Annual Report
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ANNUAL REPORT AND ACCOUNTS 2019 Strategic Report 2 Highlights 4 We are FDM 8 Chairman’s Statement 12 Chief Executive’s Review 18 Key Performance Indicators 20 Business Model 22 Our Markets 26 Financial Review 30 Risk Management 38 Corporate Responsibility Governance 58 Board of Directors 62 Corporate Governance Report 74 Audit Committee Report 82 Nomination Committee Report 86 Remuneration Report 104 Directors’ Report Financial Statements 110 Independent auditors’ report to the members of FDM Group (Holdings) plc 117 Consolidated Income Statement 118 Consolidated Statement of Comprehensive Income 119 Consolidated Statement of Financial Position 120 Consolidated Statement of Cash Flows 121 Consolidated Statement of Changes in Equity 122 Notes to the Consolidated Financial Statements 145 Parent Company Statement of Financial Position 146 Parent Company Statement of Cash Flows 147 Parent Company Statement of Changes in Equity 148 Notes to the Parent Company Financial Statements 152 Shareholder Information Contents Strategic Report Governance Financial Statements Financial Operational Revenue (£m) Mountie revenue1 (£m) £271.5m £268.2m +1 1% +12% RECRUIT 2018: £244.9m 2018: £239.0m Over 900 university Just under 60,000 We work proactively with events attended in 2019 applicants applied via over 200 university 5 Adjusted operating profit2 (£m) Profit before tax (£m) (2018: over 700) our website partnerships globally £55.2m £52.5m +7% +9% 3 2018 (restated3): £51.8m 2018 (restated ): £48.2m Adjusted profit before tax2 (£m) Basic earnings per share (pence) TRAIN 2,115 training Continued investment in 20 different training 37.3 pence completions in 2019, training Academies, with locations during £54.5m a 2% decrease global total training the year 6 +6% +9% (2018: 2,155) capacity of 988 at year 2018 (restated3): £51.2m 2018 (restated3): 34.2p end, up by 5% over December 2018 Adjusted basic earnings per share2 Cash flow generated from (pence) operations (£m) 38.8 pence £57.7m +7% +17% 2018 (restated3): 36.3p 2018 (restated3): £49.3m DEPLOY 8 4 Mounties assigned to Mountie utilisation rate 97 new clients globally Cash conversion (%) Dividend per share 7 client sites at week 52 of 96.1% (2018: 77) were up 5% at 3,924 (2018: 97.3%) 108.4% 34.5 pence (2018: 3,747) 1 Mountie revenue excludes revenue from contractors. See page 28 for analysis of revenue. +7% +15% 2 The adjusted operating profit and adjusted profit before tax are calculated before Performance Share Plan expenses (including social security costs) of £2.0 million 2018 (restated3): 100.9% 2018: 30.0 pence (2018: £3.0 million). The adjusted basic earnings per share is calculated before the impact of Performance Share Plan expenses (including social security costs and associated deferred tax). See page 29 for further details of adjusted items. Highlights 3 The Company has restated comparative figures following the fully retrospective adoption of IFRS 16 ‘Leases’ at 1 January 2019. See note 5 for more information. 4 Cash conversion is calculated by dividing cash flow from operations by operating profit. Previously cash conversion was calculated by dividing cash flows from operations by profit before tax. Following the adoption of IFRS 16 “Leases”, the calculation was amended and the 2018 comparative restated, to provide a more meaningful indicator. Forward-looking statements 5 The recording of applications changed in 2019, such that there is no prior year like-for-like comparative. This Annual Report contains statements which constitute “forward-looking statements”. Although the Group believes that the expectations reflected in these forward-looking 6 Total training capacity seats is combined permanent capacity (2019: 844; 2018: 848) and temporary capacity (2019:144; 2018: 90). 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 7 Week 52 in 2019 commenced on 16 December 2019 (2018: week 52 commenced on 17 December 2018). may differ materially from those expressed or implied by these forward-looking statements. 8 Utilisation is calculated as the ratio of cost of utilised Mounties to the total Mountie payroll cost. FDM Group (Holdings) plc FDM Group (Holdings) plc 2 Annual Report and Accounts 2019 Annual Report and Accounts 2019 3 Strategic Report Governance Financial Statements We are Together we FDM Group (Holdings) plc (“the Company”) and its subsidiaries Our purpose (together “the Group” or “FDM”) operate in the Recruit, Train and Deploy (“RTD”) sector. Our mission is to bring people and are stronger To create and inspire exciting careers that shape our digital future. technology together, creating and inspiring exciting careers that From day one, FDM has always been people-focussed. shape our digital future. To deliver customer-led, sustainable, profitable growth on a We celebrate diversity. We encourage inclusivity. We consistent basis, through our well-established Mountie model: thrive on teamwork and collaboration with colleagues, We strive for The Group’s principal business activities involve recruiting, clients and partners. What makes us successful is that training and deploying its own permanent IT and business success • To identify and recruit talented individuals – we attract we’re a collective made up from a multitude of consultants (‘Mounties’) at client sites. FDM specialises in a and recruit high-calibre candidates and develop them into backgrounds, cultures, languages, nationalities and We are entrepreneurial, ambitious, creative and range of technical and business disciplines including skilled Mounties. We currently have three pathways: skills. This diversity makes us stronger as one. brave. We thrive on pushing the boundaries to Development, Testing, IT Service Management, Project Graduate, Ex-Forces, and Returners to Work. Increased exceed clients’ expectations. We create an inspiring Management Office, Data Services, Business Analysis, Business awareness of our brand is helping to promote FDM further place for colleagues to work and develop their Intelligence, Murex, Salesforce, Cyber Security and Robotic in the Recruit, Train and Deploy sector. careers. We encourage our colleagues to challenge Process Automation. themselves and help each other maximise their • To train individuals through our Academies – we potential so we can continue to deliver a unique and The FDM Careers Programme bridges the gap for graduates, provide our Mounties with first-class training and ongoing unparalleled service to our clients and stakeholders. ex-Forces and returners to work, providing them with the We make it development and support, giving them the best possible training and experience required to make a success of platform from which to launch exciting and successful launching or re-launching their careers. We have dedicated happen careers in IT. We invest in our trainers and Academies to training centres and sales operations located in London, Leeds, create leading-edge centres of excellence. We’re pioneers and innovators – a team of Glasgow, Birmingham, New York NY, Herndon VA, Charlotte NC, adaptable, agile and passionate people. Our Austin TX, Toronto, Frankfurt, Singapore, Hong Kong, Shanghai • To grow our customer presence profitably – we We have a ‘can-do’ attitude, approaching and Sydney. We also operate in Ireland, France, Switzerland, continually create new opportunities to deploy our every day with energy and enthusiasm. Austria, Spain, Luxembourg, the Netherlands and South Africa. Mounties amongst our existing client base and in ever- We seize every opportunity to provide broadening and diverse new markets and territories. solutions for our clients, careers for our FDM is a collective of over 5,000 people, from a multitude of people and to drive our business forward. different backgrounds, life experiences and cultures. We are a Values • To identify and fill our clients’ IT skills gaps – we focus strong advocate of diversity and inclusion in the workplace and on understanding and anticipating their requirements, as the strength of our brand arises from the talent within. well as market trends, to provide exciting career opportunities Committed to our Mounties and other employees, delivering Together, we are FDM. sustainable profitable growth for our shareholders. to our clients We all work towards a shared goal – to help Our vision • To create a long-term sustainable global business – we We say it our clients succeed. We are attentive, aim to have a beneficial impact on the communities where focussed and in-tune with their wants and To be recognised by our clients and industry as the global we operate, are aware of our responsibility towards our how it is needs. We work hard to nurture our leader in the Recruit, Train and Deploy sector. suppliers and work to minimise our impact upon the relationships, to become our clients’ partner physical environment. We believe in professional integrity. We are and to create solutions to fulfil their business reliable, open and trustworthy, and we are ambitions. Their success is our success. undivided in this behaviour. This approach has earned us the respect of our colleagues, clients, partners and investors and has made us the business we are today. FDM Group (Holdings) plc 4 Annual Report and Accounts 2019 Strategic Report Governance Financial Statements Awards • Social Mobility Employer Index 2019: Top 75 • JobCrowd Top 100 Companies For Graduates To Work For 2019/ 20 • RateMyPlacement – Top 100