FDM Group Regulatory News (FDM)

30 July 2014

FDM Group (Holdings) plc

Interim Results

FDM Group (Holdings) plc ("FDM"), an international professional services provider focusing principally on Information Technology, today announces its Interim Results for the six months ended 30 June 2014.

Financial highlights:

Operational highlights:

Notes:

a) Net fee income represents revenue for Mounties(b) plus the gross margin on freelancers

b) FDM meets the demands of its customers through the provision of suitably qualified full time employed consultants, known internally as Mounties.

Rod Flavell, CEO, commented:

"The first half of 2014 was a period of strong operational and financial progress. Client demand is increasing across all our operating territories and, supported by a strong balance sheet and healthy cash generation, we continue to grow our geographic reach, sector focus and service offering. I am confident that the Group is well placed to make good progress for the remainder of the year."

For further information:

Note to Editors

FDM is an international professional services provider focusing principally on Information Technology.

FDM specialises in recruiting, training and deploying its own permanent IT consultants across six core service areas; Development, Testing, PMO (Project Management Office), Data Analysis, Application Support and Infrastructure operating from offices in London, Manchester, Glasgow, New York, Toronto, Frankfurt and Hong Kong.

With a large number of blue chip clients across its operational territories FDM meets the demands of its customers through the provision of suitably qualified full time employed consultants, known internally as Mounties. FDM's business model has evolved into the current Mountie model over a number of years through a process of refinement and enhancement such that today FDM looks principally to recruit:

FDM strongly supports the recruitment of women into the IT industry and helping their advancement through the 'Women in IT' initiative.

Interim management review

FDM is an international professional services provider focusing principally on Information Technology.

FDM specialises in recruiting, training and deploying its own permanent IT consultants across six core service areas; Development, Testing, PMO (Project Management Office), Data Analysis, Application Support and Infrastructure operating from offices in London, Manchester, Glasgow, New York, Toronto, Frankfurt and Hong Kong.

Effective from 20 June 2014 FDM's Ordinary shares were admitted to the premium listing segment of the Official List and to trading on the London Stock Exchange and at the same time the name was changed to FDM Group (Holdings) plc from Astra Topco Limited.

FDM's strategy is to drive continued growth in profitability and cash generation primarily through: leveraging its six core service areas through increased Mountie headcount fuelled by the establishment of new Academies; increased penetration into its current client base and expansion of its client base, including through geographic expansion; and the broadening of its knowledge, skills and domain expertise through remaining agile and responsive to shifting technology trends and client demands.

Group results

Reflecting both its healthy end markets and the Group's successful strategy to drive growth, FDM delivered a strong operating performance in the period with Group revenues increasing by 13.6% to £56.6 million (2013: £49.8 million). Operating profit before exceptional items increased by 10.1% to £10.7 million (2013: £9.7 million). Exceptional costs related to the Initial Public Offering of FDM of £4.9 million and exceptional share based payment costs of £0.4 million (2013: £nil) reduced the Group operating profit to £5.4 million (2013: £9.7 million).

Earnings per share before exceptional items were 7.5 pence (2013: 7.0 pence) whilst earnings per share after exceptional items were 2.4 pence per share (2013: 7.0 pence per share).

Total headcount at the period end was 1,616 assigned to client sites (2013: 1,336 assigned to client sites). Of this total 1,319 were Mounties (2013: 1,039) and 297 freelancers (2013: 297). This represents a 21.0% increase in the total headcount assigned to client sites and an increase of 27.0% in Mounties assigned to client sites.

Mountie revenues for the six months to 30 June 2014 were 20.0% higher at £41.2 million (2013: £34.4 million) and overall net fee income, comprising Mountie revenue plus the margin on freelancers, was up by 19.1% to £42.6 million (2013: £35.8 million). Within this total and reflecting the planned geographic expansion of the Group's customer base, United Kingdom Mountie revenues increased by 15.2% to £29.5 million (2013: £25.6 million), North American Mountie revenues increased by 63.5% to £7.7 million (2013: £4.7 million), EMEA excluding the UK decreased (see segmental report) by 4.6% to £3.3 million (2013: £3.4 million) and APAC increased by 30.1% to £0.8 million (2013: £0.6 million).

The relative movement in Mountie and freelance headcount, and related revenues, reflect the Group's intention to increase the quantum of higher margin Mountie revenues; this is being driven by growth in the deployment of Mounties to existing and new clients and the launch of new Mountie skillsets.

Exceptional Costs

Exceptional costs related to the Initial Public Offering of FDM were £4.9 million with exceptional share based payment costs of £0.4 million (2013: £nil).

Net Finance Expense

The net finance expense relates principally to interest on the drawn element of the Group's revolving credit facility, non-utilisation charges on the undrawn element of the Group's revolving credit facility and fees arising from the Group's working capital facility.

Taxation

The tax charge of £2.5 million represents the effective tax charge on the Group profit before taxation excluding exceptional items at the Group's effective tax rate of 24.3% (2013: 24.0%). It has been assumed that tax relief will be restricted in respect of costs relating to the IPO of the Group.

Earnings Per Share

Basic earnings per share for the period were 2.4 pence (2013: 7.0 pence). Earnings per share excluding exceptional items were 7.5 pence per share (2013: 7.0 pence). There is no difference between basic earnings per share and diluted earnings per share.

Balance Sheet and Net Funds

As at 30 June 2014 the Group had net cash of £5.4 million (2013: net cash £5.0 million). The IPO (Initial Public Offering) on 20 June 2014 included the issue of 2.8 million new shares for consideration in cash which raised approximately £8.0 million of funds for the Group; this cash has been and will be used to meet the expenses of the IPO that fell to the Group and to repay £3.0m of the Group's revolving credit facility. A further £9.0m of the facility has been repaid through cash flows generated during the period.

Dividend

No dividend has been proposed for the period to 30 June 2014 (2013: nil). The Board intends to adopt a progressive dividend policy, while allowing it to retain sufficient capital to fund on-going operating requirements and to invest in the Group's long term growth.

Segmental review

United Kingdom

The UK remained the cornerstone of the Group's operations with Mountie numbers deployed at the period end of 950 (2013: 783) and total UK revenue generated for the six months to 30 June 2014 of £42.1m (2013: £36.9 million). Operating profit before exceptional items for the UK for the six months to 30 June 2014 was £8.3 million, an increase of 5.0% over 2013's £7.9 million. The operating profit growth of 5.0% is lower than the revenue growth of 14.0% following the move to new London premises and as we grow to fill the increased cost base.

As the hub of the Group, the UK continues to act as the test bed for new service areas and has a number of initiatives in development that should broaden our sector, client and potential Mountie reach through widening the disciplines in which we train.

The relocation of our flagship London academy and offices in late 2013 to a purpose built location at The Cottons Centre adjacent to London Bridge has more than doubled our capacity to recruit and train Mounties in the South East. In July 2014 we opened our new Glasgow academy and offices, which we believe will better enable us to support our Scottish and North of England clients and Mounties and allow us to access new clients in the region. In July 2014 we also relocated our Brighton facility to smaller offices dedicated to providing back office services to the Group.

North America

In North America our existing New York office took an additional floor at its 14 Wall Street premises to increase capacity and we opened our Toronto office in January 2014. The combined North American operations saw revenue increase by 49.6% to £9.3 million for the six months to 30 June 2014 (2013: £6.2 million) and operating profit increase by 58.1% to £1.9 million (2013: £1.2 million). Mounties on assignment at the period end in North America were 240, an increase of 54.8% on half year end 2013 of 155.

Rest of EMEA, excluding UK

Our combined rest of EMEA, excluding UK, saw revenues decrease by 28.0% to £4.3 million (2013: £6.0 million) and operating profit reduce to £0.4 million from £0.7 million. These changes result principally from the planned refocusing of our German operation following the decision to no longer provide freelancers into the territory, rundown the existing freelancer base and focus only on the Mountie model; Mounties on assignment in EMEA at the period end were 84 against half year end 2013 Mounties on assignment of 74. We anticipate that the changes that we have made in the segment will deliver an improving financial performance in the second half of 2014.

APAC

In APAC we incorporated a wholly foreign owned entity in Shanghai during the period and now have our first Mounties on deployment in mainland China. Revenues for APAC for the six months to 30 June 2014 were up 30.0% to £0.8 million (2013 £0.6 million). Operating profit for the six months to 30 June 2014 was £0.1 million compared with an operating result of £nil in 2013. APAC Mounties assigned at the period end were 45 against 2013's 27.

Board

Upon the Company's IPO we welcomed three new non-Executive Directors to the Board being Peter Whiting, Jonathan Brooks and Robin Taylor, who between them bring many years of relevant and valuable experience to the team; the biographies for our new Board members and the rest of the Board are available at www.fdmgroup.com/investors.

Outlook

The first half of 2014 was a period of strong operational and financial progress. Client demand is increasing across all our operating territories and, supported by a strong balance sheet and healthy cash generation, we continue to grow our geographic reach, sector focus and service offering. I am confident that the Group is well placed to make good progress for the remainder of the year.

Forward looking statements

Note: Certain statements in this interim report are forward-looking. 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.

Condensed consolidated income statement

for the six months ended 30 June 2014

Condensed consolidated statement of comprehensive income

for the six months ended 30 June 2014

Condensed consolidated statement of financial position

as at 30 June 2014

Condensed consolidated statement of changes in equity

for the six months ended 30 June 2014

Condensed consolidated statement of cash flows

for the six months ended 30 June 2014

Notes to the condensed interim financial statements

1 General information

FDM Group (Holdings) plc (formerly Astra Topco Limited and hereafter referred to as the "Company") and its subsidiaries (together the "Group") is an international professional services provider focusing principally on Information Technology, specialising in the recruitment, training and deployment of its own permanent IT consultants.

The Company is a public limited company incorporated in the UK with a premium listing on the London Stock Exchange. The Company was admitted to the London Stock Exchange on 20 June 2014. The Company's registered office is at The 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 on 29th July 2014. They have not been audited, but have been subject to an independent review by PricewaterhouseCoopers LLP, whose independent report is included.

These condensed interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2013 were approved by the Board of Directors on 29 April 2014 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 2014 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority (previously the Financial Services 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 2013, which has been prepared in accordance with IFRSs as adopted by the European Union.

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, and for this reason they continue to adopt the going concern basis in preparing its condensed interim financial statements.

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 2013.

The new, revised or amended standards and interpretations below are mandatory for the first time for the financial year ending 31 December 2014, none of which have had any significant impact on these financial statements. New, revised or amended standards and interpretations that are not yet effective have not been early adopted.

IFRIC 21 'Levies' (endorsed for annual periods beginning on or after 1 January 2014)

IAS 27 (revised 2011), 'Separate financial statements'(endorsed for annual periods beginning on or after 1 January 2014)

IAS 28 (revised 2011), 'Investments in associates and joint ventures'(endorsed for annual periods beginning on or after 1 January 2014)

IAS 32 (amendment), 'Financial instruments - Presentation' on asset and liability offsetting (endorsed for annual periods beginning on or after 1 January 2014)

IFRS 10 'Consolidated financial statements' (endorsed for annual periods beginning on or after 1 January 2014)

IFRS 11 'Joint arrangements' (endorsed for annual periods beginning on or after 1 January 2014)

IFRS 12 'Disclosure of interests in other entities'(endorsed for annual periods beginning on or after 1 January 2014)

Amendments to IFRS 10, IFRS 11 and IFRS 12 (endorsed for annual periods beginning on or after 1 January 2014)

IASB narrow-scope amendments to IAS 36, 'Impairment of assets' (effective for annual periods beginning on or after 1 January 2014)

4 Estimates

When preparing the condensed interim financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results.

The judgements, estimates and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty, were the same as those applied in the Group's last annual financial statements for the year ended 31 December 2013. The only exception is the estimate of the provision for income taxes which 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 excluding disallowable exceptional items. 

5 Seasonality

The Group is not significantly impacted by seasonality trends. A lower number of working days in the first half of the year are approximately offset by increased annual leave in the second half of the year.

6 Significant events and transactions

On 20 June 2014, the Company was successfully admitted to the London Stock Exchange achieving a premium listing and placement of 107,517,506 ordinary shares at £2.87 per share. The placement raised £8 million for the Company through the issue of 2,787,457 new ordinary shares and £221 million for selling shareholders net of selling shareholder costs.

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 Board of Directors is the chief operating decision maker in accordance with the requirements of IFRS 8 'Operating segments'.

At 30 June 2014, the Board of Directors consider that the Group is organised on a worldwide basis into four core geographical operating segments:

(1) UK;

(2) Rest of Europe, Middle East and Africa ("EMEA");

(3) North America; 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.

Sales between segments are carried out at arm's length. 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 six month period to 30 June 2014 there have been no changes from prior periods in the measurement methods used to determine operating segments and reported segmental profit or loss.

Segmental reporting for the six months ended 30 June 2014

Segmental reporting for the six months ended 30 June 2013

Segmental reporting for the year ended 31 December 2013

Information about major customers

Revenue from each customer that represents 10% or more of the Groups revenues is attributable to all four operating segments and is presented as follows:

8 Exceptional administrative expenses

During the 6 months ended 30 June 2014, the Group incurred exceptional costs of £4,887,000 in respect of its listing on the London Stock Exchange. The Group also incurred an exceptional share based payment expense of £421,000 in the period. The tax effect of the exceptional items is documented in note

9 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 2014 is 24.3% (the estimated tax rate for the six months ended 30 June 2013 was 24.0%). The taxation charge is higher than the expected annual tax rate in the period to 30 June 2014 due to £5,308,000 million of exceptional administrative expenses which have been assumed to be disallowable for tax purposes and had the effect of increasing the effective tax rate to 49.6%.

10 Dividends

The Company has not declared or paid dividends in the six month period ended 30 June 2014 (six month period ended 30 June 2013: £nil).

During the year ended 31 December 2013 the Company paid dividends of £20 million (£0.20 per share).

11 Net debt/cash (non-GAAP measure)

Net debt is defined as borrowings less net cash and cash equivalents. During the period the Group repaid £12,000,000 of borrowings.

12 Share capital and share premium

On 20 June 2014 a reorganisation of the Company's share capital took place. Immediately prior to the reorganisation the issued share capital of the Company was as follows:

The reorganisation involved the following steps being taken in respect of the share capital of the Company:

i) certain of the distributable profits of the Company and an amount standing to the credit of the Company's share premium account were capitalised in order to pay up in full 809,084,009,079 new Exit Shares (the "New Exit Shares") on a 99,999:1 basis to the holders of the existing Exit Shares;

ii) the 809,084,009,079 New Exit Shares and the 8,090,921 existing Exit Shares were consolidated into 8,090,921 exit shares of £0.01 each (the "Consolidated Exit Shares");

iii) the following shares were reclassified as deferred shares of £0.01 each, having the rights set out in the articles of association of the Company:

iv) the remaining A Share, B Shares, C Shares, D Shares and Consolidated Exit Shares were reclassified into ordinary shares of £0.01 each having the rights set out in the articles of association of the Company.

The Deferred Shares are not entitled to any dividend or distribution and the holders have 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 has 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 have received £10,000,000 in respect of each such share held by them.

Immediately following the reorganisation the Company issued 2,787,457 new ordinary shares to investors as part of its initial public offering and admission to the premium listing segment of the official list of the UK listing authority and to trading on the London Stock Exchange's main market for listed securities (the "IPO").

The share capital of the Company immediately following the reorganisation and the issuance of new shares in the IPO was as follows:

13 Related party transactions

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

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

15  Risks and uncertainties

The Board regularly reviews key risks and uncertainties and has concluded that the disclosure in last year's Annual report and financial statements remains appropriate. These risks and uncertainties, which relate to customers, markets and sectors, recruitment of individuals to train, training facilities and materials, people, technology, compliance with laws and regulations, currency fluctuations and financing, should be read in conjunction with the interim management review for the half year ended 30 June 2014.

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 4.2.7 and DTR 4.2.8 of the Disclosure and Transparency Rules of the Financial Conduct Authority, namely:

Directors who held office during the period:

The executive directors and chairman of FDMwere listed in the financial statements of the Company for the year ended 31 December 2013 and remained the same in the six months to 30 June 2014.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

By order of the Board 

29 July 2014

Independent review report to FDM Group (Holdings) plc

Report on the condensed interim financial statements

Our conclusion

We have reviewed interim report, defined below, of FDM (Holdings) plc for the six months ended 30 June 2014. Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

This conclusion is to be read in the context of what we say in the remainder of this report.

What we have reviewed

The interim report, which is prepared by FDM Group (Holdings) plc, comprise:

· the condensed consolidated statement of financial position as at 30 June 2014;

· the condensed consolidated income statement and the 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 report.

· As disclosed in note 2, 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.

The interim report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

What a review of condensed consolidated 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 Ireland) 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 condensed consolidated interim financial statements.

Responsibilities for the condensed consolidated interim financial statements and the review

Our responsibilities and those of the directors

The interim report 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 and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express to the company a conclusion on 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 and Transparency Rules of the 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.

PricewaterhouseCoopers LLP

Chartered Accountants

London

29 July 2014