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FDM Group plc (FDM)

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Wednesday 29 July, 2020

FDM Group plc

Half-year Report

RNS Number : 3989U
FDM Group (Holdings) plc
29 July 2020
 

FDM Group (Holdings) plc

Interim Results

 

FDM Group (Holdings) plc ("the Company") and its subsidiaries (together "the Group" or "FDM"), today announces its Interim Results for the six months ended 30 June 2020.

 


30 June 2020

30 June 2019

 

% change

Revenue

£ 140.5 m

£ 134.4 m

+5%

Adjusted operating profit1

£ 20.5 m

£ 27.0 m

-24%

Profit before tax

£ 21.2 m

£ 24.9 m

-15%

Adjusted profit before tax1

£ 20.2 m

£ 26.6 m

-24%

Basic earnings per share

14.8p

17.6 p

-16%

Adjusted basic earnings per share1

14.1p

18.9 p

-25%

Cash flow generated from operations

£ 30.8 m

£ 21.3 m

+45%

Cash conversion2

143.3 %

84.5 %

+70%

Interim dividend per share

18.5p

16.0p

+16%

Net cash position at period end

£ 58.3 m

£ 28.7 m

+103%

· Resilient first half performance given challenges presented by the COVID-19 pandemic

· COVID-19 has impacted the Group to differing degrees of significance, longevity and economic effect in each of our territories 

· The Group performed strongly in the first quarter. Trading levels then fell as various lockdown restrictions were imposed, but are now showing signs of improvement in the majority of sectors and all of the geographies in which we operate

· FDM's agile and robust business model enabled us to respond rapidly and effectively to changing conditions, including the move to remote recruitment and training, and Mounties working for clients remotely

· Mounties assigned to client sites at week 263 were down 5 % from a year previous at 3,656 (2019: 3,846) and down 329 heads since mid-March

· Mountie utilisation rate4 for the six months to 30 June 2020 was 95.0% (2019: 96.1%)

· The Group has not accessed the UK Coronavirus Job Retention Scheme (UK furlough) nor taken any funding from the UK Government

· Training courses have been revised to include greater emphasis on technical disciplines to meet the changing market demand

· FDM has launched its "Pod" solution allowing clients to select teams of Mounties who have collaborated throughout their training, in one transaction

· 28 new clients secured globally (2019: 40) of which eight were secured in the second quarter

· Long-running North American legal claim settled through mediation

· Strong balance sheet, with £58.3 million cash at period end (2019: £28.7 million) 

· Reported cash conversion of 143.3% (2019: 84.5%). Adjusted for the impact of accruals relating to the legal claim and holiday pay, underlying cash conversion2 was 104.8%

· On 28 July 2020, the Board declared an interim dividend of 18.5 pence per ordinary share (2019: 16.0 pence), which will be payable on 4 September 2020 to shareholders on the register on 7 August 2020

 

1 The adjusted operating profit and adjusted profit before tax are calculated before Performance Share Plan expense/ credit (including social security costs). The adjusted basic earnings per share is calculated before the impact of Performance Share Plan expense/ credit (including social security costs and associated deferred tax).

2 Cash conversion is calculated by dividing cash flow generated from operations by operating profit. Previously cash conversion was calculated by dividing cash flows generated from operations by profit before tax. The calculation was amended and the June 2019 comparative restated, to provide a more meaningful indicator following the adoption of IFRS 16 "Leases". Underlying cash conversion is calculated by dividing cash flow generated from operations by operating profit adjusted for the impact of accruals relating to the settlement cost (including expenses) of the longstanding legal claim, an d holiday pay.

3 Week 26 in 2020 commenced on 29 June 2020 (2019: week 26 commenced on 24 June 2019).

4 Utilisation rate is calculated as the ratio of cost of utilised Mounties to the total Mountie payroll cost.  

 

 

Rod Flavell, Chief Executive Officer, said:

"The Group has returned a resilient performance in the first half of the year given the challenges presented by the COVID-19 pandemic and, since its first-quarter update to the market in April, has traded comfortably in line with the Board's revised expectations.

Uncertainties over the impact of COVID-19 remain, but FDM's agile and robust business model has allowed us to respond rapidly and effectively to changes in market conditions during the first half, and will allow us to take advantage of opportunities as conditions normalise.

Reflecting the strength of the Group's balance sheet, current encouraging trading levels and our confidence in FDM's long term prospects, the Board is pleased to declare an interim dividend of 18.5 pence per share."

 

Rod Flavell, Chief Executive Officer

 

Enquiries

For further information:

FDM

Rod Flavell - CEO

Mike McLaren - CFO

0203 056 8240

0203 056 8240

Nick Oborne

(financial public relations)


07850 127526

 

Inside information and forward -looking statements

This Interim Report contains information that qualified, or may have qualified, as inside information for the purposes of Article 17 of the Market Abuse Regulations (EU) 596/2014 (MAR).

This Interim Report also contains statements which constitute "forward-looking statements". Although the Group believes that the expectations reflected in these forward- looking statements are reasonable, it can give no assurance that these expectations will prove to be correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. Subject to any requirement under the Disclosure Guidance and Transparency Rules or other applicable legislation or regulation, the Group does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Shareholders and/ or prospective shareholders should not place undue reliance on forward-looking statements, which speak only as of the date of this Interim Report.

 

 

 

We are FDM

FDM Group (Holdings) plc ("the Company") and its subsidiaries (together "the Group" or "FDM") operate in the Recruit, Train and Deploy ("RTD") sector. Our mission is to bring people and technology together, creating and inspiring exciting careers that shape our digital future.

The Group's principal business activities involve recruiting, training and deploying its own permanent IT and business consultants ("Mounties") at client sites either physically or remotely. FDM specialises in a range of technical and business disciplines including Development, Testing, IT Service Management, Project Management Office, Data & Operational Analysis, Business Analysis, Business Intelligence, Murex, Salesforce, Cyber Security and Robotic Process Automation.

The FDM Careers Programme bridges the gap for graduates, ex-Forces and returners to work, providing them with the training and experience required to make a success of launching or re-launching their careers. We have dedicated training centres and sales operations located in London, Leeds, Glasgow, Birmingham, New York NY, Arlington VA, Charlotte NC, Austin TX, Toronto, Frankfurt, Singapore, Hong Kong, Shanghai and Sydney. We also operate in Ireland, France, Switzerland, Austria, Spain, Luxembourg, the Netherlands and South Africa.

FDM is a collective of over 5,000 people, from a multitude of different backgrounds, life experiences and cultures. We are a strong advocate of diversity and inclusion in the workplace and the strength of our brand arises from the talent within.



 

Interim Management Review

Overview

FDM Group has returned a resilient performance in the first half of the year in light of the challenges presented by the COVID-19 pandemic.

The Group performed strongly in the first quarter of the year, with trading only marginally impacted by the various COVID-19 induced national lockdown restrictions. The second quarter saw more difficult trading conditions than the first quarter, primarily reflected in a reduction in the volume of new deals and the early termination of placements by clients operating in sectors most adversely affected by the pandemic. The impact has been most apparent in the UK market, while our other territories have shown headcount growth when compared with the first half of 2019.

FDM Group has an agile and robust business model which allowed us to respond quickly to the challenges created by COVID-19. Our continuity plans enabled us to use technology such that our recruitment processes and Academies in all our territories could operate remotely, with the significant majority of our Mounties working remotely during the lockdown periods in each jurisdiction, continuing their client placements with revenue-generating work. This has helped us to safeguard the well-being of our staff and our clients and to mitigate the impact of COVID-19 on our revenues.

The number of Mounties placed with clients at week 26 was 3,656, down 5% against the first half of 2019 and down 329 since mid-March. Benefiting from the stronger first quarter performance and a greater than usual number of chargeable days per Mountie, with significantly reduced levels of annual leave taken by Mounties in the first half because of lockdown travel restrictions, revenues for the six month period grew 5% to £140.5 million (2019: £134.4 million). An accrual has been made at the half year for the pro rata cost of unused annual leave which we anticipate will be taken in the second half of the year. We delivered a profit before tax for the first half of £ 21.2 million, down 15 % on the equivalent period in 2019. 

FDM has not accessed any of the UK Government's COVID-19 support packages, has not furloughed any staff and has not reduced any salaries. We have continued recruiting and training Mounties, albeit at reduced levels, have supported our unallocated (beached) Mounties and engaged with our workforce to reassure them of the strength and sustainability of the business.

Our strong focus on cash management and cash collection, together with the decision not to pay a final dividend in respect of the year ended 31 December 2019, resulted in the Group ending the period with £58.3 million of cash and no debt (30 June 2019: £28.7 million of cash and no debt).

The events of the last six months have placed great demands on our staff as they faced changes to working routines and the operations of our clients. The Board is immensely proud of the manner in which they have responded to these challenges and expresses its gratitude to all employees.

Dividend policy

A key tenet of FDM's relationship with shareholders is the payment of sustainable dividends at an attractive level.  After careful thought, the Board decided against proposing a 2019 final dividend to the Annual General Meeting (originally intended to be set at 18.5 pence per share). At the time, the COVID-19 situation was new, uncertain and difficult to assess. Since then the business has performed at an encouraging level, cash collection has been consistent and cash conversion robust.

Taking into account the decision not to recommend a final dividend for the 2019 financial year, and reflecting the encouraging trading levels, strong balance sheet and robust cash conversion that we have seen, the Company will pay an interim dividend of 18.5 pence per ordinary share to shareholders in September 2020 (2019 interim dividend: 16.0 pence per share).

The Board has previously stated its policy of holding approximately £30.0 million of cash across the Group and of having no debt; this policy gives us the freedom to react to events and invest as required to secure FDM's position and fund the Group's organic growth. The Board intends both to continue this policy and to manage dividends broadly in line with the earnings and cash conversion payout ratios that we have previously adopted.



 

Strategy

FDM's strategy is to deliver customer-led, sustainable, profitable growth on a consistent basis through our well-established Mountie model. The impact of COVID-19 on the delivery of our four primary strategic objectives in the first half of the year is set out below:

(i)  Attract, train and develop high-calibre Mounties

During the second quarter, as lockdown restrictions prevented our trainees from being able to access our physical training locations, we implemented technical solutions to enable all training to be delivered remotely across all our global markets. The near seamless transition to remote training is a credit to our exceptional IT people who worked hard and quickly to ensure the technology supported the delivery of training remotely and to the quality of our team of trainers who continued to deliver first-class training throughout. In total, there were 831 training completions in the first half, a decrease of 18 % on the equivalent period in 2019 (2019: 1,008). The flexibility of our business model has allowed us to align recruitment during the second quarter to changing client demand with increased emphasis on more technical roles, whilst we expect the strength of our university partner relationships and our ex-Forces and Getting Back to Business pathways to enable us to increase recruitment steadily over time.

One of the success stories of our first half has been the development of our "Pod" concept. This allows our Mounties to develop their skills remotely in a setting which closely simulates the client environments in which they will be placed. This solution has been well received by both Mounties and clients alike, culminating in improved client engagement, with many attending virtual sessions to see the Pods in action. Some clients have already engaged the services of individual Mounties and entire Pod teams as a result. 

(ii)  Invest in leading-edge training facilities

For the past few years we have increasingly leveraged pop-up centres to deliver training, on the basis that they are quick to establish and offer flexible availability to meet local candidate and client demand. The flexibility offered by pop-ups has meant that in 2020 we have been able to exit certain pop-up leases and give notice on others, reducing our cost base during the recent months when training has largely been delivered remotely. As COVID-19 restrictions necessitated remote delivery of training, we accelerated planned investment in cloud-based training platforms which will continue to add value after lockdown is eased, giving us a range of options to expand and enhance our training delivery. By broadening the accessibility of our training to those with travel restrictions, children and other caring responsibilities, we hope to promote further diversity and inclusivity amongst our trainee population.

(iii)  Grow and diversify our client base

We continued to deliver the highest level of service to our clients during the first half and have worked closely with our clients to support them as they have had to flex their resource requirements as a result of the impact of COVID-19. Despite the volume of new deals dropping in the second quarter, we secured 28 new clients in the first half (2019: 40) of which eight were in the second quarter. Half of the new clients secured were outside of the financial services sector. Our new Pod concept is proving to be an attractive offering which we are optimistic will give further impetus to the growth and diversification of our client base.

(iv)  Expand our geographic presence

Except for the UK and Ireland, which saw Mountie headcount fall by 348, we have increased the number of Mounties on site across all regions compared with June 2019. The largest increase came in APAC, which saw Mountie headcount increase by 125. North America increased Mountie headcount by 17, and EMEA Mountie headcount increased by 16 .

An overview of the financial performance and development in each of our markets is set out below.



 

Market review

UK and Ireland

Mountie revenue for the six-month period to 30 June 2020 decreased by 6% to £63.9 million (2019: £68.3 million). Mounties placed on client sites at week 26 were 1,637, a decrease of 18% from 1,9851 at week 26 2019. Adjusted operating profit decreased by 24% to £14.2 million (2019: £18.8 million).

Following clarity over Brexit and political leadership, 2020 started promisingly; however, we felt the impact of COVID-19 in the second quarter, when the UK was placed into lockdown. The pace and efficiency with which our workforce transitioned to working remotely has been very pleasing. With many Mounties electing to defer annual leave until later in the year, we have seen an overall increase in billable time. COVID-19 and its knock-on effects have impacted demand in some sectors more than others, with travel, energy, retail and insurance most noticeably affected. All of our UK Academies are training and placing Mounties with clients remotely.

North America

Mountie revenue for the six-month period to 30 June 2020 grew by 9% to £50.9 million (2019: £46.5 million). Mounties placed on client sites at week 26 were 1,222, an increase of 1% over 1,205 at week 26 2019. Adjusted operating profit decreased by 40% to £4.6 million (2019: £7.7 million), after the Board took the pragmatic and commercial decision to settle for £3.3 million a longstanding legal claim which the Board considered to be unmeritorious (see note 6).

We started the year with modest headcount growth, but the impact of COVID-19 and the associated move to remote working resulted in increased onboarding times and lower demand during the second quarter. Government policy has recently allowed Mounties in some locations to return to their place of work while others continue to work remotely. All our Academies are training and placing Mounties with clients remotely.

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

Mountie revenue for the six-month period to 30 June 2020 grew by 42% to £10.8 million (2019: £7.6 million). Mounties placed on client sites at week 26 were 236, an increase of 7% over 2201 at week 26 2019. Adjusted operating profit increased by 40% to £1.4 million (2019: £1.0 million).

We continued to see good demand in Luxembourg and benefited from a full period of trading in the Netherlands. Our German Academy was temporarily closed during lockdown, reopening in June, and we have developed the infrastructure to train remotely.

APAC (Asia Pacific)

Mountie revenue for the six-month period to 30 June 2020 grew by 39% to £14.2 million (2019: £10.2 million). Mounties placed on client sites at week 26 were 561, an increase of 29% over 436 at week 26 2019. The adjusted operating profit was £0.3 million (2019: adjusted operating loss of £0.5 million) as we continue to invest in our Australian operations and after benefiting from approximately £1 million of COVID-19 related employee cost subsidies, the significant majority of which was received automatically as part of the Singapore government's response to the pandemic.

Buoyed by our Sydney Academy, APAC delivered strong headcount growth under the challenging backdrop of COVID-19 and ongoing protests in Hong Kong. Across the region we commenced work with ten new clients.

 

 

1 Reflecting a change in management reporting, 30 Mounties previously included within UK and Ireland Mounties deployed as at 30 June 2019 have been re-allocated to EMEA.

 

 



 

Financial Review

Group results

Summary income statement


Six months to

30 June 2020

£m

Six months to

30 June 2019

£m

% change

Mountie revenue

139.8

132.6

+5 %

Contractor revenue

0.7

1.8

-61 %

Revenue

140.5

134.4

+5 %


Six months to

30 June 2020

£m

Six months to

30 June 2019

£m

% change

Adjusted operating profit

20.5

27.0

-24 %

Adjusted profit before tax

20.2

26.6

-24 %

Profit before tax

21.2

24.9

-15 %


Six months to

30 June 2020

Pence per share

Six months to

30 June 2019

Pence per share

% change

Adjusted basic earnings per share

14.1

18.9

-25 %

Basic earnings per share

14.8

17.6

-16 %

Mountie revenue increased by 5 % to £139.8 million (2019: £ 132.6 million) ( constant currency basis, 5%). Contractor revenue, in line with our plan of curtailing such revenues, decreased by 61% to £0.7 million (2019: £1.8 million). With the Group's strategy focussed on growing Mountie numbers and revenues and contractor revenues now negligible, contractor revenues will not be reported separately for the 2020 full year and thereafter.

Mounties assigned to client sites at week 26 2020 totalled 3,656 , a decrease of 5% from 3,846 at week 26 2019 and a decrease of 7% from 3,924 at week 52 2019. At week 26 our ex-Forces programme accounted for 201   Mounties deployed worldwide (week 26 2019: 276 ). Our Getting Back to Business programme had 102 deployed at week 26 2020 (week 26 2019: 95).

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


Six months to 30 June

2020

Mountie revenue

£m

Six months to 30 June

2019

Mountie revenue

£m

Year to

31 December 2019

Mountie

revenue

£m

 

2020

Mounties

assigned to

 client site

at week 26

 

2019

Mounties

assigned to

 client site

at week 26

 

2019

Mounties

assigned to

 client site

at week 52

UK and Ireland

63.9

68.3

134.2

1,637

1,985

1,910

North America

50.9

46.5

95.7

1,222

1,205

1,277

EMEA

10.8

7.6

16.0

236

220

240

APAC

14.2

10.2

22.3

561

436

497


139.8

132.6

268.2

3,656

3,846

3,924

 

Adjusted group operating margin has decreased significantly to 14.6% (2019: 20.1%), with overheads increasing to £45.3 million (2019: £39.8 million). The reduction in adjusted group operating margin is due primarily to the impact of the settlement of the legal claim in North America (see note 6) and the increase in the holiday pay accrual as at 30 June 2020 as employees have taken less annual leave than usual in the first half of the year.  

Adjusting items

The Group presents adjusted results, in addition to the statutory results, as the Directors consider that they provide an indication of underlying performance. The adjusted results are stated before Performance Share Plan expense/ credit including associated taxes (where applicable).

A credit of £1.0 million was recognised in the six months to 30 June 2020 relating to Performance Share Plan expenses including social security costs , the update of performance assumptions resulted in release of the reserve at 31 December 2019 (2019: debit expense of £1.7 million ). Details of the Performance Share Plan are set out in note 14 to the Condensed Consolidated Interim Financial Statements.

Net finance expense

Finance expense costs include lease liability interest of £0.4 million (2019: £0.4 million). The Group continues to have no borrowings.

Taxation

The tax charge of £5.0   million represents the effective tax charge on the Group profit before tax at the Group's effective tax rate of 23.5% (2019: 23.2%). The effective rate is higher than the underlying UK rate because of profits earned in higher tax jurisdictions.

Earnings per share

Basic earnings per share decreased in the period to 14.8   pence (2019: 17.6 pence), whilst adjusted basic earnings per share was 14.1   pence (2019: 18.9 pence). Diluted earnings per share was 14.8 pence (2019: 17.6 pence).

Dividend

In line with the dividend policy set out on page 3 , on 28 July 2020 the Directors declared an interim dividend of 18.5 pence per ordinary share (2019: 16.0 pence) which will be payable on 4 September 2020 to shareholders on the register on 7 August 2020.

Cash flow and Statement of Financial Position

Net cash flow from operating activities increased from £17.1 million in the half year to 30 June 2019 to £24.1 million in the first six months to 30 June 2020. The Group's cash balance increased to £ 58.3 million as at 30 June 2020 (2019: £28.7 million), as a result of the non-payment of the proposed final dividend in respect of the financial year ended 31 December 2019 and a strong end of half year cash collection performance.

Cash conversion for the period was 143.3%, compared with 84.5% for the comparative prior period. Adjusting for the impact of £7.9 million of accruals relating to the settlement cost (including expenses) of the longstanding legal claim and holiday pay, cash conversion was 104.8%.

Included within trade and other receivables is accrued income of £2,280,000 (30 June 2019: £9,385,000). The decrease in accrued income is in line with expectations following a higher than expected reported balance as at 30 June 2019 primarily due to a delay in invoicing, as described in the 2019 Interim Report.

Related party transactions

Details of related party transactions are included in note 16 to the Condensed Interim Financial Statements.



 

Principal risks facing the business 

The Group faces a number of risks and uncertainties which could have a material impact upon its long-term performance. The principal risks and uncertainties faced by the Group are set out in the Annual Report and Accounts for the year ended 31 December 2019 on pages 30 to 36.

COVID-19

The COVID-19 pandemic continues to cause significant uncertainty around the world, with different government approaches and restrictions in each of FDM's markets. As stated previously, in the second quarter of 2020 the Group experienced a significant reduction in the volume of new Mountie placements, delays in on-boarding of Mounties as clients adapted to the remote working environment, and the early termination of some placements by clients operating in some of the sectors most badly affected by the pandemic. This has led to an increase in the number of beached Mounties. In recent weeks we have seen the number of new deals begin to increase again, but it is too early to say whether the rate of improvement will be sustained and what the trend will be. It is therefore likely that this uncertainty will continue at some level during the second half of the year, making Mountie headcount numbers difficult to predict.

However, we have an agile and robust business model which positions us well to take advantage of opportunities as more normal conditions begin to return. As existing and potential clients adapt to new ways of working we envisage significant opportunities for our Mounties to support new technological change programmes across all sectors in which we operate.

Brexit

The UK Government continues to negotiate with the EU to establish the new working relationship which will apply following the end of the current transition period on 31 December 2020. There is therefore some uncertainty about the legal and commercial framework which will be in place between the UK and the EU after that date. However, we believe that our business model is resilient against many of the threats and uncertainties which are commonly perceived to arise from Brexit.

We have a diversified global geographical footprint and our businesses in each of our territories (including the UK and other EU countries) are self-sufficient and well-established. They have their own local management teams, and recruit Mounties largely from within the territories in which they operate. We are not reliant on moving employees to or from the EU and are not therefore significantly impacted by the changes to the arrangements for the free movement of workers between the EU and the UK.

The Board recognises that some of FDM's clients, and the economic conditions in the UK and EU, have been, and will continue to be, adversely impacted by the effects of both COVID-19 and Brexit. These impacts affect the spending decisions of some clients. Whilst certain scenarios are outside of the Group's control, we believe that FDM's business model is flexible, and the agile resource represented by our Mounties can be attractive to clients during times of economic or political uncertainty, which could potentially result in an increased demand for our services. These factors, together with FDM's strong cash and financial position, give the Board confidence that FDM can respond appropriately to ameliorate the effect of adverse conditions which may follow Brexit .

The Board

Alan Kinnear joined the Board as a Non-Executive Director of the Company on 1 January 2020. Alan had previously worked at PwC for 35 years until his retirement in 2015, including 23 years as an audit partner working with listed, private equity-backed and fast-growth entrepreneurial companies. Alan was the PwC partner leading the external audit in respect of FDM's 2013 and 2014 financial year-ends. Consistent with Provision 10 of the UK Corporate Governance Code, the Board considers Alan to be independent. Robin Taylor, Audit Committee Chair, who had been a Non-Executive Director of the Company since June 2014, retired from the Board on 29 April 2020. Alan Kinnear became Audit Committee Chair on that date, and his skills and background in financial reporting, audit, corporate governance and risk management will be invaluable to the Committee as the regulation of external audit services and the work of audit committees undergoes significant change following the Brydon review.



 

Summary and outlook

FDM's agile and robust business model has allowed us to respond rapidly and effectively to the exceptional challenges presented by the COVID-19 pandemic. Since the update in April the Group has traded comfortably in line with the Board's revised expectations for the full year, which are unchanged.

 

 

  By order of the Board

 

 

 


Rod Flavell

Chief Executive Officer

Mike McLaren

Chief Financial Officer

 

28 July 2020



 

Condensed Consolidated Income Statement

for the six months ended 30 June 2020

 



Six months to 30 June 2020

Six months

to 30 June

2019

Year ended

31 December 2019

 

 

Note

£000

£000

£000






Revenue


140,493

134,396

271,529

Cost of sales


(73,676)

( 69,314 )

(139,953)



 

 

 

Gross profit


66,817

65,082

131,576






Administrative expenses


( 45,303 )

(39,846)

( 78,401 )



 

 

 

Operating profit


21,514

25,236

53,175



 

 

 

Finance income


66

97

194

Finance expense


( 421 )

( 433 )

( 886 )



 

 

 

Net finance expense


( 355)

(336)

(692)



 

 

 

Profit before income tax


21,159

24,900

52,483

Taxation

8

( 4,972 )

( 5,784 )

(11,856)



 

 

 

Profit for the period


16,187

19,116

40,627





 



 

 

 

E arnings per ordinary share







pence

pence

pence

Basic

10

14.8

17.6

37.3



 

 

 

Diluted

10

14.8

17.6

37.2



 

 

 








 

Condensed Consolidated Statement of Comprehensive Income

for the six months ended 30 June 2020

 



Six months to 30 June 2020

Six months  to 30 June 2019

Year ended 

31 December 2019



£000

£000

£000






Profit for the period


16,187

19,116

40,627






Other comprehensive income/ (expense)

Items that may be subsequently reclassified to profit or loss





Exchange differences on retranslation of foreign operations

(net of tax)


1,366

721

(496)



 

 

 

Total other comprehensive income/ (expense)


1,366

721

(496)



 

 

 

Total comprehensive income for the period


17,553

19,837

40,131



 

 

 






 



 

Condensed Consolidated Statement of Financial Position

as at 30 June 2020









30 June

2020

30 June

2019



Note

£000

£000

Non-current assets






Right-of-use assets



17,371

18,920

Property, plant and equipment



6,425

7,360

Intangible assets



20,159

19,732

Deferred income tax assets



1,478

1,988




 

 




45,433

48,000




 

 

Current assets





Trade and other receivables


11

44,756

45,577

Cash and cash equivalents


12

58,281

28,659




 

 




103,037

74,236




 

 

Total assets



148,470

122,236




 

 

Current liabilities





Trade and other payables


13

32,937

23,214

Lease liabilities



5,943

5,474

Current income tax liabilities



1,247

3,707




 

 

 




40,127

32,395

30,522




 

 

 

Non-current liabilities






Lease liabilities



16,534

19,290

17,482




 

 

Total liabilities



56,661

51,685




 

 

Net assets



91,809

70,551




 

 

Equity attributable to owners of the parent




Share capital



1,092

1,091

Share premium



9,705

9,582

Capital redemption reserve



52

52

52

Own shares reserve



(7,997)

(8,213)

Translation reserve



2,291

2,142

Other reserves



2,958

3,830

Retained earnings



83,708

62,067




 

 

Total equity



91,809

70,551

75,064




 

 

 



 

Condensed Consolidated Statement of Cash Flows

for the six months ended 30 June 2020










Six months

to 30 June

2020

Six months

 to 30 June 2019

 

Year ended  31 December 2019

 



Note

£000

£000

£000

Cash flows from operating activities






Profit before tax for the period



21,159

24,900

52,483

Adjustments for:






Depreciation and amortisation



3,243

2,956

6,237

Loss/ (profit) on disposal of non-current assets



3

1

(9)

Finance income



(66)

(94)

(194)

Finance expense



421

430

886

Share-based payment (credit)/ charge (including associated social security costs)



(970)

1,718

2,106

Increase in trade and other receivables



(2,661)

(8,426)

(3,283)

Increase/ (decrease) in trade and other payables



9,706

(148)

(564)




 

 

 

Cash flows generated from operations



30,835

21,337

57,662







Interest received



66

94

194

Income tax paid



(6,780)

(4,290)

(11,009)




 

 

 

Net cash flow from operating activities



24,121

17,141

46,847




 

 

 

Cash flows from investing activities






Acquisition of property, plant and equipment



(400)

(2,140)

(2,711)

Acquisition of intangible assets



(79)

(5)

(321)




 

 

 

Net cash used in investing activities



(479)

(2,145)

(3,032)




 

 

 

Cash flows from financing activities






Proceeds from issuance of ordinary shares



-

9

9

Proceeds from sale of shares from EBT



172

-

271

Principal elements of lease payments



(2,641)

(2,089)

(4,828)

Interest elements of lease payments



(389)

(405)

(827)

Lease incentives received



-

1,933

1,930

Payment for shares bought back



(7)

(2,844)

(2,958)

Finance costs paid



(32)

(25)

(59)

Dividends paid


9

-

(16,783)

(34,113)




 

 

 

Net cash used in financing activities



(2,897)

(20,204)

(40,575)







Exchange gains/ (losses) on cash and cash equivalents



557

(40)

(168)




 

 

 

Net increase/ (decrease) in cash and cash equivalents



21,302

(5,248)

3,072

Cash and cash equivalents at beginning of period



36,979

33,907

33,907




 

 

 

Cash and cash equivalents at end of period


12

58,281

28,659

36,979




 

 

 

 

 

 



 

Condensed Consolidated Statement of Changes in Equity

for the six months ended 30 June 2020


Share

capital

Share

premium

 

Capital redemption reserve

 

Own shares reserve

Translation

reserve

 

 

Other reserves

Retained

earnings

Total

equity


£000

£000

£000

£000

£000

£000

£000

£000










Balance at 1 January 2020

1,092

9,687

52

(8,164)

925

3,946

67,526

75,064


 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

-

16,187

16,187

Other comprehensive income for the period

-

-

-

-

1,366

-

-

1,366


 

 

 

 

 

 

 

 

Total comprehensive income for the period

-

-

-

-

1,366

-

16,187

17,553










Share-based payments (note 14 )

-

-

-

-

-

(972)

-

(972)

Transfer to retained earnings

-

-

-

-

-

(16)

16

-

New share issue

-

18

-

-

-

-

-

18

Own shares bought back (note 15 )

-

-

-

(26)

-

-

-

(26)

Own shares sold

-

-

-

193

-

-

(21)

172


  

 

 

 

 

 

  

  

Total transactions with owners, recognised directly in equity

-

18

-

167

-

(988)

(5)

(808)


 

 

 

 

 

 

 

 

Balance at 30 June 2020

1,092

9,705

52

(7,997)

2,291

2,958

83,708

91,809


 

 

 

 

 

 

 

 










 

 

 



 

Condensed Consolidated Statement of Changes in Equity

for the six months ended 30 June 2019

 


Share

capital

Share

premium

 

Capital redemption reserve

 

Own shares reserve

Translation

reserve

 

 

Other reserves

Retained

earnings

Total

equity


£000

£000

£000

£000

£000

£000

£000

£000










Balance at 1 January 2019

1,083

8,771

52

(4,562)

1,421

6,310

55,870

68,945


 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

-

19,116

19,116

Other comprehensive income for the period

-

-

-

-

721

-

-

721


 

 

 

 

 

 

 

 

Total comprehensive income for the period

-

-

-

-

721

-

19,116

19,837










Share-based payments (note 14 )

-

-

-

-

-

1,387

-

1,387

Transfer to retained earnings

-

-

-

-

-

(3,867)

3,867

-

New share issue

8

811

-

-

-

-

-

819

Own shares bought back (note 15 )

-

-

-

(3,747)

-

-

-

(3,747)

Own shares sold

-

-

-

96

-

-

(3)

93

Dividends (note 9 )

-

-

-

-

-

-

(16,783)

(16,783)


  

 

 

 

 

 

  

  

Total transactions with owners, recognised directly in equity

8

811

-

(3,651)

-

(2,480)

(12,919)

(18,231)


 

 

 

 

 

 

 

 

Balance at 30 June 2019

1,091

9,582

52

(8,213)

2,142

3,830

62,067

70,551


 

 

 

 

 

 

 

 









 



 

Condensed Consolidated Statement of Changes in Equity

for the year ended 31 December 2019

 


Share

capital

Share

premium

Capital redemption reserve

Own

shares reserve

Translation

reserve

 

Other reserves

Retained

earnings

 

Total

equity


£000

£000

£000

£000

£000

£000

£000

£000










Balance at 1 January 2019

1,083

8,771

52

(4,562)

1,421

6,310

55,870

68,945


 

 

 

 

 

 

 

 

Profit for the year

-

-

-

-

-

-

40,627

40,627

Other comprehensive expense for the year

-

-

-

-

(496)

-

-

(496)


 

 

 

 

 

 

 

 

Total comprehensive (expense)/ income for the year

-

-

-

-

(496)

-

40,627

40,131










Share-based payments (note 14 )

-

-

-

-

-

2,825

-

2,825

Transfer to retained earnings

-

-

-

-

-

(5,189)

5,189

-

New share issue

9

916

-

-

-

-

-

925

Own shares bought back (note 15 )

-

-

-

(3,921)

-

-

-

(3,921)

Own shares sold

-

-

-

319

-


(47)

272

Dividends (note 9 )

-

-

-

-

-

-

(34,113)

(34,113)


  

 

 

 

 

 

 

 

Total transactions with owners, recognised directly in equity

9

916

-

(3,602)

-

(2,364)

(28,971)

(34,012)


 

 

 

 

 

 

 

 

Balance at 31 December 2019

1,092

9,687

52

(8,164)

925

3,946

67,526

75,064


 

 

 

 

 

 

 

 

 

 



 


Notes to the Condensed Consolidated Interim Financial Statements


1  General information

The Group is an international professional services provider focusing principally on IT, specialising in the recruitment, training and deployment of its own permanent IT and business consultants.

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.

These Condensed Interim Financial Statements were approved for issue by the Board of Directors of the Group on 28 July 2020. They have not been audited, but have been subject to an independent review by PricewaterhouseCoopers LLP, whose independent report is included on pages 25 and 26 .

These Condensed Interim Financial Statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. The Annual Report and Accounts for the year ended 31 December 2019 was approved by the Board of Directors of the Group on 10 March 2020 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

2  Basis of preparation

These Condensed Interim Financial Statements for the six months ended 30 June 2020 have been prepared in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority and IAS 34 'Interim Financial Reporting' as adopted by the European Union. These Condensed Interim Financial Statements should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2019, which has been prepared in accordance with IFRSs as adopted by the European Union.

Going concern basis

The Group's continued and forecast global growth, positive operating cash flow and liquidity position, together with its distinctive business model and training facilities, have enabled it 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.

Having reassessed the principal risks, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing the interim financial information.

3  Significant accounting policies

These Condensed Interim Financial Statements have been prepared in accordance with the accounting policies, methods of computation and presentation adopted in the financial statements for the year ended 31 December 2019.

4  Significant accounting estimate

The preparation of the Group's Condensed Interim Financial Statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset and liability affected in future periods. The following is considered to be the Group's significant estimate:

Share-based payment charge

A share-based payment charge is recognised in respect of share awards based on the Directors' best estimate of the number of shares that will vest based on the performance conditions of the awards, which comprise adjusted earnings per share growth and the number of employees that will leave before vesting. The charge is calculated based on the fair value on the grant date using the Black Scholes model and is expensed over the vesting period.

The estimates and assumptions applied in the Condensed Interim Financial Statements, including the key sources of estimation uncertainty, were the same as those applied in the Group's Annual Report for the year ended 31 December 2019, with the following exception:

· The estimate of the provision for income taxes, is determined in the interim financial statements using the estimated average annual effective income tax rate applied to the pre-tax income of the interim period.

No individual judgements have been made that have a significant impact on the financial statements.








5  Seasonality

The Group is not significantly impacted by seasonality trends. A lower number of working days in the first half of the year is approximately offset by increased annual leave in the second half of the year. Restrictions on travel due to COVID-19 have meant that many Mounties have elected to take less annual leave in the first half resulting in a greater than usual number of chargeable days per Mountie. An accrual has been made at the half year for the pro rata cost of unused annual leave which we anticipate will be taken in the second half of the year.

6  Settlement of legal claim

During the period, after engaging in mediation, the Group reached preliminary agreement to settle a long-standing employment-related legal claim brought against FDM on a contingent-fee basis in North America. We remain of the opinion that the claim lacked merit. However, having taken into consideration the likely quantum of future legal fees, and the amount of management time and focus which has been, and would continue to be, required to defend the claim, the Board concluded that it was appropriate at this stage to take the commercial opportunity to agree a settlement. The agreed settlement, which amounts to £3.3 million, has been provided for in these financial statements at the half-year and remains subject to Court approval, which is expected in the next few months.

7  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 30 June 2020, the Board of Directors consider that the Group is organised into four core geographical operating segments:

(1)  UK and Ireland;

(2)  North America;

(3)  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 income tax, assets and liabilities are attributable to the principal activity of the Group, being an international professional services provider with a focus on IT.



 

Segmental reporting for the six months ended 30 June 2020


UK and

North





Ireland

America

EMEA

APAC

Total


£000

£000

£000

£000

£000







Revenue

64,305

51,056

10,796

14,336

140,493


 

 

 

 

 

Depreciation and amortisation

(1,289)

(968)

(123)

(863)

(3,243)







Segment operating profit

14,946

4,827

1,437

304

21,514

Finance income*

96

100

3

1

200

Finance expense*

(162)

(59)

(32)

(302)

(555)


 

 

 

 

 

Profit before income tax

14,880

4,868

1,408

3

21,159


 

 

 

 

 

Total assets

88,640

28,975

11,208

19,647

148,470


 

 

 

 

 

Total liabilities

(16,762)

(12,217)

(4,788)

(22,894)

(56,661)


 

 

 

 

 

* Finance income and finance expense   include intercompany interest which is eliminated upon consolidation.

Included in total assets above are non-current assets (excluding deferred tax) as follows:


UK and

North





Ireland

America

EMEA

APAC

Total


£000

£000

£000

£000

£000







30 June 2020

28,764

3,851

1,411

9,929

43,955


 

 

 

 

 

Segmental reporting for the six months ended 30 June 2019


UK and

North





Ireland

America

EMEA

APAC

Total


£000

£000

£000

£000

£000







Revenue

69,720

46,714

7,602

10,360

134,396


 

 

 

 

 

Depreciation and amortisation

(1,218)

(863)

(128)

(747)

(2,956)







Segment operating profit/ (loss)

17,312

7,533

950

(559)

25,236

Finance income*

119

90

4

2

215

Finance expense*

(200)

(70)

(30)

(251)

(551)


 

 

 

 

 

Profit/ (loss) before income tax

17,231

7,553

924

(808)

24,900


 

 

 

 

 

Total assets

68,614

27,766

8,190

17,666

122,236


 

 

 

 

 

Total liabilities

(18,680)

(9,815)

(3,769)

(19,421)

(51,685)


 

 

 

 

 

* Finance income and finance expense include intercompany interest which is eliminated upon consolidation.



 

Included in total assets above are non-current assets (excluding deferred tax) as follows:


UK and

North





Ireland

America

EMEA

APAC

Total


£000

£000

£000

£000

£000







30 June 2019

30,017

4,761

1,605

9,629

46,012


 

 

 

 

 

 

Segmental reporting for the year ended 31 December 2019


UK and

North





Ireland

America

EMEA

APAC

Total


£000

£000

£000

£000

£000







Revenue

136,921

96,024

15,961

22,623

271,529


   

 

 

 

 

Depreciation and amortisation

(2,534)

(1,866)

(252)

(1,585)

(6,237)







Segment operating profit/ (loss)

35,916

16,455

2,152

(1,348)

53,175







Finance income*

231

191

9

2

433

Finance expense*

(388)

(143)

(61)

(533)

(1,125)


 

 

 

 

 

Profit/ (loss) before income tax

35,759

16,503

2,100

(1,879)

52,483


 

 

 

 

 

Total assets

72,523

25,341

8,647

16,557

123,068


 

 

 

 

 

Total liabilities

(17,742)

(7,330)

(3,525)

(19,407)

(48,004)


 

 

 

 

 

* Finance income and finance expense include intercompany interest which is eliminated upon consolidation.

Included in total assets above are non-current assets (excluding deferred tax) as follows:


UK and


North





Ireland


America

EMEA

APAC

Total

 


£000


£000

£000

£000

£000

 








 

31 December 2019

29,586


4,134

1,435

9,265

44,420

 


 


 

 

 

 

 

 

Information about major customers

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


Six months to

30 June

2020

Six months to

30 June

2019

Year ended

31 December

2019


£000

£000

£000





Revenue from customer A

16,471

14,270

29,121


   

   

   

 



 

8  Taxation

Income tax expense is recognised based on management's estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the six months ended 30 June 2020 is 23.5% (the estimated tax rate for the six months ended 30 June 2019 was 23.2 %).

9  Dividends

2020

An interim dividend of 18.5   pence per ordinary share was declared by the Directors on 28 July 2020 and will be paid on 4 September 2020 to holders of record on 7 August 2020.

2019

An interim dividend of 16.0   pence per ordinary share was declared by the Directors on 22 July 2019 and was paid on 20 September 2019 to holders of record on 23 August 2019.

The Board updated its recommendation included in the 2019 Annual Report and Accounts and did not propose a final dividend in respect of the year to 31 December 2019 following the global outbreak of COVID-19.

10  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 period.




Six months to

30 June

2020

Six months to

30 June

2019

Year ended

31 December

2019







Profit for the period


£000

16,187

19,116

40,627







Average number of ordinary shares in issue (thousands)


Number

109,191

108,485

108,822




   

   

   







Basic earnings per share


Pence

14.8

17.6

  37.3




   

   

   

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 period.




Six months to

30 June

2020

Six months to

30 June

2019

Year ended

31 December

2019













Profit for the period (basic earnings)


£000

16,187

19,116

40,627







Share-based payment (credit)/ expense (including social security costs) (see note 14 )


£000

(970)

1,718

2,037

Tax effect of share-based payment credit/ expense


£000

195

(293)

( 468 )




   

   

   

Adjusted profit for the period


£000

15,412

20,541

42,196




   

   

   







Average number of ordinary shares in issue (thousands)

 Number


109,191

108,485

108,822




   

   

   







Adjusted basic earnings per share

 Pence


14.1

18.9

38.8




   

   

     



 

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.

 




Six months to

30 June

2020

Six months to

30 June

2019

 

Year ended

31 December

2019

Profit for the period (basic earnings)


  £000

16,187

19,116

40,627







Average number of ordinary shares in issue (thousands)


Number

109,191

108,485

108,822

Adjustment for share options (thousands)


Number

486

374

492




   

   

   

Diluted number of ordinary shares in issue (thousands)


Number

109,677

108,859

109,314




   

   

   







Diluted earnings per share

  Pence


14.8

17.6

37.2




   

   

     

11  Trade and other receivables

 


30 June

2020

30 June

2019

31 December

2019


£000

£000

£000





Trade receivables

36,365

30,394

33,115

Other receivables

2,010

992

1,021

Prepayments and accrued income

6,381

14,191

5,801


 

 

 


44,756

45,577

39,937


 

 

 

Included within prepayments and accrued income is £2,280,000 of accrued income (June 2019: £9,385,000; December 2019: £1,551,000).

12  Cash and cash equivalents



30 June

2020

30 June

2019

31 December

 2019



£000

 

£000

£000

Cash and cash equivalents


58,281

28,659

36,979

 


 

 

 

13  Trade and other payables


30 June

2020

30 June

2019

31 December

2019


£000

£000

 

£000

 

Trade payables

1,013

2,317

1,923

Other payables

989

662

599

Other taxes and social security

8,423

6,754

8,319

Accruals and deferred income

22,512

13,481

11,896


 

 

 


32,937

23,214

22,737


 

 

 

 

14  Share-based payments

During the six month period ended 30 June 2020 the Group recognised a share-based payment credit of £826,000 (2019: £1,381,000 expense) and associated social security costs credit of £144,000 (2019: £337,000 charge). A transfer of £16,000 was made from Other reserves to Retained earnings in respect of the exercise of share options during the period. During the period the share options issued in 2017 vested, these options have not yet been exercised.

15  Investment in own shares

During 2018 the FDM Group Employee Benefit Trust was established to purchase shares sold by option holders upon exercise of options under the FDM Performance Share Plan. The Group accounts for its own shares held by the Trustee of the FDM Group Employee Benefit Trust as a deduction from shareholders' funds.

16  Related party transactions

During the six month period ended 30 June 2019 the Company paid £18,000 to Rod Flavell, Chief Executive Officer and Sheila Flavell, Chief Operating Officer, for rent of an apartment used for short-term employee accommodation. The rent payable was at market rate, no balances were outstanding at 30 June 2019, the agreement expired in September  2019. At no time during 2019 was the apartment used by any of the Directors.

A number of the Directors' family members are employed by the Group. The employment relationships are at market rate and are carried out on an arm's length basis.

The key management personnel comprise the Directors of the Group. The compensation of key management is set out below:


Six months to

30 June

2020

Six months to

30 June

2019

Year ended

31 December

2019


£000

 

£000

£000

Short-term employee benefits

1,221

1,205

2,395

Post-employment benefits

17

17

33

Share-based payments (credit)/ expense

(169)

 218

364


 

 

 


1,069

1,440

2,792


 

 

 

 

17  Financial instruments

There are no material 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



 

Statement of Directors' Responsibilities

The Directors confirm that these Condensed Interim Financial Statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union, and that the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R of the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, namely:

· An indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

· Material related party transactions in the first six months and any material changes in the related party transactions described in the last Annual Report.

Directors who held office during the period: 

Rod Flavell    Chief Executive Officer

Sheila Flavell  Chief Operating Officer

Mike McLaren    Chief Financial Officer

Andy Brown    Chief Commercial Officer

David Lister  Non-Executive Chairman 

Alan Kinnear  Non-Executive Director (appointed 1 January 2020)

Jacqueline de Rojas  Non-Executive Director

Michelle Senecal de Fonseca  Non-Executive Director

Robin Taylor  Non-Executive Director (resigned 29 April 2020)

Peter Whiting  Non-Executive Director

 

 

The Executive Directors of FDM were listed in the Annual Report and Accounts of the Company for the year ended 31 December 2019 and remained the same in the six months to 30 June 2020.

By order of the Board

 

 


Rod Flavell

 Chief Executive Officer

Mike McLaren

Chief Financial Officer

 

28 July 2020

 



 

Independent review report to FDM Group (Holdings) plc

Report on the Condensed Consolidated Interim Financial Statements

Our conclusion

We have reviewed FDM Group (Holdings) plc's Condensed Consolidated Interim Financial Statements (the "interim financial statements") in the Interim Report of FDM Group (Holdings) plc for the 6 month period ended 30 June 2020. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

· the Condensed Consolidated Statement of Financial Position as at 30 June 2020;

· the Condensed Consolidated Income Statement and Condensed Consolidated Statement of Comprehensive Income for the period then ended;

· the Condensed Consolidated Statement of Cash Flows for the period then ended;

· the Condensed Consolidated Statement of Changes in Equity for the period then ended; and

· the explanatory notes to the interim financial statements.

The interim financial statements included in the Interim Report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

 

As disclosed in note 2 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The interim report, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Report in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

 

Our responsibility is to express a conclusion on the interim financial statements in the Interim Report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose.  We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

 



 

 

What a review of interim financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the Interim Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers LLP

Chartered Accountants

London

28   July 2020

 


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