increase efficiency, whilst decreasing management overheads. From development, support and training, FDM provides highly skilled teams to build the right solution to meet clients' business needs. FDM ACADEMY FDM's award-winning Academy runs a unique fast track training programme designed to provide the programmers of today and tomorrow. The Academy provides a hi-tech apprenticeship scheme for programmers in Sun Microsystems' Java and Microsoft's C#. With recently introduced finance and testing streams, FDM Academy is well placed for the future. Over 900 IT professionals have now graduated from the Academy. TRACK RECORD FDM provides IT services across five business sectors: Financial Services; Systems Integrators and Software Houses; Telecommunications and Broadband; Media and Transportation. Clients include over 150 blue-chip organisations such as JP Morgan, Sony, Barclays, Deutsche Bank, EDS, The BBC, Siemens and T-Mobile. KEY VENDOR PARTNERSHIPS FDM has established solid partnerships with industry heavyweights including IBM, Oracle, Sybase, Sun and Microsoft, enabling the Group to offer services in leading-edge technical environments. FDM Group plc ("FDM" or "the Group") Unaudited interim results for six months ended 30 June 2006 Chairman's and Chief Executive Officer's Statement The Group has had a good year so far. We reported in July 2006 that all three of the Company's business units had performed well during the first half of the year and that, accordingly, revenues and profits for the six months to 30 June 2006 would be ahead of our expectations. The results we report today confirm this. Results Turnover for the six months ended 30 June 2006 was £21.12 million, a 28% increase over the equivalent period in 2005 (£16.44 million). Gross profit (net fee income) rose 23% to £3.96 million (H1 2005: £3.21 million). Operating profit increased by 42% to £1.33 million compared to £0.94 million in H1 2005. Adjusted* operating profit increased by 32.9% to £1.28 million (H1 2005: £0.96 million). Pre-tax profit was £1.26 million (H1 2005: £0.40 million). Diluted earnings per share was 3.6p (H1 2005: 0.6p per share, adjusted* diluted earnings per share increased by 22% to 3.9p (H1 2005: 3.2p),. Net cash at 30 June 2006 was £1.46m (H1 2005: £2.0 million). * Adjusted for float costs and FRS20 share-based payment charges Dividend In line with the dividend policy set out at the time of the Company's flotation on AIM, and in recognition of the Company's continued strong trading performance, the Board is increasing the level of the interim dividend to 0.6p per share (H1 2005: 0.5p per share). The interim dividend will be paid on 13th October 2006 to shareholders on the register as at 15th September 2006. Market Position FDM specialises in providing IT contractors with Java and Microsoft .NET skills to clients in a number of industry sectors. Since 2003, both large business customers and the Government have begun significant IT programmes to web-enable their computer systems. FDM has been well positioned to supply staff with the necessary specialist skills and qualifications, which are in short supply in the UK. The FDM Academy allows us to provide our clients with our own highly trained and certified IT staff, known as Mounties, who are not part of an IT agency database that is shared by the industry. Our recruitment programmes have been successful this year and with 41 new Mounties graduating in the first half of this year we remain on track to reach our target of 75 new graduates trained by the year-end. Using our own employees enables us to generate higher margins than our freelance dependent rivals. FDM's business strategy is to avoid exposure to any particular sector or single customer. We currently operate across five principal sectors: Financial Services; Software & Systems Integrators; Telecoms; Media; and Transportation. For the 6 months ended 30 June 2006, the percentage breakdown of turnover across these sectors was as follows: 6 months ended 30 June 2006 2005 System Integrators 37.7% 33.6% Financial Services 28.8% 35.9% Transportation 13.0% 8.4% Media 9.5% 10.5% Telecoms 6.0% 8.8% Others 5.0% 2.8% 100% 100% Review of Operations IT Staffing FDM provides IT Staffing solutions from 4 international offices in Brighton, Washington DC, Frankfurt and Luxembourg. • FDM UK Trading within the UK IT staffing business has been strong. New clients acquired during the period include AIG, BNP Paribas, Virgin Mobile, Logica, Xansa and M&G Investment Management. The requirement for properly trained IT consultants remains robust across all areas, including the Transportation Sector where we are working with British Airways, BMW, Daimler Chrysler and The AA. We are experiencing high levels of utilisation of both of our freelance contractors and our in-house Mounties. Total UK headcount (including IT Services) at 30 June 2006 was 361 contractors on billing and 93 Mounties (2005: 290 contractors and 74 Mounties). • FDM USA Our US operation has performed well in the first half of the year. We have increased our presence in the Government sector and also added several new financial services clients, including Searchspace and HSBC. Our plan in the second half of the year is to continue to cross-sell from our UK client base into the USA. A number of UK Mounties are being currently seconded to ABN AMRO in New York. Headcount in the USA at 30 June 2006 was 28 contractors and 5 Mounties (2005: 26 contractors and 2 Mounties). • FDM Germany & Benelux FDM's European offices have seen an uplift in turnover and profitability in the first 6 months of 2006 compared to the first 6 months of 2005. The FDM European operation is well positioned for the second half of the year with on-going business with existing customers (e.g. JP Morgan, Deutsche Bourse Systems, Sony and the European Commission) as well as new customers such as IKB Bank, BNP Paribas and Avery Dennison. Total headcount within the European Division as at 30 June 2006 was 65 contractors and 20 Mounties (2005: 62 contractors and 15 Mounties). Professional Services & Commercial Training (to be renamed IT Services) Following customer feedback and our own experience, we have amalgamated Professional Services and Commercial Training Divisions into the IT Services Division, with effect from 1st July 2006. Professional Services has performed strongly during the first half of the year. We have been especially active in the banking sector, where projects are being undertaken with several tier one international banks. We have been successfully focusing on securing long-term revenues from this sector in particular where we can supply our Mounties within a managed team. Our Commercial Training division has commenced work providing training solutions with BA, and other major blue-chip clients. The division also recently won a major outsourcing contract with Reuters. Board Changes We announced in July the appointment of Ivan Martin as a Non-Executive Director. He will become Chairman on 1st October 2006 when Brian Divett, one of the original founders of FDM, will be stepping down as Chairman. Brian will remain on the Board as a Non-Executive Director until 31st December 2006. As we stated before, we are very pleased to have secured the services of someone of Ivan's calibre and believe that his industry expertise will benefit FDM in the future. He is highly respected and experienced in the IT industry, having built up Misys' Banking Division over a number of years. He is already contributing in a meaningful way to Board discussions and his knowledge and advice will prove invaluable to FDM. Strategy We will continue our organic growth through the expansion of the FDM Academy programme and building long-term strategic client relationships. Where opportunities present themselves, we will also examine suitable acquisitions, on the basis that they enhance our overall offering and provide shareholder value. The experience of Ivan Martin will be of particular value in this regard. Current Trading and Outlook Since our trading update of 10th July 2006, FDM has continued to trade in line with Board expectations. Having begun the year with a headcount of 465, at 30 June we had a total of 572 contractors placed with clients (454 were freelance contractors and 118 were Mounties). Our pipeline of new business opportunities remains strong and we are already building up a steady stream of business. We remain confident of meeting our expectations for the current year and look forward to the future with increasing confidence. Brian Divett Rod Flavell Chairman Chief Executive Officer 7 September 2006 FDM Group PLC Consolidated Profit and Loss Account For the six months ended 30 June 2006 Notes Restated (Note 3) Restated (Note 3) Unaudited Unaudited Audited Six Months ended Six Months ended Year ended 30 June 2006 30 June 2005 31 December 2005 £'000 £'000 £'000 Turnover from continuing operations 2 21,119 16,438 35,068 Cost of sales (17,161) (13,224) (28,274) Gross profit 3,958 3,214 6,794 Administration expenses (2,746) (2,282) (4,824) 3 Other income - - 47 Exceptional costs of flotation 4 - (497) (447) Operating Profit After Exceptionals 1,212 435 1,570 Interest Receivable/(Payable) 46 (27) 25 Profit Before Tax 1,258 408 1,595 Taxation 5 (411) (289) (666) Profit After Tax 847 119 929 Basic earnings per share (in pence) 3.7p 0.6p 4.3p Diluted earnings per share (in pence) 3.6p 0.6p 4.2p FDM Group PLC Consolidated Balance Sheet At 30 June 2006 Unaudited Unaudited Audited At 30 June 2006 At 30 June 2005 At 31 December 2005 £'000 £'000 £'000 Fixed Assets Tangible Assets 191 229 190 Intangible Assets 14 11 14 205 240 204 Current Assets Debtors 9,693 7,354 7,704 Cash at Bank 1,555 2,206 2,568 11,248 9,560 10,272 Creditors: Falling due within 1 year (4,799) (4,500) (4,323) Net Current Assets 6,449 5,060 5,949 Net Assets 6,654 5,300 6,153 Share Capital 232 232 232 Capital Redemption Reserve 63 63 63 Share Premium 3,332 3,332 3,332 Profit & Loss Account 3,027 1,673 2,526 Equity Shareholders Funds 6,654 5,300 6,153 FDM Group PLC Operating Profit to Net Cash flow from Operating Activities For the six months ended 30 June 2006 Restated (Note 3) Restated (Note 3) Unaudited Unaudited Audited Six Months Six Months ended Year ended ended 30 June 2006 30 June 2005 31 December 2005 £'000 £'000 £'000 Operating Profit from continuing activities 1,212 435 1,570 Depreciation 48 48 95 Loss on sale of fixed assets - 1 - FRS20 Share Based Payments charges (restated 69 32 110 for 2005) Increase in debtors (1,974) (902) (1,287) Increase in creditors 288 764 293 Net cashflow from continuing operating activities (357) 378 781 Returns on Investment and servicing of finance Interest paid (5) (48) (68) Interest received 51 21 93 Equity dividends paid (231) (698) (814) Taxation (476) (445) (513) Capital expenditure & Financial Investment Purchase of fixed assets (49) (41) (51) Cash flow before management of liquid resources and (1,067) (883) (572) financing Financing 1,636 1,693 176 (Decrease)/increase in cash in period (891) 803 1,121 FDM Group PLC Reconciliation of net cash flow to movement in net funds For the six months ended 30 June 2006 Restated (Note 3) Restated (Note 3) Unaudited Unaudited Audited Six Months ended Six Months ended Year ended 30 June 2006 30 June 2005 31 December 2005 £'000 £'000 £'000 (Decrease)/increase in cash in (891) 803 1,121 period Repayment of bank loan - 1,800 1,800 Change in net funds (891) 2,603 2,921 Translation differences 7 (18) (19) Movement in net funds in period (884) 2,585 2,902 Net funds at start of period 2,342 (560) (560) Net funds at end of period 1,458 2,025 2,342 Notes to Interim Report 1. Basis of Preparation The financial information contained herein does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The interim report has been prepared using the same accounting policies as for the financial statements for the year ended 31st December 2005 except for a change in accounting policy for the valuation of share options in accordance with FRS20 Share- based payments (IFRS2). The comparative figures for the year ended 31st December 2005 are not the company's statutory accounts for that financial year. These amounts have been extracted from those financial statements and have been restated on adoption of FRS20 Share-based payments, which is applicable for the first time. Financial information given for the six month period ended 30 June 2005 has also been restated on adoption of FRS20 Share-based payments. The statutory accounts (prior to the restatement) have been reported on by the company's auditors and delivered to the Registrar of Companies. The report of the auditors did not contain statements under section 237(2) or (3) of the Companies Act 1985. 2. Segmental Information - Turnover Unaudited Unaudited Audited Six months ended Six months ended Year ended 30 June 2006 30 June 2005 31 December 2005 £'000 £'000 £'000 UK 17,181 12,998 27,952 Europe 2,735 2,471 5,102 America 1,203 969 2,014 21,119 16,438 35,068 3. Administration Expenses In accordance with FRS 20 Share-based payments (IFRS 2), a charge of £69,000 has been made to Administration expenses for the six month period ended June 2006, for the year ended 31 December 2005 and for the six month period ended 30th June 2005. The UITF17 Share option charge has been removed and replaced with the FRS20 Share-based payments charge. Six months ended Year ended 30 June 2005 31 December 2005 £'000 £'000 UITF17 Share options charge 40 140 FRS20 Share-based payments charge (32) (110) Net profit/(loss) difference 8 30 4. Exceptional Charges The profit and loss for the period ended 30th June 2005 includes exceptional Administration Expenses of £497,000 relating to the costs associated with the flotation of the Group on the Alternative Investment Market of the London Stock Exchange. 5. Taxation The tax charge for the half year has been based on the estimated effective tax rate for the full year. 6. Dividends The Directors have recommended an interim dividend of 0.6p per share (H1 2005: 0.5p) to be paid on 13th October 2006 to shareholders on the register at 15th September 2006. Dividends paid out in the financial periods were as follows Six Months ended Six Months ended Year ended 30 June 2006 30 June 2005 31 December 2005 £'000 £'000 £'000 Dividends 231 298 414 7. Earnings per share Earnings per share have been calculated using the weighted average number of shares in issue during the period 22,966,181 (June 2005 20,550,011). The diluted earnings per share is based on 23,280,241 (June 2005 20,568,546) and reflects the potential exercise of share options granted. Adjusted earnings per share are calculated using profit before FRS20 Share-based payments charges and the exceptional float costs and are as shown below. Six Months ended Six Months ended Year ended 30 June 2006 30 June 2005 31 December 2005 Adjusted basic earnings per share (in pence) 4.0p 3.2p 6.8p Adjusted diluted earnings per share (in pence) 3.9p 3.2p 6.8p 8. Circulation to Shareholders Copies of the interim statement will be sent to shareholders with further copies available from the company secretary, FDM Group Plc, 2nd Floor Lanchester House, Trafalgar Place, Brighton, East Sussex, BN1 4FL. This information is provided by RNS The company news service from the London Stock Exchange

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