FDM Group confident after fall in first-half revenues

(Sharecast News) - IT services company FDM Group reported a 7% fall in revenue in its first half on Wednesday, to £131.1m, which it put down to having a lower average number of consultants, or 'Mounties', deployed during the first half.
The FTSE 250 firm said that reflected a "very strong" performance in the first quarter of 2020, before the effects of the Covid-19 pandemic were felt.

Its adjusted operating profit was up 9% year-on-year for the six months ended 30 June at £22.3m, while its profit before tax slipped 3% to £20.5m.

Basic earnings per share were also down 3%, at 14.3p., while adjusted earnings per share jumped 11% to 15.6p.

Cash flows generated from operations slid 37% to £19.4m, and the company's cash conversion for the period was 93.3%, down from 143.3% a year earlier.

The board declared an interim dividend of 15p per share, down 19% from the first-half distribution in 2020, and reported a cash position of £44.7m at period end, 23% lower than a year earlier.

On the operational front, FDM reported strong levels of demand for Mounties, and high deal volumes across most of its regions, most notably in the UK and Asia-Pacifc.

In North America, it reported "good demand" in Canada, while the United States was more subdued, although more recently was showing "encouraging signs" of increased demand.

Mounties assigned to clients at week 264 were up 5% from a year prior at 3,841, and up 7% since the 2020 year-end, while the Mountie utilisation rate for the six months was 96.9%, rising from 95%.

Recruitment and training levels were ramped up "significantly" in the first half to meet growing client demand, as training completions in the first half rose 23% to 1,025, and current trainee numbers stood at "record levels".

From July, FDM said its trainees in the UK would be employed and paid a salary from the first day of their training, in line with its other territories.

A total of 37 new clients were secured globally in the period, of which 31 were outside the financial services sector, with progress reported in the government, pharmaceutical, healthcare, life sciences and telecommunications sectors.

FDM's board said the company was "well-placed" to achieve its expectations for the full year, and to deliver long-term growth.

"I am pleased to report that FDM made strong progress in the first half of the year and, while our markets remain impacted by the pandemic, we have seen operational performance return to levels that we experienced prior to the pandemic," said chief executive officer Rod Flavell.

"The number of training completions in the first half of 2021 is double what we achieved in the second half of 2020 and current trainee numbers are at record levels."

Flavell said the company was investing "significantly" in a programme to transform its academy offering, using new technologies and training methods to drive growth as demand for Mounties increased.

"The board is confident that the group is well placed to achieve its expectations for the current year and to deliver long-term growth."

At 0940 BST, shares in FDM Group Holdings were up 2.32% at 1,146p.