Final Results

RNS Number : 4698R
FDM Group (Holdings) plc
09 March 2016
 

9 March 2016

FDM Group (Holdings) plc

Preliminary Results

 

FDM Group (Holdings) plc and its subsidiaries ("the Group," "FDM", or "the Company"), a global professional services provider with a focus on Information Technology ("IT") today announces its results for the year ended 31 December 2015.

Highlights

 

31 December

2015

31 December

2014

% change

Revenue

£160.7m

£123.3m

30.3%

Mountie revenue

£119.4m

£88.9m

34.3%

Adjusted1 Group operating profit

£30.2m

£24.9m

21.3%

Group profit before tax

£29.4m

£19.0m

54.7%

Adjusted1 Group profit before tax

£30.1m

£24.4m

23.4%

Basic earnings per share

20.5p

12.7p

61.4%

Adjusted1 basic earnings per share

21.0p

17.5p

20.0%

Net cash position at year end

£22.4m

£12.3m

82.1%

Cash flow generated from operations

£36.5m

£19.3m

89.1%

Adjusted1 cash flow generated from operations

£36.5m

£24.6m

48.4%

Adjusted1 cash conversion

121.3%

101.1%

20.0%

Ordinary dividend per share2

16.5p

7.5p

120.0%

Special dividend per share2

5.0p

-

n/a

·           Strong operational and financial performance

·           Mounties assigned to client sites at the commencement of week 52 were up 31% at 2,022 (2014: 1,539)3

·           Total headcount assigned to client sites at week 52 was up 26% at 2,329 (2014: 1,845)3

·           Mountie utilisation rate for the year to 31 December 2015 was 97.8% (2014: 98.4%)

·           Further successful geographic expansion into new territories and strong growth in Mounties on client sites across all regions

·           65 new clients in 2015

·           Continued investment in training academies in each of our geographic locations such that by 31 March 2016 we will have increased global training capacity by 33.5% over March 2015

·           Final dividend of 8.5 pence per share giving a total ordinary dividend for the year of 16.5 pence per share, in addition to a special dividend of 5.0 pence per share

·           Group well positioned for continued success in 2016 and beyond

 

1 The adjusted Group operating profit, adjusted profit before tax, adjusted cash flow generated from operations and adjusted cash conversion are calculated before exceptional items and performance share plan expenses (including social security costs). The adjusted basic earnings per share is calculated before the impact of exceptional items and performance share plan expenses (including social security costs and associated deferred tax).

2 The dividend in 2015 is in respect of the full year ended 31 December 2015 and represents an interim dividend of 8.0 pence per share and a proposed final dividend of 8.5 pence per share, in addition to a proposed special dividend of 5.0 pence per share. The dividend declared in 2014 is in respect of the period from admission to the London Stock Exchange on 20 June 2014 to 31 December 2014.

3 Week 52 in 2015 commenced on 21 December 2015 (2014: week 52 commenced on 22 December 2014).

 

Rod Flavell, Chief Executive Officer, said:

"I am exceptionally proud of what FDM has achieved in 2015. The Group, across all its regions, delivered a strong financial performance, materially grew the number of Mounties on site and accelerated our UK and international Academy expansion programme. Notwithstanding significant investments made in the year in people and facilities to underpin our future growth, we finished 2015 with net cash balances of £22.4 million. Reflecting the Group's strong cash position and the Board's confidence in the business, the Board is also proposing a special dividend of 5.0 pence per share, equivalent to £5.4 million.

We have started 2016 with good momentum and I am confident that the year will see further progress for the Group."

Enquiries

For further information:

FDM

Rod Flavell - CEO

Mike McLaren - CFO

020 7067 0000 (today)

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. The Group undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

About FDM

FDM is a global professional services provider with a focus on IT and with over 160 clients in a variety of industries.

The Group's principal business activities involve recruiting, training and placing its own permanent IT and business consultants (known as "Mounties") at client sites. This is across a range of technical and business disciplines including Development, Testing, Support, Project Management Office ("PMO"), Data Services, Business Analysis, Business Intelligence and Cyber Security. The Group also supplies contractors to customers, either to supplement its own employed consultants' skill sets or to provide greater experience where required.

The Group has training academies and sales operations in dedicated facilities located in London, Leeds, Glasgow, New York, Toronto, Frankfurt and Hong Kong. In addition, FDM has a sales office in Singapore and operates in mainland China, Ireland, France, Switzerland, Luxembourg, Austria and South Africa. FDM has established partnerships with key universities, enabling it to recruit high quality graduates to train as Mounties.

FDM is a strong advocate of diversity and inclusion in the workplace, with around 60 nationalities working together as a team. The Group encourages and supports the recruitment of women into the IT industry, promoting their advancement through the "FDM Women in IT" initiative. The Group also actively recruits ex-Forces personnel in both the UK and the USA, as well as having a "Returners to Work" programme in APAC, aiding those workers who are ready to re-enter the workplace after a career break.

 

 

 

FDM GROUP (HOLDINGS) PLC

INTRODUCTION

2015 represented a year of strong performance by the Group. We delivered a 31% growth in Mountie headcount, achieving a record 2,022 Mounties placed with clients by week 52 2015 (week 52 2014; 1,539).  Global revenues increased by 30% to £160.7 million (2014: £123.3 million) with growth in revenues and operating profits being delivered by each of our operating regions.

During 2015 we secured 65 new clients across multiple sectors and now have a presence in finance, media, insurance, energy, aviation, government and not-for-profit sectors. We have expanded the regions in which we operate, placing Mounties for the first time in Austria and expanding into six new states in the USA. We have strengthened our partnerships with many universities, clients and military associations which enable us to continue creating and inspiring exciting careers that shape our digital future.

STRATEGY

FDM's strategy is to deliver customer led, sustainable profitable growth on a consistent basis. This strategy requires that all activities and investments produce the appropriate level of profit and cash returns, deliver sustained and measurable improvements for all stakeholders including customers, staff and shareholders and further FDM's objective of launching the careers of talented people worldwide.

To drive its strategy FDM looks to leverage its core service areas through increased Mountie headcount, the establishment of new academies, increased penetration into its existing customer base and expansion of the customer base including geographic expansion across the territories in which it operates.

FDM made good progress against its strategic objectives in 2015.

GROUP RESULTS

Reflecting its successful growth strategy, the Group delivered a strong operating performance during the year, with Group revenues increasing by 30% to £160.7 million (2014: £123.3 million). Mountie revenue increased by 34% to £119.4 million (2014: £88.9 million) whilst contractor revenue increased by 20% to £41.3 million (2014: £34.4 million).  The significant increase in Mountie revenue reflects the Group's strategy of focusing on increasing Mountie numbers and Mountie revenue, with the latter representing 74% of total revenue in 2015 compared with 72% in 2014. This had a small positive impact on the gross margin which increased from 39.3% to 39.5%. The proportion of Mountie headcount allocated to the Group's top 30 customers has decreased to 75% in week 52 2015 (2014: week 52 80%). The declining relative significance of non-Mountie revenues to the Group is expected to continue as the emphasis remains centred on growing Mountie numbers.

An analysis of Mountie revenue and headcount by region is set out in the table below:

 

2015

Mountie

revenue

£m

2014

Mountie

revenue

 £m

2015

Mountie

numbers

at week 52

2014

Mountie

numbers

at week 52

UK and Ireland

74.6

61.7

1,264

1,018

North America

31.0

18.0

520

341

EMEA

10.2

7.3

133

117

APAC

3.6

1.9

105

63

 

119.4

88.9

2,022

1,539

Overheads increased in the year from £23.5 million to £33.9 million, reflecting the significant investment in larger academies in the year in support of FDM's continued growth and the increase in Mountie headcount. A new academy opened in the year in Leeds, with openings in Glasgow, Hong Kong and Toronto after the year end also impacting operating costs in the year as leases were signed and some staff contracted prior to the year-end.  The Group made a number of strategic hires in the year across its management, recruitment, sales and training teams increasing total headcount in these areas of the business to 316 from 267. The increase in overheads as a result of the accelerated investments made in the year has had an impact on the adjusted operating margin which has decreased to 18.8% from 20.2%.

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 and exceptional items (where applicable).

There were no exceptional items in 2015 (2014: £5.4 million). The exceptional items in 2014 represented the £4.9 million of costs associated with admission of the Company's ordinary shares to the Main Market of the London Stock Exchange plc ("Admission") and exceptional staff costs of £0.5 million.

The performance share plan expenses including social security costs were £0.7 million in 2015 (2014: £nil).

Net finance costs

As the Group has no borrowings, finance costs are minimal. The net charge for the year represents £16,000 of finance income and a finance expense of £168,000 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 £7.3 million, equivalent to an effective tax rate of 25.0%, on profit before tax of £29.4 million (2014: effective tax rate of 28.9% based on a tax charge of £5.5 million and a profit before tax of £19.0 million). The effective tax rate was higher in 2014 due to the impact of £4.0 million of non-deductible expenses incurred in relation to the Admission.

The effective tax rate in 2015 is higher than the underlying tax UK tax rate of 20.25% due primarily to profits earned in higher tax jurisdictions.

Earnings per share

The basic earnings per share increased in the year to 20.5p (2014: 12.7p) whilst adjusted earnings per share was 21.0p (2014: 17.5p).

Dividends

The Board is proposing the following dividends in respect of the year to 31 December 2015, for approval by shareholders at the AGM on 28 April 2016:

·      A final dividend of 8.5 pence per share; and

·      A special dividend of 5.0 pence per share.

Subject to shareholder approval, both of these dividends will be paid on 3 June  2016 to shareholders of record on 13 May 2016.

This brings the Group's total dividend for the year to 21.5 pence per share (2014: 7.5 pence per share), comprising total ordinary dividends of 16.5 pence per share (2014: 7.0 pence per share) and the special dividend of 5.0 pence per share (2014: Nil pence per share). The total ordinary dividends of 16.5 pence per share will be covered 1.2 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.

Cash flow and net funds

Net cash inflow generated from operating activities more than doubled in the year, increasing from £14.4 million in 2014 to £29.6 million in 2015. After paying dividends of £16.7 million and capital investments of £2.4 million, net cash increased by £10.1 million to £22.4 million.

 Adjusted cash conversion increased to 121% from 101%, reflecting improved working capital management in the year.

At the end of the financial year, the Group had total facilities of £20.0 million available until 31 August 2018 (2014: £30.0 million - a £10.0 million facility expired in February 2015). The committed facilities, which were undrawn for all of 2015, are in place to support the Group's financing needs and provide headroom against forecast requirements.

Balance sheet

The Group has a robust balance sheet, with no debt and £22.4 million of cash.  The Group's largest asset, its trade receivable balance, reduced year on year, despite the growth in revenue and year end debtor days reduced to 48, (2014: 64 days) as a result of improvements to the systems and credit control functions of the Group.


SEGMENTAL PERFORMANCE

UK and Ireland

The UK and Ireland delivered another strong performance in the year. Total revenue was up by 22% to £110.0 million (2014: £90.3 million) and adjusted operating profit increased by 8% to £23.0 million (2014: £21.2 million). The number of Mounties placed at client sites reached 1,264 at week 52 (2014: 1,018).

Demand from both existing and new customers in the year was high, with the UK and Ireland securing 41 new customers in the year. As with the rest of the Group, the UK and Ireland continues to diversify the sectors in which it operates, most notably increasing its presence in the government and not-for-profit sectors during the year.

New service offerings continue to be a key strategic focus for the Group. As the hub of the Group, the UK continues to act as the test bed for new service areas, of which there were three in the year, Business Analysis, Business Intelligence and Cyber Security. The appointment of Jonathan Young in the UK as Group Chief Information Officer will facilitate the expansion of the Group's existing range of technical and business disciplines.

In June 2015 we relocated from Manchester to our new state-of-the-art Academy and sales office in Leeds. The Leeds Academy provides capacity for FDM to recruit and train additional graduates and ex-Forces personnel and an opportunity for FDM to work more closely with our university partners in the area, whilst creating new partnerships and developing existing relationships with customers in the region. Shortly after the year end, we opened our new Glasgow office and are confident it will also provide additional training, recruitment and collaboration opportunities for the Scottish regions.

North America

Our North American operations have delivered an exceptional performance in 2015. Total revenue grew to £36.2 million (2014: £22.1 million), an increase of 64% and adjusted operating profit increased to £6.0 million (2014: £3.1 million), an increase of 94%. Mounties placed on site during the year exceeded 500 for the first time, totalling 520 at year end compared to 341 in 2014.

FDM gained 16 new customers in 2015, including a number of high profile household names, one of which has already become our largest client in North America. We placed Mounties in six new states, including Virginia and Maryland, and FDM now provides services to the five largest banks in Canada.

In order to facilitate the increase in demand, the Group has accelerated its investment programme in the USA. Enlarged premises in Toronto are due to open in April 2016 and the North American management team was strengthened in the year with a number of key hires to support its ongoing growth, including a new head of military and a new head of training. A location for a further small scale training academy in the USA is currently being explored.

EMEA (Europe, Middle East and Africa, excluding UK and Ireland)

As reported previously, the EMEA market has been made more complex by the differing interpretations by clients of the evolving labour leasing legislation in Germany. Despite this, EMEA revenues increased by 20% to £10.7 million (2014: £8.9 million) and adjusted operating profit increased to £0.9 million (2014: £0.5 million). The number of Mounties placed at client sites at week 52 was 133, compared with 117 at week 52 2014.

The current focus of the EMEA business is to continue to grow the Mountie model in Germany and Switzerland, whilst Mounties were placed for the first time in the year in Austria. A new head of sales for the EMEA region was appointed during the second half of the year to help drive this growth.


APAC (Asia Pacific)

An improved performance in the APAC region saw revenues double to £3.8 million (2014: £1.9 million), with adjusted operating profit growing to £0.3 million (2014: £0.1 million). APAC Mounties placed on site at the beginning of week 52 were 105, up from 63 in 2014.

The APAC business continues to be based in Hong Kong and the new Academy and sales office opened in early 2016 to accommodate continuing growth. For the first time, training of local talent will take place in our own premises in the region. The Hong Kong base continues to support operations in China.  The Singapore sales office provides training from temporary facilities when required.

PEOPLE

The Board would like to thank all of our employees and other stakeholders for their hard work and dedication over the past year. FDM is a people business and the expertise and commitment of our people enables us to drive the business forward and helps to underpin our strong reputation with our customers.

BOARD CHANGES

We are delighted to welcome Michelle Senecal de Fonseca and David Lister to the Board. Their significant experience and capabilities further strengthen the Board.

We would like to thank Jonathan Brooks, who stepped down during the year, for his contribution to the Group during his tenure.

CURRENT TRADING AND OUTLOOK

2016 has started well for the Group and we are confident that we are well placed to deliver another year of good progress.


Consolidated Income Statement

for the year ended 31 December 2015

 

Note

 

2015

2014

 

 

 

£000

£000

Revenue

4

 

160,656

123,257

 

 

 

 

 

Cost of sales

 

 

(97,207)

(74,859)

 

 

 

 

 

Gross profit

 

 

63,449

48,398

 

 

 

 

 

Administrative expenses

 

 

(33,932)

(23,530)

Exceptional administrative expenses

6

 

-

(5,412)

Total administrative expenses

 

 

(33,932)

(28,942)

 

 

 

 

 

Operating profit

5

 

29,517

19,456

 

 

 

 

 

Financial income

7

 

16

4

Financial expense

7

 

(168)

(490)

 

 

 

 

 

Net finance expense

 

 

(152)

(486)

 

 

 

 

 

Analysis of profit before income tax

 

 

 

 

 

 

29,517

24,868

6

 

-

(5,412)

 

 

(152)

(486)

 

 

 

 

 

 

 

 

 

 

Profit before income tax

 

 

29,365

18,970

 

Taxation

8

 

(7,344)

(5,473)

 

 

 

 

 

Profit for the year

 

 

22,021

13,497

 

 

 

 

 

 

Earnings per ordinary share

 

 

 

2015

2014

 

 

 

pence

pence

 

 

 

 

 

Basic and diluted

 9

 

20.5

12.7

 

 

 

           

              

 

The results for the year shown above arise from continuing operations.

 

 

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2015

 

 

 

2015

2014

 

 

 

 

£000

£000

 

 

 

 

 

 

 

Profit for the financial year

 

 

22,021

13,497

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(67)

97

 

 

 

               

              

 

Total other comprehensive (expense)/ income

 

 

(67)

97

 

 

 

 

               

              

 

Total comprehensive income recognised for the year

 

 

21,954

13,594

 

 

 

 

                

               

             

 

 

Consolidated Statement of Financial Position

as at 31 December 2015

 

 

 

 

 

2015

2014

 

 

 

 

Note

 

£000

£000

 

 

Non-current assets

 

 

 

 

 

 

 

Property, plant and equipment

 

 

 

4,264

2,522

 

 

Intangible assets

 

 

 

19,550

19,429

 

 

Deferred income tax asset

 

 

 

173

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23,987

21,951

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Trade and other receivables

 

 

 

24,593

25,072

 

 

Cash and cash equivalents

 

 

 

22,360

12,287

 

 

 

 

 

 

 

 

 

 

 

 

 

 

46,953

37,359

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

70,940

59,310

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

Deferred income tax liabilities

 

 

 

282

259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

282

259

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Trade and other payables

 

 

 

19,168

14,013

 

 

Current income tax liabilities

 

 

 

3,089

2,515

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,257

16,528

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

22,539

16,787

 

 

 

 

 

 

 

 

 

 

Net assets

 

 

 

48,401

42,523

 

 

 

 

 

 

 

 

 

 

Equity attributable to owners of the parent

 

 

 

 

 

 

Share capital

 

11

 

1,075

1,127

 

 

Share premium

 

 

 

7,873

8,364

 

 

Capital redemption reserve

 

 

 

52

-

 

 

Other capital reserves

 

 

 

589

-

 

 

Translation reserve

 

 

 

76

143

 

 

Retained earnings

 

 

 

38,736

32,889

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

 

48,401

42,523

 

 

 

 

 

 

 

 

 

               

 

Consolidated Statement of Cash Flows

for year ended 31 December 2015

 

 

Note

 

2015 

2014

 

 

 

 

£000

£000

Cash flows from operating activities

 

 

 

 

 

Group profit before tax for the year

 

 

 

29,365

18,970

Adjustments for:

 

 

 

 

 

Depreciation and amortisation

 

 

 

753

643

Finance income

 

7

 

(16)

(4)

Finance expense

 

7

 

168

490

Share-based payment charge (including associated national insurance cost)

 

 

 

710

421

Decrease/ (increase) in trade and other receivables

 

 

 

479

(4,044)

Increase in trade and other payables

 

 

 

5,027

2,852

 

 

 

 

              

              

Cash flows generated from operations

 

 

 

36,486

19,328

Interest received

 

 

 

16

4

Income tax paid

 

 

 

(6,920)

(4,898)

 

 

 

 

              

              

Net cash generated from operating activities

 

 

 

29,582

14,434

 

 

 

 

              

              

Cash flows from investing activities

 

 

 

 

 

Acquisition of property, plant and equipment

 

 

 

(2,437)

(601)

Acquisition of intangible assets

 

 

 

(172)

(70)

 

 

 

 

              

              

Net cash used in investing activities

 

 

 

(2,609)

(671)

 

 

 

 

              

               

Cash flows from financing activities

 

 

 

 

 

Proceeds from issuance of ordinary shares

 

 

 

-

7,902

Repayment of borrowings

 

 

 

-

(15,000)

Finance costs paid

 

 

 

(161)

(466)

Dividends paid

 

12

 

(16,665)

-

 

 

 

 

              

               

Net cash used in financing activities

 

 

 

(16,826)

(7,564)

 

 

 

 

              

               

Net increase in cash and cash equivalents

 

 

 

10,147

6,199

Exchange (losses)/ gains on cash and cash equivalents

 

 

 

(74)

78

Cash and cash equivalents at beginning of year

 

 

 

12,287

6,010

 

 

 

 

              

               

Cash and cash equivalents at end of year

 

 

 

22,360

12,287

 

 

 

 

              

               

 

 

 

 

Consolidated Statement of Changes in Equity

for year ended 31 December 2015

 

 

Share

capital

Share

premium

Treasury

shares

 

Capital redemption reserve

 

Other capital reserves

Translation

reserve

Retained

earnings

Total

equity

 

£000

£000

£000

£000

£000

£000

£000

£000

Balance at 1 January 2015

1,127

8,364

-

-

-

143

32,889

42,523

 

              

              

              

              

              

              

              

              

Profit for the year

-

-

-

-

-

-

22,021

22,021

Other comprehensive expense

for the year

-

-

-

-

-

(67)

-

(67)

 

              

              

              

              

              

              

              

              

Total comprehensive (expense)/ income

for the year

-

-

-

-

-

(67)

22,021

21,954

 

 

 

 

 

 

 

 

 

Share-based payments

-

-

-

-

589

-

-

589

Closure of Employee Benefit Trust

-

(491)

-

-

-

-

491

-

Purchase of deferred shares

(52)

-

-

52

-

-

-

-

Dividends

-

-

-

-

-

-

(16,665)

(16,665)

 

              

              

              

              

              

              

              

              

Balance at 31 December 2015

1,075

7,873

-

52

589

76

38,736

48,401

 

              

              

              

              

              

              

              

              

 

 

 

 

 

 

 

 

 

 

Share

capital

Share

premium

Treasury

shares

 

Capital redemption reserve

 

Other capital reserves

Translation

reserve

Retained

earnings

Total

equity

 

£000

£000

£000

£000

£000

£000

£000

£000

Balance at 1 January 2014

1,018

543

(22)

-

-

46

19,021

20,606

 

              

              

              

              

              

              

              

              

Profit for the year

-

-

-

-

-

-

13,497

13,497

Other comprehensive income for the year

-

-

-

-

-

97

-

97

 

              

              

              

              

              

              

              

              

Total comprehensive income for the year

-

-

-

-

-

97

13,497

13,594

 

 

 

 

 

 

 

 

 

Share-based payments

-

-

-

-

421

-

-

421

Transfer to retained earnings

-

-

-

-

(421)

-

421

-

Sale of treasury shares

-

-

22

-

-

-

(22)

-

Bonus issue of shares

81

(53)

-

-

-

-

(28)

-

Proceeds from shares issued

28

7,972

-

-

-

-

-

8,000

Cost of shares issued

-

(98)

-

-

-

-

-

(98)

 

              

              

              

              

              

              

              

              

Balance at 31 December 2014

1,127

8,364

-

-

-

143

32,889

42,523

 

              

              

              

              

              

              

              

              

 

 

 

 

 

 

 

 

 

                       

 

 

Notes to the Consolidated Financial Statements

1          Corporate information

FDM Group (Holdings) plc 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 2015 and 31 December 2014, for the purpose of the Companies Act 2006, but is derived from those accounts. The audited statutory accounts for 2014 have been delivered to the Registrar of Companies and those for 2015 were approved for issue on 8 March 2016. The Group's auditor reported on the Annual Report and Accounts for the year ended 31 December 2015 on 8 March 2016. 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 2014 with the exception of the following new amendment which was effective during the year and was adopted by the Group in preparing the financial statements. The adoption of this amendment has not had a material impact on the Group's financial statements in the year:

·      Amendment to IAS 19, 'Employee benefits', on defined benefit plans (effective 1 July 2015)

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, enables 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 2015, 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 an international IT services provider.

During the year to 31 December 2015 the measurement methods used to determine operating segments and reported segmental profit or loss was updated to include all recharges from operating segments, and where appropriate, central costs. This analysis provides a clearer understanding of the underlying performance in each segment. The comparative numbers have been restated for comparability.

For the year ended 31 December 2015

 

UK and

North

 

 

 

 

Ireland

America

EMEA

APAC

Total

 

£000

£000

£000

£000

£000

 

 

 

 

 

 

Revenue

110,011

36,154

10,672

3,819

160,656

 

              

              

              

              

              

Depreciation and amortisation

(559)

(176)

(15)

(3)

(753)

 

 

 

 

 

 

Segment operating profit

22,370

5,892

909

346

29,517

Finance income

14

-

2

-

16

Finance costs

(152)

(4)

(9)

(3)

(168)

 

              

              

              

              

              

Profit before tax

22,232

5,888

902

343

29,365

 

              

              

              

              

              

Total assets

57,127

8,652

3,601

1,560

70,940

 

              

              

              

              

              

Total liabilities

(15,861)

(4,258)

(1,600)

(820)

(22,539)

 

              

              

              

              

              

 

For the year ended 31 December 2014

 

UK and Ireland

North America

 

EMEA

 

APAC

 

Total

 

£000

£000

£000

£000

£000

 

 

 

 

 

 

Revenue

90,313

22,122

8,909

1,913

123,257

 

              

              

              

              

              

Depreciation and amortisation

(456)

(165)

(20)

(2)

(643)

 

 

 

 

 

 

Operating profit before exceptional items

21,191

3,133

488

56

24,868

Exceptional expenses

(5,339)

(73)

-

-

(5,412)

 

              

              

              

              

              

Segment operating profit

15,852

3,060

488

56

19,456

Finance income

4

-

-

-

4

Finance costs

(473)

(5)

(11)

(1)

(490)

 

              

              

              

              

              

Profit before tax

15,383

3,055

477

55

18,970

 

              

              

              

              

              

Total assets

47,101

7,546

3,676

987

59,310

 

              

              

              

              

              

Total liabilities

(11,551)

(3,435)

(1,357)

(444)

(16,787)

 

              

              

              

              

              

Information about major customers

One customer represents 10% or more of the Group's revenues from all four operating segments and is presented as follows:

 

 

2015

2014

 

 

£000

£000

 

 

 

 

Revenue from customer

 

44,714

30,252

 

 

              

              

5          Operating profit

Operating profit for the year has been arrived at after charging/ (crediting):

 

2015

2014

 

£000

£000

 

 

 

Hire of property - operating leases

2,627

2,048

Net foreign exchange differences

(69)

(46)

Depreciation and amortisation

753

643

 

              

              

6          Exceptional items

The Group incurred no exceptional costs in 2015. During 2014, the Group incurred £5,412,000 of exceptional expenses.  These comprised £4,887,000 in respect of the Company's Admission to the London Stock Exchange, and exceptional staff costs, including share-based payments relating to a scheme that existed prior to Admission of £525,000.

7          Financial income and expense

 

 

 

2015

2014 

 

 

 

£000

£000

 

 

 

 

 

Bank interest

 

 

16

4

 

 

 

              

              

Financial income

 

 

16

4

 

 

 

              

              

 

 

 

 

 

 

 

 

2015

2014 

 

 

 

£000

£000

 

 

 

 

 

Interest payable on working capital facility

 

 

(11)

(51)

Interest payable on revolving credit facility

 

 

(109)

(351)

Finance fees and charges

 

 

(48)

(88)

 

 

 

              

              

Financial expense

 

 

(168)

(490)

 

 

 

              

              

8          Taxation

The major components of income tax expense for the years ended 31 December 2015 and 2014 are:

 

 

2015 

2014

 

 

£000

£000

Current income tax:

 

 

 

Current income tax charge

 

7,494

5,540

Adjustments in respect of prior periods

 

-

(301)

 

 

 

 

Deferred tax:

 

 

 

Relating to origination and reversal of temporary differences

 

(150)

67

Adjustments in respect of prior periods

 

-

167

 

 

              

               

Total tax expense reported in the income statement

 

7,344

5,473

 

 

              

               

The standard rate of corporation tax in the UK changed from 23% to 21% with effect from 1 April 2014, and to 20% with effect from 1 April 2015. Accordingly, the profits for the respective accounting periods are taxed at an effective rate of 20.25% (2014: 21.5%). The tax charge for the year is higher (2014: higher) than the standard rate of corporation tax in the UK. The differences are set out below:

Reconciliation of effective tax

 

2015

2014

 

 

£000

£000

 

 

 

 

Profit before income tax

 

29,365

18,970

 

 

              

              

 

 

 

 

Profit multiplied by UK standard rate of corporation tax of 20.25% (2014: 21.5%)

 

5,946

4,079

Effect of different tax rates on overseas earnings

 

1,283

644

Adjustments in respect of prior periods

 

-

(135)

Expenses not deductible for tax purposes

 

115

885

 

 

              

              

Total tax charge

 

7,344

5,473

 

 

              

              

9          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. There is no difference between basic and diluted earnings per share for the year as there are no dilutive shares.

 

 

 

 

2015

2014

Profit for the year

 

 

£000

22,021

13,497

Average number of ordinary shares in issue

 

 

Number

107,517,506

106,219,238

Earnings per share (ordinary shares)

 

 

Pence

20.5p

12.7

 

 

 

 

 

 

Adjusted earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the parent company, excluding exceptional items and performance share plan expense (including social security costs), by the weighted average number of ordinary shares in issue during the year.

 

 

 

2015

2014

 

 

 

 

 

Profit for the year (basic earnings)

 

£000

22,021

13,497

Exceptional items (net of tax) (note 6)

 

£000

-

5,137

Share-based payment expense (including social security costs)

 

£000

710

-

Tax effect of share-based payment expense

 

£000

(173)

-

 

 

 

                

                 

Adjusted profit for the year

 

£000

22,558

18,634

 

 

 

                

                 

 

 

 

 

 

Average number of ordinary shares in issue

Number

 

107,517,506

106,219,238

 

 

 

                         

                          

 

 

 

 

 

Adjusted earnings per share

Pence

 

21.0

17.5

 

 

 

                 

                 

 

10        Analysis of net cash/ (debt) (non-GAAP measure)

 

 

 

2015

2014

Analysis of net cash

 

 

 

£000

£000

Cash and cash equivalents

 

 

22,360

12,287

              

 

 

              

              

Net debt is defined as borrowings less net cash and cash equivalents. The Group had undrawn facilities at 31 December 2015 of £20,000,000 (2014: £30,000,000).

 

2015

2014

Movement of net cash/ (debt)

 

£000

£000

Net cash/ (debt) at beginning of year

12,287

(8,990)

 

 

 

Net increase in cash and cash equivalents

10,147

6,199

Repayment of borrowings

-

15,000

Exchange (losses)/ gains

(74)

78

 

              

              

Total net cash

22,360

12,287

 

              

              

(i)            Revolving credit facility

The Group has a £20,000,000 Revolving Credit Facility ("RCF") with HSBC Bank plc, expiring on 14 August 2018. The facility is available to be repaid and redrawn at the discretion of the Group.

The RCF is secured by way of a debenture on the assets of the Company, Astra 5.0 Limited, FDM Group Limited and FDM Group Inc. The interest rate on the RCF is fixed at 2.75% over LIBOR per annum. Since February 2015 the charge on non-utilised funds reduced from 1.0% to 0.4% per annum.

(ii)       Working capital facility

At 31 December 2014 the Group had a working capital facility of £10,000,000 provided by HSBC. The facility expired in February 2015 at the end of the facility term.

11        Share capital

Authorised, called up, allotted and fully paid share capital

 

 

 

 

 

2015

2015

2014

2014

 

 

Number of shares

£000

Number of

shares

£000

Ordinary shares of £0.01 each

 

107,517,506

1,075

107,517,506

1,075

Deferred shares of £0.01 each

 

-

-

5,200,392

52

 

 

                        

                

                        

                

 

 

 

 

 

 

 

 

107,517,506

1,075

112,717,898

1,127

 

 

                        

                 

                       

                  

 

 

 

 

 

 

               

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.

Deferred shares

At the Company's Annual General Meeting held on 30 April 2015, shareholders approved the purchase by the Company of 5,200,392 deferred shares for £1.00; the deferred shares had a nominal value of £0.01 each. The deferred shares were not entitled to any dividend or distribution and the holders had no right to attend, speak or vote at any general meeting of the Company by virtue of their holdings of any deferred shares. The holder of each deferred share had the right to receive, after the holders of all other shares in the capital of the Company (other than the deferred shares) then in issue had received £10,000,000 in respect of each such share held by them.

12        Dividends

 

 

 

 

2015

2014

 

 

 

 

£000

£000

Dividends paid              

 

 

 

 

 

Paid to shareholders

 

 

16,665

-

 

 

 

 

              

               

                     

An interim dividend of 8.0 pence per share (2014: nil pence) was proposed by the Directors on 28 July 2015 and paid on 25 September 2015 to holders of record on 21 August 2015. An interim dividend of 7.5 pence per share in respect of the period from Admission of the Company's shares to the Main Market of the London Stock Exchange on 20 June 2014 to 31 December 2014 was paid on 12 June 2015. There were no dividends declared or paid in the year ended 31 December 2014.

The Board is proposing the following dividends in respect of the year to 31 December 2015, for approval by shareholders at the AGM on 28 April 2016:

·      A final dividend of 8.5 pence per share; and

·      A special dividend of 5.0 pence per share.

Subject to shareholder approval, both of these dividends will be paid on 3 June 2016 to shareholders of record on 13 May 2016.

The Board continues to follow a progressive dividend policy, while allowing the Group to retain sufficient capital to fund ongoing operating requirements and to invest in long-term growth.

13        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 2015 is set out below:

 

 

2015

2014

 

 

 

 

£000

£000

 

 

 

 

 

 

Short term employee benefits

 

2,292

1,780

 

Post-employment benefits

 

33

24

 

Share-based payments

 

-

421

 

 

             

              

 

 

 

2,325

2,225

 

 

 

              

              

 

                 

14        Financial instruments

There are no differences between the fair value of the financial assets and liabilities included within the following categories in the condensed 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
 
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