ANNUAL REPORT AND
ACCOUNTS 2015
FDM Group (Holdings) plc
Creating and inspiring exciting careers that shape our digital future
Contents
Strategic Report
Financial Statements
2
5
7
9
12
15
17
18
25
29
About FDM
Highlights
Chairman’s Statement
Chief Executive’s Review
Business Model
Our Markets
Key Performance Indicators
Risk Management
Financial Review
Corporate Social Responsibility
Governance
33
35
45
47
53
74
Board of Directors
Corporate Governance Report
Nomination Committee Report
Audit Committee Report
Remuneration Report
Directors’ Report
79
85
86
87
88
89
90
Independent auditors’ report to the
members of FDM Group (Holdings) plc
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
Consolidated Statement of
Financial Position
Consolidated Statement of
Cash Flows
Consolidated Statement of
Changes in Equity
Notes to the Consolidated
Financial Statements
117
Independent auditors’ report to the
members of FDM Group (Holdings) plc
119 Parent Company Statement of
Financial Position
120 Parent Company Statement of
Cash Flows
121 Parent Company Statement of
Changes in Equity
122 Notes to the Parent Company
Financial Statements
127 Shareholder Information
Strategic Report
About FDM
The Group
FDM Group (Holdings) plc (“the Company”) and its subsidiaries (together “the Group” or “FDM”) is a global professional
services provider with a focus on Information Technology (“IT”) and with over 160 clients in a variety of industries.
The Group’s principal business activities involve recruiting, training and placing its own permanent IT and business
consultants (known as “Mounties”) at client sites. This is across a range of technical and business disciplines including
Development, Testing, Support, Project Management Office (“PMO”), Data Services, Business Analysis, Business
Intelligence and Cyber Security. The Group also supplies contractors to customers, either to supplement its own employed
consultants’ skill sets or to provide greater experience where required.
The Group has training academies and sales operations in dedicated facilities located in London, Leeds, Glasgow, New
York, Toronto, Frankfurt and Hong Kong. In addition, FDM has a sales office in Singapore and operates in mainland
China, Ireland, France, Switzerland, Luxembourg, Austria and South Africa. FDM has established partnerships with key
universities, enabling it to recruit high quality graduates to train as Mounties.
FDM is a strong advocate of diversity and inclusion in the workplace, with around 60 nationalities working together as a
team. The Group encourages and supports the recruitment of women into the IT industry, promoting their advancement
through the “FDM Women in IT” initiative. The Group also actively recruits ex-Forces personnel in both the UK and the
USA, as well as having a “Returners to Work” programme in Hong Kong, aiding those workers who are ready to re-enter
the workplace after a career break.
Strategy
FDM’s strategy is to deliver customer led, sustainable profitable growth on a consistent basis. This strategy requires that
all activities and investments produce the appropriate level of profit and cash returns, deliver sustained and measurable
improvements for all stakeholders including customers, staff and shareholders and further FDM’s objective of launching
the careers of talented people worldwide.
The Group’s strategy is to increase the number of Mounties on site delivering IT and business services to its customers
through:
• Establishing new training academies and investing in operational capacity and new service areas;
• Increasing the number of Mounties on site across our existing customer base and growing the number of new customers;
• Expanding its geographic presence across the territories in which we operate; and
• Being agile and responsive to shifting technology trends and customer demands.
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FDM Group (Holdings) plcAnnual Report and Accounts 2015 Strategic Report
About FDM
FDM’s vision and values
FDM’s vision is to be recognised as the leading provider of innovative and specialised IT and business services making it
the preferred choice in the market place whilst creating and inspiring exciting careers that shape our digital future. This
is driven through the following values:
AMBITION
We set ourselves challenging goals and are determined to achieve them
COLLABORATION
We work best when we work together
ENERGY
We thrive on activity and getting things done
INCLUSIVITY
We embrace and bring together the best people with diverse backgrounds and experiences
PROFESSIONALISM
We work to high standards
GROWTH
We like to be challenged and have a willingness to learn, innovate and improve
Forward-looking statements
This Annual Report 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.
3
FDM Group (Holdings) plcAnnual Report and Accounts 2015 “Our values are part of
our DNA. They define
the way we work with
each other and with
our clients, academic
partners and key
stakeholders.”
Rod Flavell
Chief Executive Officer
4
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Strategic Report
Highlights
FDM has delivered on its key financial and operational objectives.
Financial highlights
Revenue
Mountie revenue
Adjusted1 Group operating profit
Group profit before tax
Adjusted1 Group profit before tax
Basic earnings per share
Adjusted1 basic earnings per share
Net cash position at year end
Cash flow generated from operations
Adjusted1 cash flow generated from operations
Adjusted1 cash conversion
Ordinary dividend per share2
Special dividend per share2
Operational highlights
31 December
2015
31 December
2014
% change
£160.7m
£119.4m
£30.2m
£29.4m
£30.1m
20.5p
21.0p
£22.4m
£36.5m
£36.5m
121.3%
16.5p
5.0p
£123.3m
£88.9m
£24.9m
£19.0m
£24.4m
12.7p
17.5p
£12.3m
£19.3m
£24.6m
101.1%
7.5p
–
30.3%
34.3%
21.3%
54.7%
23.4%
61.4%
20.0%
82.1%
89.1%
48.4%
20.0%
120.0%
n/a
• Mounties assigned to client sites at the commencement
• 65 new clients in 2015
of week 52 were up 31% at 2,022 (2014: 1,539)3
• Total headcount assigned to client sites at week 52 was
up 26% at 2,329 (2014: 1,845)3
• Mountie utilisation rate for the year to 31 December
• Continued investment in training academies in each of
our geographic locations such that by 31 March 2016
we will have increased global training capacity by 33%
over March 2015
2015 was 97.8% (2014: 98.4%)
• Final dividend of 8.5 pence per share giving a total
• Further successful geographic expansion into new
territories and strong growth in Mounties on client sites
across all regions
ordinary dividend for the year of 16.5 pence, in addition
to a special dividend of 5.0 pence per share
1 The adjusted Group operating profit, adjusted profit before tax, adjusted cash flow generated from operations and adjusted cash conversion are
calculated before exceptional items and performance share plan expenses (including social security costs). The adjusted basic earnings per share is
calculated before the impact of exceptional items and performance share plan expenses (including social security costs and associated deferred tax).
2 The dividend in 2015 is in respect of the full year ended 31 December 2015 and represents an interim dividend of 8.0 pence per share and a proposed
final dividend of 8.5 pence per share, in addition to a proposed special dividend of 5.0 pence per share. The dividend declared in 2014 is in respect of the
period from admission to the London Stock Exchange on 20 June 2014 to 31 December 2014.
3 Week 52 in 2015 commenced on 21 December 2015 (2014: week 52 commenced on 22 December 2014).
5
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Industry awards received during the year included:
• The JobCrowd – Top 100 Companies For Graduates To Work For 2015/16 (also won in 2014/15)
• The JobCrowd – Top IT Services and Consulting Companies For Graduates To Work For 2015/16
• Shares Awards – Best Main Market Company Achievement 2015
• European CEO Awards – Best CEO in the IT Industry 2015
• CEO Insight Awards – Best IT Services Employer 2015
• Information Age Women in IT Awards – Editor’s Choice 2015
• Computer Weekly – Top 50 Most Influential Women in UK IT 2015
• USA Military Times – Best for Vets Employer 2015 (also won in 2014)
• USA CivilianJobs.com – Most Valuable Employer for Military 2015 (also won in 2014)
Highlights
6
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Strategic Report
Chairman’s Statement
“The ongoing investment in our people and infrastructure continues to deliver
significant growth in Mounties deployed, Mountie revenue, profitability, cash
generation and shareholder returns.”
Performance
I am delighted to report another year of strong performance by the Group. We delivered a 31% growth in Mountie
headcount in 2015 achieving a record 2,022 Mounties placed with clients by week 52 2015 (week 52 2014: 1,539). Global
revenues increased by 30% to £160.7 million (2014: £123.3 million) with growth in revenues and operating profits being
delivered by each of our operating regions.
During 2015 we secured 65 new clients across multiple sectors and now have a presence in finance, media, insurance,
energy, aviation, government and not-for-profit sectors. We have expanded the regions in which we operate, placing
Mounties for the first time in Austria and expanding into six new states in the USA. We have strengthened our partnerships
with many universities, clients and military associations which enable us to continue creating and inspiring exciting careers
that shape our digital future.
Strategic investment
At the core of our strategy is investment in our people and in our infrastructure. A key feature of 2015 has been the
accelerated investment in our training academies; a combination of new facilities in new locations or larger facilities
in existing locations. In June 2015 we opened an academy in Leeds, followed by openings in Glasgow and Hong Kong
immediately after the year end, with a new and significantly enlarged facility opening in Toronto in April 2016. We are
currently sourcing a new satellite centre in the USA which will enable us to accommodate the growing demand from our
existing customers in states outside of the tri-state area of New York, New Jersey and Connecticut. We will continue to
open and hire temporary training facilities to accommodate our client needs where required. The training offered through
our academy facilities is continuously enhanced, refined and expanded in order to suit new and existing customers,
territories and markets.
In 2015 we introduced a performance share plan that has enabled us to widen the factors motivating and rewarding our
staff for their contribution to the success of the Group. We have also made some key personnel appointments in the year
to ensure we are well placed to continue to deliver growth, excellent services to all of our customers and outstanding
careers to our Mounties.
Board changes
I am delighted to welcome Michelle Senecal de Fonseca and David Lister to the Board, Michelle joined the Board on
15 January 2016 and David’s appointment will commence on 9 March 2016. Their significant experience and capabilities
further strengthen the Board.
I would like to thank Jonathan Brooks, who stepped down during the year, for his contribution to the Group during his
tenure.
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FDM Group (Holdings) plcAnnual Report and Accounts 2015
Chairman’s Statement
Dividends
I am pleased to report that the Directors are proposing a final dividend of 8.5 pence per share, which together with the
interim dividend gives a total ordinary dividend per share for the year of 16.5 pence. I am also pleased to report that
the Board is proposing a special dividend of 5.0 pence per share. It is our intention to continue to deliver increasing
shareholder returns in part through our progressive dividend policy.
Current trading and outlook
2016, our 25th trading year, has started well for the Group and I am confident that we are well placed to deliver another
year of good progress.
I would like to thank all of our employees for their hard work and dedication over the past year whose commitment and
energy continue to drive the Group forward.
Ivan Martin
Chairman
8 March 2016
8
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Strategic Report
Chief Executive’s Review
“I am exceptionally proud of what FDM has achieved in 2015. The Group, across
all its regions, delivered a strong financial performance, materially grew the
number of Mounties on site and accelerated our UK and international Academy
expansion programme. Notwithstanding significant investments made in the year
in people and facilities to underpin our future growth, we finished 2015 with net
cash balances of £22.4 million. Reflecting the Group’s strong cash position and the
Board’s confidence in the business, the Board is also proposing a special dividend
of 5.0 pence per share, equivalent to £5.4 million.”
Our strategy
Our strategy, which is to deliver customer led, sustainable profitable growth on a consistent basis, is enabled by:
• Attracting, training and developing high-calibre consultants globally (“Mounties”);
• Investing in operational capacity through the development of state-of-the-art training facilities (“Academies”);
• Providing excellent client service to attract new clients and to retain and expand contracts with existing clients
(“Clients”); and
• Developing new service capabilities in current markets and in new markets which offer attractive growth
opportunities (“New markets and services”).
We have made good progress against our strategic objectives in 2015 as set out below:
Mounties
Academies
• FDM is now amongst the UK’s largest graduate
• Four new Academies opened in 2015 or early 2016:
employers.
- Leeds, a new location for FDM, replacing its existing
• FDM’s reputation amongst leading universities is
Manchester facility;
growing with excellent feedback.
• A 31% increase in the number of Mounties placed in all
territories, reaching a record 2,022 at week 52 in 2015.
• Ex-Forces Programme performing strongly with over
- Glasgow, enlarged premises in existing location;
- Hong Kong, enlarged premises in existing location
with the addition of a training Academy; and
130 personnel placed at client sites across all territories.
- Toronto, a new and significantly enlarged facility in
existing location.
• Numerous employer awards won by FDM as detailed in
the Highlights section on page 6.
• 1,240 individuals trained through FDM’s Academies in the
year, an increase of 32% compared with 2014.
• Improved funding initiatives during training for
Mounties.
Clients
• 65 new clients across all territories.
• Increased presence and diversification in the key sectors
in which FDM operates.
9
New markets and services
• Three new service offerings successfully launched:
Business Analysis; Business Intelligence; and Cyber
Security.
• Recruitment of new Group Chief Information Officer
to drive the expansion of the Group’s existing range of
technical and business disciplines.
• Six new US states entered into, including Virginia and
California.
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Chief Executive’s Review
Our markets
An overview of the financial performance of and developments in each of the markets in which we operate is set out
on pages 15 and 16. Whilst significant growth and progress was made across all markets, North America in particular
had an outstanding year. We gained 16 new clients across the region, with one of FDM’s new clients in 2015 already
our largest client in North America, a remarkable achievement in such a short period of time. What we have achieved
with this client demonstrates the quality and flexibility of the FDM model and the lengths FDM will go to in order to
meet its customers’ needs.
Case study
Engagement
In early 2015 FDM was engaged by a US client to provide a pool of trained, readily available, local
resource to facilitate a planned systems transformation.
Delivery
In partnership with the US client team lead, FDM designed an intensive and tailored programme to
train Mounties in relevant technologies and methodologies. FDM set up a remote “pop-up” training
centre in Virginia, enabling local talent to be sourced and trained by experienced FDM trainers near
the US client’s main operation.
To facilitate the knowledge transition and to reduce the on boarding phase, a Senior FDM consultant
and FDM Business Development Manager were embedded into the US client’s team. Through a
combination of shadowing current activity, work environment analysis, and hands-on activity, a full
picture of the US client’s requirements was captured and incorporated into FDM’s training programme.
Outcome
FDM successfully placed an initial 30 Mounties, followed by an additional 45 by week 52 2015. The total
Mounties on site has since grown to 80 by February 2016. The feedback received from the client has
been excellent, with further requests for consultants in the first quarter of 2016.
10
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Strategic Report
Chief Executive’s Review
Our people
Our Mounties and staff are the face of FDM; it is their quality and delivery which enables us to grow our business with
existing customers and to win new customers. During 2015, we trained 1,240 Mounties, an increase of 32%. This was only
possible because of the strength of our management, recruitment, sales and training teams. We continue to seek ways to
ensure we are able to retain and develop our best people and to this end introduced a new share award scheme in the
year, the details of which are explained in note 25 to the Consolidated Financial Statements. We have also improved our
funding initiatives for Mounties in training to ensure we continue to attract the best resource available.
We championed a number of people initiatives in the year; FDM currently employs over 130 ex-Forces personnel in the
UK and USA and FDM USA was recognised as a Most Valuable Employer for Military USA (by CivilianJobs.com) and a Best
for Vets Employer (by USA Military Times) for the second year running. The Group continues to support the advancement
of women into the IT industry through the “FDM Women in IT” initiative. 26% of the Group’s workforce is now female. We
also established in the year, the “Returners to work” initiative in Hong Kong, which helps individuals re-train, upskill, and
return to the work place after a career break.
Looking forward
We have made a strong start to 2016 and I believe the Group is well placed to continue to deliver growth.
Rod Flavell
Chief Executive Officer
8 March 2016
11
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Business Model
A model designed to create sustainable growth
We recruit
Successful partnerships with key universities and ex-Forces partners
A graduate programme offering quality training, commercial experience and opportunity for
fast-track career progression to attract the best candidates
We train
Strategically located training Academies with highly skilled trainers
Intensive three month training programme combining technical education with
industry-standard certifications and professional training
Advancement and career progression enabled
We deploy
Highly skilled resource which is fully operational at client sites from day one
FDM is a global organisation whose Mountie model benefits clients with a global presence
Mounties are able to transition permanently to clients once their two year bond period is complete, offering
the opportunity for continuity and minimum disruption to clients when needed
12
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Strategic Report
Careers Programme
FDM Centres
FDM Learning Pathways
Foundation Modules
Ex-Forces
(Traditional and
Advanced Routes)
Glasgow
Leeds
Client
Interviews
Professional
Skills
SQL
Excel VBA
Quality
Gate
Business Intelligence
Ex-Forces
Advanced Route
Data & Compliance
Java Development
Project Support
Software Testing
Business Testing
.NET Development
Business Analysis
Production Support
MX.3 Production Support
Graduates
1
Ex-Forces
Army
Navy
RAF
London
2
Cyber Security
3
4
Key University Partners
Aston University
Brunel University
City University London
Coventry University
Glasgow Caledonian University
King’s College London
Kingston University
Lancaster University
Leeds Beckett University
Loughborough University
University of Greenwich
Manchester Metropolitan University
University of Hertfordshire
National University of Ireland, Galway
University of Kent
Queen Mary University of London
University of Leeds
University of Strathclyde
University College Dublin
University College London
University of Edinburgh
University of Glasgow
University of Leicester
University of Manchester
University of Newcastle
University of Nottingham
University of Sheffield
The above illustration represents the FDM model as applied to its UK business.
13
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Business Model
Client
Industries
Aerospace
Banking and Finance
Betting
Biotechnology
Broadcast and Media
Consulting
Energy
FMCG
Government
Healthcare
Information Services
Insurance
Logistics and Distribution
Manufacturing
Media
Motor Industry
Oil and Gas
Professional Services
Publishing
Real Estate
Retail
Software Houses
Systems Integration
Technology
Telecommunications
Transport
Travel and Tourism
Utilities
And more...
6
On Site
Support
Account Management
Consultant Support
Consultant Peer Support
ME+
Mentoring
Research and
Development
Technical Support
Pathway Development Through to Placement
UNIX Web Apps Design
Introduction to BI & Data
Warehousing Concepts
Data Interrogation
(SSAS & SSRS)
Data
Visualisation
ETL
Core Java Modules
Interviews
Sign Off
Placement
Design &
Methodologies
ITIL
Core .NET Modules
Cyber Security
Support Modules
Core Production
Support Modules
Core MX.3 Production
Support Modules
FIA
PRINCE2
Core Project
Support Modules
ISTQB-ISEB Manual Testing
Data & Compliance
Modules
Core Testing
Modules
BA Foundation
Certificate
Core Business
Analysis Modules
Review
!
Feedback
5
Key
Graduate Trainees
Business Testing Course
.NET Development Course
Quality Gate (Confirmation of Learning Pathway)
Ex-Forces Trainees
Cyber Security Course
Production Support Course
Consultant Post-Interview Feedback and Review
Glasgow Centre
Data & Compliance Course
Project Support Course
Qualifications
Leeds Centre
London Centre
Ex-Forces Advanced Route
Software Testing Course
Java Development Course
Business Intelligence
Business Analysis Course
MX.3 Production Support Course
Key Strategic University/Ex-Forces Partners
14
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Strategic Report
Our Markets
Highlights
North America
Revenue
Adjusted operating
profit1
Mountie numbers
2015
2014
£36.2m £22.1m
£6.0m £3.1m
520
341
UK and Ireland
Revenue
Adjusted operating
profit1
Mountie numbers
2015
2014
£110.0m £90.3m
£23.0m £21.2m
1,264
1,018
EMEA
Revenue
Adjusted operating
profit1
Mountie numbers
2015
2014
£10.7m £8.9m
£0.9m £0.5m
133
117
APAC
Revenue
Adjusted operating
profit1
Mountie numbers
2015
2014
£3.8m £1.9m
£0.3m £0.1m
105
63
UK and Ireland
The UK and Ireland delivered another strong performance
in the year. Total revenue was up by 22% to £110.0 million
(2014: £90.3 million) and adjusted operating profit1 increased
by 8% to £23.0 million (2014: £21.2 million). The number of
Mounties placed at client sites reached 1,264 at week 52
(2014: 1,018).
Demand from both existing and new customers in the year
was high, with the UK and Ireland securing 41 new customers
in the year. As with the rest of the Group, the UK and Ireland
continues to diversify the sectors in which it operates, most
notably increasing its presence in the government and not-
for-profit sectors during the year.
New service offerings continue to be a key strategic focus for the Group. As the hub of the Group, the UK continues to
act as the test bed for new service areas, of which there were three in the year, Business Analysis, Business Intelligence
and Cyber Security. The appointment of Jonathan Young in the UK as Group Chief Information Officer will facilitate the
expansion of the Group’s existing range of technical and business disciplines.
In June 2015 we relocated from Manchester to our new state-of-the-art Academy and sales office in Leeds. The Leeds
Academy provides capacity for FDM to recruit and train additional graduates and ex-Forces personnel and an opportunity
for FDM to work more closely with our university partners in the area, whilst creating new partnerships and developing
existing relationships with customers in the region. Shortly after the year end, we opened our new Glasgow office and
are confident it will also provide additional training, recruitment and collaboration opportunities for the Scottish regions.
1 The adjusted operating profit is calculated before; exceptional items and performance share plan expenses (including social security costs).
15
FDM Group (Holdings) plcAnnual Report and Accounts 2015 North America
Our Markets
Our North American operations have delivered an exceptional
performance in 2015. Total revenue grew to £36.2 million (2014:
£22.1 million), an increase of 64% and adjusted operating profit1
increased to £6.0 million (2014: £3.1 million), an increase of 94%.
Mounties placed on site during the year exceeded 500 for the
first time, totalling 520 at year end compared to 341 in 2014.
FDM gained 16 new customers in 2015, including a number
of high profile household names, one of which has already
become our largest client in North America. We placed Mounties
in six new states, including Virginia and Maryland, and FDM now
provides services to the five largest banks in Canada.
In order to facilitate the increase in demand, the Group has accelerated its investment programme in the USA. Enlarged
premises in Toronto are due to open in April 2016 and the North American management team was strengthened in
the year with a number of key hires to support its ongoing growth, including a new head of military and a new head of
training. A location for a further small scale training academy in the USA is currently being explored.
EMEA (Europe, Middle East and Africa, excluding UK and Ireland)
APAC (Asia Pacific)
As reported previously, the EMEA market has been made
more complex by the differing interpretations by clients of
the evolving labour leasing legislation in Germany. Despite
this, EMEA revenues increased by 20% to £10.7 million (2014:
£8.9 million) and adjusted operating profit1 increased to
£0.9 million (2014: £0.5 million). The number of Mounties
placed at client sites at week 52 was 133, compared with 117
at week 52 2014. The current focus of the EMEA business
is to continue to grow the Mountie model in Germany and
Switzerland, whilst Mounties were placed for the first time in
the year in Austria. A new head of sales for the EMEA region
was appointed during the second half of the year to help
drive this growth.
An improved performance in the APAC region saw revenues
double to £3.8 million (2014: £1.9 million), with adjusted
operating profit1 growing to £0.3 million (2014: £0.1 million).
APAC Mounties placed on site at the beginning of week 52
were 105, up from 63 in 2014.
The APAC business continues to be based in Hong Kong and
the new Academy and sales office opened in early 2016 to
accommodate continuing growth. For the first time, training
of local talent will take place in our own premises in the
region. The Hong Kong base continues to support operations
in China. The Singapore sales office provides training from
temporary facilities when required.
1 The adjusted operating profit is calculated before; exceptional items and performance share plan expenses (including social security costs).
16
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Strategic Report
Key Performance Indicators
We focus on a number of Key Performance Indicators (“KPIs”) to identify trends in
the trading performance of the Group. The Group aims to increase profitability
whilst maintaining a healthy balance sheet and investing in the operations
and geographies which underpin the organic growth of the Group. The Group
continues to deliver strong margins and converts profits into operating cash for
investment to provide a return to shareholders. The KPI targets, used as a basis
for remuneration awards, are included in the Remuneration Report.
The adjusted numbers in the KPI analysis remove the impact of exceptional
costs and costs associated with the performance share plan, to provide a clear
understanding of the underlying trading performance.
Mountie revenue (£m)
Increased Mounties on site throughout the
year has driven revenue growth
119.4
71+10088.9
2014
2015
+34%
Mounties on client sites (start week 52)
Increase in Mounties on site across all
Mountie utilisation rate (%)
Mountie utilisation rates decreased
Total revenue (£m)
Strong organic growth driven by the Mountie
segments and key service areas
marginally during the year but remained
model
within expected tolerances
98.4
1,539
2,022
76+100
+31% 100+98
2014
2015
2014
2015
97.8
-1%
160.7
71+100123.3
2014
2015
+30%
Adjusted operating profit1 (£m)
The Group delivered operating profit growth
Adjusted profit before tax1 (£m)
Profit before tax increased from strong
Adjusted earnings per share1 (pence)
We have delivered earnings growth in line
whilst investing in its operational capacity
trading and lower net finance costs
with our targets
24.9
30.2
83+100 79+100
+21%
2014
2014
2015
2015
24.4
30.1
+23%
21.0
17.5
82+100
2014
2015
+20%
Adjusted cash generated from
operations1 (£m)
The Group closed the year with cash
balances of £22.4 million (2014: £12.3
Adjusted cash conversion1 (%)
The conversion of profits into cash
remains good
Training completions2
The number of Mounties completing
training increased by 32%
million)
24.6
36.5
63+100 80+100
101.1
121.3
+48%
2014
2014
2015
2015
+20%
1,240
74+100938
2014
2015
+32%
17
1 The adjusted operating profit, adjusted profit before tax, adjusted cash generated from operations and adjusted
cash conversion are calculated before exceptional items and performance share plan expenses (including
social security costs). The adjusted earnings per share is calculated before the impact of exceptional items and
performance share plan expenses (including social security costs and associated deferred tax).
2 Training completions, which drives growth in Mountie numbers, is included for the first time as a non-financial KPI.
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Risk Management
We believe that effective risk management is critical to the delivery of the Group’s strategic objectives.
Approach to risk
The Board has overall responsibility for ensuring risk is effectively managed across the Group and does not delegate any
significant elements of the risk management process. The Board deals directly with the approach to risk management and
the procedures for the identification, assessment, management, mitigation and reporting of risks.
Identifying and monitoring key risks
The principal tool used by the Board to monitor and report risk is the risk register. The preparation of the register is led by the
Chief Financial Officer, supported by the senior management team and details the Group’s risks, the impact of each risk, the
likelihood of that risk occurring and the strength of the mitigating controls in place and how these are evidenced. The updated
risk register was last reviewed, debated and agreed by the Board in December 2015 and was reviewed twice in 2015.
The current risk register included 24 risks categorised between strategic, operational, compliance and financial risks, of
which 10 are considered to be the Group’s principal risks.
Changes to the risks reported in 2014
The risks reported here are broadly the same as those reported last year with the exception of the following:
• The risk of a disruptive cyber-attack has been elevated to being one of the Group’s principal risks. The increasing
frequency with which corporations are being targeted has resulted in this being a key area of focus for the Board.
During the year a Group Chief Information Officer whose responsibilities include, amongst other things, IT security was
appointed by the Board.
• The risk relating to “balancing supply and demand” has been subdivided into two separate risks – one being the risk of not
having sufficient Mountie resource to accommodate a rapid increase in demand and the other being unable to utilise or
place Mounties should a sudden decrease in demand occur.
• The risk relating to the Group’s ability to
effectively upscale has also been subdivided
into two separate risks – one relating to
the ability to secure the necessary physical
infrastructure as the business expands and
a further risk of potentially being unable to
secure the necessary skilled personnel as the
business expands.
• Due to the strength of controls in place, risks
relating to exercising oversight over the UK and
overseas businesses and managing growing
cash balances are no longer considered by the
Board to be key risks.
The principal risks and uncertainties faced by
the Group in 2015, together with the potential
effects, controls and mitigating factors and the
rationale for perceived increases and decreases
in the risks compared to 2014, are set out on
pages 20 to 22.
Likely
d
o
o
h
i
l
e
k
i
L
Unlikely
Principal risks
2
10
3
5
9
6
7
8
1
4
Low
Impact
High
18
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Appointment of Group
Chief Information
Officer in the year
19
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Strategic Report
Risk Management
Strategic risks
Risk and impact
Mitigation
Movement in the year
1. Economic environment
A downturn in the UK and/ or global
External factors such as macro-economic risks
With some instability occurring in
No change
economies could curtail demand
are outside of the Group’s control. The Group
global markets since the beginning
significantly and the ability of the Group
is primarily invested in the UK and the US, thus
of 2016, the Board is of the view
to deploy its Mountie resource, adversely
minimising its exposure to weaker economies.
that this risk remains unchanged.
impacting on revenue, gross margin and
overall profitability.
Notwithstanding the impact of risk 2 below, the
Group is focused on diversifying its customer base
both by sector and by geography.
2. Concentration exposure in the
financial services sector
The majority of the Group’s revenue is
As above, the Group is focused on diversifying its
As the proportion of the Group’s
Increased
generated from the financial services
customer base both by sector and by geography.
revenue which is generated
sector. A crisis in the financial services
The Group is continuing to increase its service
from the financial services sector
sector could reduce revenue significantly
offerings with three new revenue streams,
continues to increase, this is
and have a negative impact on the
Business Analysis, Business Intelligence and Cyber
perceived by the Board to be a
majority of the Group’s KPIs.
Security, introduced in the year.
higher risk than in 2014.
3. Balancing supply and demand (i)
An inability to meet a rapid increase in
The recruitment team maintains strong links to
There has been a continued
Reduced
demand due to insufficient Mountie
universities and other recruitment channels.
focus by management during the
resource and an inability to recruit in
a timely manner would result in lost
revenue, eroded customer confidence
and an adverse reputational impact.
Resource management meetings occur weekly to
ensure supply and demand issues are identified
and resolved.
The management team is incentivised to
maximise utilisation and increase flow through of
graduates within the Academies.
year to ensure the most efficient
utilisation and deployment of
Mounties.
Specific initiatives undertaken
in the year should result in the
Group being better able to balance
supply and demand. These
The ex-military personnel and women returners
include attracting Mounties via
to work, whilst relatively small in terms of overall
additional funding initiatives whilst
Group headcount, are growing and will help
in training. New and/ or enlarged
spread the Group’s access to a wider talent pool.
offices in different locations will
give the Group greater ability to
meet higher demand.
4. Balancing supply and demand (ii)
An inability to utilise or redeploy Mounties
As above, resource management meetings occur
The growth and diversification in
Reduced
in the event of a sudden decrease in
weekly to ensure supply and demand issues are
the Group’s client base by both
demand would result in a reduction in
identified and resolved in a timely manner.
number of clients and geographical
margin and would demotivate Mounties.
spread has reduced the risk of the
Group not being able to fully utilise
its Mountie resource.
20
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Strategic Report
Operational risks
Risk and impact
Mitigation
Movement in the year
5. Recruitment and development of
highly skilled Mounties
Mounties are the Group’s core asset. A
The Group continually reviews and benchmarks
The Group has continued to
No change
failure to deliver high quality Mounties
the remuneration packages and incentives it
receive a number of employer
into its customer base could result in a
offers to attract graduates.
awards during the year,
loss of customers and damage to the
Group’s reputation.
Strong relationships exist with universities and
other recruitment channels including ex-military
enhancing its reputation amongst
graduates.
personnel and women returners to work.
Military programmes both in the
A tailored development programme is in place
for Mounties, covering training and development
opportunities, including after the bond period.
The Group is focussed on promoting its
reputation in the marketplace as a leading
graduate employer.
UK and the US have grown in the
year. The number of ex-military
personnel on site during the year
exceeded 100 in the UK.
The Group’s nascent women
returners to work can provide
access to another talent pool.
6. Ability of business to effectively
upscale (i)
The inability of the business to effectively
Research, identification and assessment of
The Group has a track record
Reduced
upscale as a result of not securing the
investment opportunities is performed on a
of successfully securing and
required physical infrastructure (sites)
regular basis.
would result in lost revenue and missed
growth opportunities.
The Group has gained considerable experience
from successfully securing and developing existing
sites which can be replicated for new sites.
developing sites both in the UK
and overseas. During the year the
Group opened a new Academy in
Leeds with further openings after
the year end in Glasgow, Hong
Kong and Toronto.
Reduced
7. Ability of business to effectively
upscale (ii)
The inability of the business to effectively
The remuneration packages of all employees
Recent developments in the
upscale as a result of not being able
are reviewed regularly to ensure they remain
Group’s business - its listing,
to recruit and retain key staff with
competitive.
appropriate skills.
An annual appraisal system includes the
identification of training requirements, which are
fulfilled within the following 12 months.
The Nomination Committee considers succession
matters as a regular agenda item.
increased profitability, expansion
overseas - make it an attractive
employer for skilled personnel.
8. Development of new service offerings
The inability of the Group to develop new
A new executive role, responsible for the
Appointment of Group Chief
Reduced
service offerings and revenue streams
development of new service offerings, was
Information Officer in the year
could result in a loss of customers and
established in the year.
market share.
21
FDM’s flexible training model is able to develop
course material relevant to customers’ needs.
FDM’s state-of-the-art training Academies
are designed to provide quality training in a
professional environment.
and a continued investment in the
Group’s Academies has resulted in
this risk being reduced.
Three new service streams were
introduced in the year; Business
Analysis, Business Intelligence and
Cyber Security.
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Risk Management
Operational risks (continued)
Risk and impact
Mitigation
Movement in the year
9. Business interruption – caused by
successful cyber-attack or other disaster
This could result in a financial loss to
The Group’s IT systems are protected by anti-virus
The Group experienced
Increased
the Group due to fraudulent access to
software and firewalls.
Group funds/ assets and an impact on
reputation through a loss of customer or
sensitive data.
Staff are regularly made aware of the risk of
a cyber-attack and the appropriate actions
necessary to mitigate the risk of this occurring.
A new Group Chief Information Officer was
appointed in the year who has taken responsibility
for IT security matters.
attempted cyber-attacks during
the year - as such this is deemed
to be a key risk to the Group.
Compliance risk
Risk and impact
Mitigation
Movement in the year
10. International regulatory non-
compliance
Failure to comply with international tax,
The Group has robust recruitment procedures
The Group continues to invest in
No change
legal, employment and other business
which ensure the employment of appropriately
appropriately skilled personnel
regulations could result in significant fines
skilled personnel in areas where compliance with
in areas where compliance and
and/ or revocation of business licences.
legislation is required.
expertise is required.
The Group seeks appropriate advice and engages
external advisors as appropriate, particularly
in overseas locations, and proactively manages
those relationships.
22
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Strategic Report
Risk Management
Viability statement
In accordance with provision C.2.2 of the 2014 revision of the Code, the Directors have assessed the prospects of the
Group over a longer period than the 12 months required by the “Going Concern” provision. The period selected by the
Board for its assessment is three years, for the following reasons:
• The Group’s strategic plan covers a period of three years
• The period identified is underpinned by financial budgets and forecasts
• The core of FDM’s business is the Mountie model. The period identified approximates to the average lifecycle of
Mounties’ engagement with FDM.
In making its assessment, the Board has considered the Group’s current position and prospects, its cash flow requirements
and other key financial assumptions over the three year period and has sensitised certain of those assumptions where
considered appropriate. As stated previously, the core of FDM’s business is the Mountie model; the sensitivity analysis
therefore included the consideration of various scenarios relating to flexing Mountie headcount, direct costs of training
and employing Mounties, as well as a loss of the Group’s two largest customers and major disruption to one of the
Group’s major training facilities.
The Board has also taken into account in its assessment, the principal risks affecting the Group (as set out above); the
likelihood of those risks occurring and the impact on the Group’s future performance, solvency and liquidity should those
risks occur.
Based on the results of this assessment, the Directors have a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due over the three year period of their assessment.
23
FDM Group (Holdings) plcAnnual Report and Accounts 2015 The Group is focused
on promoting its
reputation in the
marketplace as a
leading graduate
employer
24
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Strategic Report
Financial Review
“2015 was another year of strong financial performance as we delivered an
adjusted operating profit of £30.2 million and increased our footprint in all our
operating regions.”
Summary income statement
Revenue
Mountie revenue
Contractor revenue
Adjusted operating profit
Adjusted profit before tax
Reported profit before tax
Adjusted EPS
Reported EPS
Overview
31 December
2015
31 December
2014
% change
£160.7m
£119.4m
£41.3m
£30.2m
£30.1m
£29.4m
£123.3m
£88.9m
£34.4m
£24.9m
£24.4m
£19.0m
30.3%
34.3%
20.1%
21.3%
23.4%
54.7%
Pence per share
Pence per share
% change
21.0
20.5
17.5
12.7
20.0%
61.4%
Group revenue in the year increased by 30%, from £123.3 million to £160.7 million. Mountie revenue increased by 34%
to £119.4 million (2014: £88.9 million) whilst contractor revenue increased by 20% to £41.3 million (2014: £34.4 million).
The significant increase in Mountie revenue reflects the Group’s strategy of focusing on increasing Mountie numbers
and Mountie revenue, with the latter representing 74% of total revenue in 2015 compared with 72% in 2014. This had a
small positive impact on the gross margin which increased from 39.3% to 39.5%. The proportion of Mountie headcount
allocated to the Group’s top 30 customers has decreased to 75% in week 52 2015 (2014: week 52 80%). The declining
relative significance of non-Mountie revenues to the Group is expected to continue as the emphasis remains centred on
growing Mountie numbers.
An analysis of Mountie revenue and headcount by region is set out in the table below:
UK and Ireland
North America
EMEA
APAC
25
2015
Mountie
revenue
£m
2014
Mountie
revenue
£m
2015
Mountie
numbers
at week 52
2014
Mountie
numbers
at week 52
74.6
31.0
10.2
3.6
119.4
61.7
18.0
7.3
1.9
88.9
1,264
520
133
105
1,018
341
117
63
2,022
1,539
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Financial Review
Overheads increased in the year from £23.5 million to £33.9 million, reflecting the significant investment in larger
Academies in the year in support of FDM’s continued growth and the increase in Mountie headcount. A new Academy
opened in the year in Leeds with openings in Glasgow, Hong Kong and Toronto after the year end also impacting operating
costs in the year as leases were signed and some staff contracted prior to the year-end. The Group made a number of
strategic hires in the year across its management, recruitment, sales and training teams increasing total headcount in
these areas of the business to 316 from 267. The increase in overheads as a result of the accelerated investments made
in the year has had an impact on the adjusted operating margin which has decreased to 18.8% from 20.2%.
Adjusting items
The Group presents adjusted results, in addition to the statutory results, as the Directors consider that they provide a
useful indication of underlying performance. The adjusted results are stated before performance share plan expenses
including associated taxes and exceptional items (where applicable).
There were no exceptional items in 2015 (2014: £5.4 million). The exceptional items in 2014 represented the £4.9 million
of costs associated with admission of the Company’s ordinary shares to the Main Market of the London Stock Exchange
(“Admission”) and exceptional staff costs of £0.5 million.
The performance share plan expenses including social security costs were £0.7 million in 2015 (2014: £nil). Details of the
performance share plan are set out in note 25 to the Consolidated Financial Statements.
Net finance costs
As the Group has no borrowings, finance costs are minimal. The net charge for the year represents £16,000 of finance
income and a finance expense of £168,000 representing non-utilisation charges on the undrawn element of the Group’s
revolving credit facility.
Taxation
The Group’s total tax charge for the year was £7.3 million, equivalent to an effective tax rate of 25.0%, on profit before
tax of £29.4 million (2014: effective tax rate of 28.9% based on a tax charge of £5.5 million and a profit before tax of £19.0
million). The effective tax rate was higher in 2014 due to the impact of £4.0 million of non-deductible expenses incurred
in relation to the Admission.
The effective tax rate in 2015 is higher than the underlying UK tax rate of 20.25% due primarily to profits earned in higher
tax jurisdictions.
Earnings per share
The basic earnings per share increased in the year to 20.5 pence (2014: 12.7 pence) whilst adjusted earnings per share
was 21.0 pence (2014: 17.5 pence).
26
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Strategic Report
Financial Review
Dividends
Subject to shareholders’ approval the Group’s total dividend for the year will be 21.5 pence per share (2014: 7.5
pence per share). This comprises total ordinary dividends of 16.5 pence per share (2014: 7.5 pence per share) and
a special dividend of 5.0 pence per share (2014: nil pence per share). The total ordinary dividends of 16.5 pence per
share will be covered 1.2 times by basic earnings per share.
The Board has adopted a progressive dividend policy; the Group will retain sufficient capital to fund ongoing
operating requirements, maintain an appropriate level of dividend cover and sufficient funds to invest in the Group’s
longer term growth.
Cash flow and net funds
Net cash inflow generated from operating activities more than doubled in the year, increasing from £14.4 million in 2014
to £29.6 million in 2015. After paying dividends of £16.7 million and capital investments of £2.4 million, net cash increased
by £10.1 million to £22.4 million. Adjusted cash conversion increased to 121% from 101%, reflecting improved working
capital management in the year.
At the end of the financial year, the Group had total facilities of £20.0 million available until 31 August 2018 (2014: £30.0
million - a £10.0 million facility expired in February 2015). The committed facilities, which were undrawn for all of 2015, are
in place to support the Group’s financing needs and provide headroom against forecast requirements.
Balance sheet
The Group has a robust balance sheet, with no debt and £22.4 million of cash. The Group’s largest asset, its trade
receivable balance, reduced year on year, despite the growth in revenue and year end debtor days reduced to 48
(2014: 64 days), as a result of improvements to the systems and credit control functions of the Group.
Mike McLaren
Chief Financial Officer
8 March 2016
27
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Group revenue in
the year increased
by 30%, from
£123.3 million to
£160.7 million
28
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Strategic Report
Corporate Social Responsibility
The Directors continually consider the Group’s impact on its stakeholders including employees, contractors, trainees,
customers, suppliers, investors and the wider community. Management ensures that the decisions made are responsible
and ethical by taking into consideration the wider society external to the organisation. The Group is committed to
contributing towards creating a sustainable environment and community in which it operates as a business.
Employees
The Directors recognise that the success of the business as a whole is dependent on all of our staff at every level.
Throughout the Group we provide guidance, coordination and awareness of our key initiatives, enabling colleagues with
similar interests or backgrounds to collaborate and take part in workshops, conferences, mentorship and local activities.
The following new career support initiatives were introduced in 2015, helping each employee to reach their full potential:
• Consultant Peer Support (“CPS”) initiative
The CPS initiative builds a sense of community among our Mounties within client locations. Our selected Ambassadors
will help their fellow Mounties to start their new placements on site.
• Mentoring Programme
In the UK we introduced the “Mentoring Programme”, enabling our people to have or become a mentor. This gives our
employees the opportunity to firstly define and then achieve their ambitions with the help of someone within FDM as
their mentor. It also gives more experienced consultants the chance to give something back by becoming a mentor. The
programme is supported by an internal FDM Mentoring Team, which provides training via web seminars for mentors,
matching participants, giving access to ME+® (see below) to capture goals and ambitions, and the opportunity for
feedback along the journey.
• ME+®
FDM launched a career self-development mobile app called ME+®. ME+® aims to put people in control of their own
careers and guides them to achieve their ambitions. The app was developed jointly with Me Plus Development Limited.
The new innovative technology allows the accessibility required within a diverse, graduate community. FDM Group was
shortlisted as a finalist in the category of “Excellence through Technology” in the Personnel Today Awards 2015 as a
result of this project.
As part of recognising and rewarding our staff’s commitment and hard work, in April 2015, we introduced a new
performance share plan that will allow participants to share in the benefit from the on-going growth of the Group. Details
of the share plan are set out in note 25 to the Consolidated Financial Statements.
We communicate with employees regularly via email, monthly staff newsletters and face to face meetings in order to
ensure that they are being supported especially when placed remotely on site. The FDM Consultant of the Month and FDM
Stars initiatives are designed to reward those that are excelling, as nominated by our customers and other employees in
the business. The Group systematically provides employees with information on matters of concern to them, consulting
them or their representatives regularly, so that their views can be taken into account when making decisions that are
likely to affect their interests.
Diversity and inclusion in the workplace
The Group’s workforce is made up of around 60 nationalities working together and is dedicated to promoting a diverse
workforce that reflects wider society. There is zero tolerance towards discrimination throughout all our business
activities whether it relates to race, nationality, religion, disability, gender, age, sexual orientation or any other such
discrimination where an individual may feel marginalised. Currently half of attendees to the FDM assessment centre in
the UK are from an ethnic minority background. It is this diversity that forms the foundation of our culture and drives
our business forward.
29
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Corporate Social Responsibility
Supporting ex-Forces personnel
The dedicated Ex-Forces Programme operated by our businesses in the UK and USA has demonstrated the Group’s
support of the Armed Forces through the offering of IT and business careers to the ex-Forces community. The UK
business has been recognised in this area through its work with the British Forces Resettlement Services and the Careers
Transitions Partnership, as well as signing the Ministry of Defence Armed Forces Corporate Covenant to demonstrate our
support to the Armed Forces community.
In the USA we have been recognised for our commitment to launching the careers of former Service men and women.
In 2015, FDM was announced for the second year in a row as a “Best for Vets Employer” by The Military Times and
“Most Valuable Employer for Military” by CivilianJobs.com. FDM signed a memorandum of agreement with the US Army
Partnership for Youth Success programme in 2015, reaffirming our commitment to assisting veterans in making the
transition into the commercial workplace.
People with disabilities
The Group gives full and fair consideration to the employment of disabled persons. In the event of members of staff
becoming disabled, every effort is made to ensure that their employment within the Group continues either in the job
or in a suitable alternative. The Group endeavours to make any reasonable adjustments to enable disabled employees
to fulfil the responsibilities of their job role. It is the Group’s policy to support disabled employees in all aspects of their
training, development and promotion where it benefits the employee and the Group.
Gender diversity
The table below shows the gender split at different levels within the organisation as at 31 December 2015.
As at 31 December 2015
On the Board
Within Senior Management
All employees
Number of males
Number of females
6
11
1,924
1*
9
678
* In January 2016, Michelle Senecal de Fonseca was appointed to the Board, increasing the number of female Board members to two.
The Group hosts regular “Advantage Sessions” to encourage women to consider a career in IT and FDM Female
Champions act as role models to other women in the business. We take part in judging awards, networking events and
speaker panels, as well as hosting the annual “FDM Everywoman in Technology Awards” that are designed to celebrate
and promote outstanding women in the industry. FDM’s Chief Operating Officer, Sheila Flavell, has been recognised in
Computer Weekly’s “Top 50 Most Influential Women in IT” in 2015. In Hong Kong, we introduced the “Returners to Work
Programme” in 2015 aiding those who are ready to re-enter the workplace after a career break.
In 2014 FDM signed the United Nations Women’s Empowerment Principles CEO Charter, sealing our commitment to
actively promote gender diversity in the workplace and the wider business community. In Germany, FDM signed the
Komm mach MINT Memorandum in 2014, a government initiative to encourage companies to support more women
into Science and Technology careers.
FDM is currently part of the Home Office’s “Think, Act, Report” initiative to drive greater transparency on gender
employment issues.
Our community
The Group believes that it has a responsibility to contribute towards the local community and wider society and actively
encourages individual and collective initiatives to support this. In 2015, the Group carried out fundraising events globally
to raise money for charities such as Save the Children, Macmillan Cancer Research, Nepal Earthquake Appeal and the
German Sports Aid Foundation.
30
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Strategic Report
Corporate Social Responsibility
Our community (continued)
We run paid summer internships in our London, Glasgow, Leeds and New York offices. Undergraduate students are
offered an eight-week placement, during which they work on live business projects, providing them with exposure to a
commercial environment during their studies. The scheme aims to match students to business areas within the Group
which are relevant to their studies, to ensure the interns gain targeted experience.
Environmental policy
Throughout the Group the responsibility to minimise detrimental impact to the environment is recognised. Although
we have no manufacturing facilities we aim to reduce the Group’s environmental impact by monitoring and minimising
the consumption of energy in the Group’s operations and where possible promote the procurement of environmentally
friendly products. The Group complies with all relevant environmental legislation. We aim to reduce waste and, where
practicable, re-use and recycle consumables. We have recycling facilities in all our offices and recycle waste paper and ink
cartridges. Computers that are no longer in use are donated to charities. We encourage communication via electronic
documents.
CO2 emissions
The Company complies with the greenhouse gas (“GHG”) emissions reporting requirements of The Companies
Act 2006 (Strategic and Directors’ Reports) Regulations 2014. The Company reports all material GHG emissions,
wherever possible using tonnes of CO2-equivalent (“CO2e tonnes”) as the unit, to account for all GHGs which are
attributable to human activity, as defined in section 92 of the Climate Change Act 2008(a). Emissions data is reported
for the Group’s worldwide operations. The methodology used to compile this data is in accordance with DEFRA’s
“Environmental Reporting Guidelines: Including mandatory greenhouse gas emissions reporting guidance (June 2014)”.
Fuel type
Scope 21
Scope 32
Greenhouse gas emissions intensity ratio:
CO2e tonnes per £ million of revenue
Year ended
31 December 2015
CO2e tonnes
545
1,194
CO2e tonnes
10.8
Year ended
31 December 2014
CO2e tonnes
453
923
CO2e tonnes
11.2
1 Scope 2 being electricity, heat, steam and cooling purchased for the Group’s own use.
2 Scope 3 being emissions which the Group is not directly responsible for, but arise as a by-product of its operation.
The Group’s Scope 1 CO2 emissions are negligible and are therefore not disclosed. The Group’s Scope 3 CO2 emissions
increased in 2015 due to the inclusion of emissions data from travel bursary costs. The paying of travel bursary costs to
trainees was introduced during 2015, and has allowed FDM to widen its recruitment base.
The Strategic Report was approved by the Board on 8 March 2016 and signed on its behalf by:
Rod Flavell
Chief Executive Officer
8 March 2016
31
FDM Group (Holdings) plcAnnual Report and Accounts 2015
In 2015, FDM was
announced for the
second year in a
row as a “Best for
Vets Employer” by
The Military Times
and “Most Valuable
Employer for Military”
by CivilianJobs.com
32
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Governance
Board of Directors
Ivan Martin
Non-Executive Chairman
Ivan has been Chairman of FDM Group since 2006 and is Chairman of the Nomination
Committee. Ivan joined the board of Microgen plc as a Non-Executive Director in January 2016
and became Chairman of the Board as planned in March 2016. He has no other significant
commitments. He was a member of Misys plc’s board and headed their banking software
division until 2005. Previously, Ivan worked at ACT Group plc and spent his earlier career at
US multinational computer business, Unisys Corporation. Between 2007 and 2014, he was
Executive Chairman of Sesame Bankhall Group. Ivan was also a Non-Executive Director of
Avelo, a financial services technology business, and Chairman of Red Commerce, a specialist
SAP recruitment and staffing business.
Roderick (Rod) Flavell
Chief Executive Officer
Rod is the founder and Chief Executive Officer of the Group. He is responsible for the overall
strategic development and expansion of the Group and, over the past 25 years, has been
instrumental in developing the Group into one of the UK’s leading IT graduate employers.
He is also a member of the Nomination Committee. Rod is a firm supporter of improving
diversity in the IT workplace, with clear results being achieved by the Group through the
FDM Women in IT, Returners to Work, ex-Forces and veteran career transition initiatives.
Rod was recognised as “Best CEO in the IT Industry” in 2015 at the European CEO Awards.
Sheila Flavell
Chief Operating Officer
Sheila was appointed Chief Operating Officer of FDM Group in 2008 and has over 25 years’
experience in both the public and private IT sectors. Sheila’s experience and knowledge of
the Group has been key in driving the Group’s global expansion programme. She is fully
committed to driving gender diversity in the workplace and spearheads FDM’s global Women
in IT campaign. Her dedication to promoting gender balance in the workplace has been
recognised through various awards including “Corporate Leader of the Year” at the Cisco
everywoman in Technology Awards 2012, “Top 30 Most Inspirational Female Entrepreneurs in
the City 2014” by Brummell Magazine and featured 13th in the Computer Weekly “Top 50 Most
Influential Women in UK IT” 2015 list.
Andrew (Andy) Brown
Group Commercial Director
Andy has spent over 20 years with FDM and progressed through the Group’s sales team to
become Global Sales Director in 2007. Andy now fulfils the role of Group Commercial Director
and oversees the expansion of the Group with a key focus on the sales, HR and recruitment
functions. Andy’s strategic focus is around developing new service offerings in line with client
demands, as well as increasing the number of applicants for the Group’s graduate programme,
which are both key areas to the success and growth of the Group. Andy has also played a key role
in the launch and success of the UK Ex-Forces Programme, which was initiated in January 2014.
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FDM Group (Holdings) plcAnnual Report and Accounts 2015
Board of Directors
Michael (Mike) McLaren
Chief Financial Officer
Mike was appointed Chief Financial Officer of the Group in 2011. Prior to joining the Group,
Mike served as Chief Operating Officer and Group Finance Director of Timeweave plc (formerly
Alphameric plc) and has served on a number of other Boards for both private and listed
companies. Mike is a Fellow of the Institute of Chartered Accountants in England and Wales.
Peter Whiting
Non-Executive Director
Peter was appointed in June 2014 as Senior Independent Director, Chairman of the
Remuneration Committee and is a member of the Audit Committee and the Nomination
Committee. Peter has over twenty years of experience as an investment analyst, specialising
in the software and IT services sector. Peter joined UBS in 2000 and led the UK small and mid-
cap research team. Between 2007 and 2011 he was Chief Operating Officer of UBS European
Equity Research. One of his responsibilities during this period was the oversight of the graduate
recruitment, training and development programmes both for the Research business and the
Equities operation as a whole. Peter is also a Director of Microgen plc and MBA Polymers Inc.
Robin Taylor
Non-Executive Director
Robin was appointed in June 2014 and is Chairman of the Audit Committee and a member
of the Remuneration Committee and the Nomination Committee. He is a member of the
Institute of Chartered Accountants of Scotland. Robin is currently a Non-Executive Director of
EMIS Group plc and Fusionex International plc and was formerly Chief Financial Officer of main
market publicly listed companies Intec Telecom Systems plc, ITNET plc and JBA Holdings plc.
Prior to that, Robin held a variety of financial and general management roles in both Europe
and North America.
Michelle Senecal de Fonseca
Non-Executive Director
Michelle was appointed in January 2016 and is a member of the Audit Committee and
Remuneration Committee. Michelle has more than 25 years of experience in international
telecommunications and technology and, until the start of 2016, served as the global Director
of Cloud & Hosting Services at Vodafone, which she joined in July 2012. From 2007 to 2011
Michelle worked at the European Bank for Reconstruction and Development where she
managed the Telecom, Media and Technology banking team. Michelle is a cofounder and
board member of Women in Telecoms and Technology, a UK not-for-profit organisation,
and is also a global council member at Thunderbird School of Global Management in
Phoenix, Arizona.
34
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Governance
Corporate Governance Report
Chairman’s introduction
On behalf of the Board, I am pleased to introduce the Group’s Corporate Governance Report for the year ended
31 December 2015. Since the Group’s listing in 2014, the Board has been committed to ensuring appropriate standards
of governance are introduced and maintained throughout the Group. This report sets out the way the Group complies
with good corporate governance principles; it describes how the Board and its Committees work and also the Board’s
approach to risk management and internal control. I am delighted to welcome Michelle Senecal de Fonseca and David
Lister to the Board, their appointments will further strengthen the capabilities and experience of the Board. Michelle
joined the Board on 15 January 2016, whilst David’s appointment commences on 9 March 2016.
UK Corporate Governance Code
The Board is committed to the highest standards of Corporate Governance as set out in the UK Corporate Governance
Code 2014 (“the Code”). During the financial year 2015, the Company has complied with the Code other than in respect
of the following exceptions:
• A formal schedule of matters specifically reserved for the decision of the Board was adopted on 27 January 2015,
therefore was not in place for the whole year;
• The UK Corporate Governance Code recommends that, on appointment, the chairman of a company with a Premium
Listing on the Official List should meet the independence criteria set out in the UK Corporate Governance Code. Ivan
Martin joined the Board of Directors of FDM in July 2006 and became Non-Executive Chairman of the Group on 1
October 2006. Ivan does not meet the independence criteria set out in the UK Corporate Governance Code as he was a
shareholder of the Company in the three year period prior to the Company’s listing; the period specified by the Code for
not being a material shareholder. The Board decided in 2014 that in order to ensure maximum continuity and stability
in the Company’s transition from a privately owned company to a listed company, Ivan should remain as Non-Executive
Chairman of the Group because of the vast experience and knowledge that he brings to the FDM team. The Board
believes that it is still in the best interests of the Group that Ivan remains as Chairman;
• The Nomination Committee was established on 27 January 2015, therefore was not in place for the whole year. Further
information about the role and responsibilities of the Nomination Committee is set out in the Nomination Committee
report on page 45. The Nomination Committee did not carry out an effectiveness review during the year but plans to
do so in 2016.
The provisions of the Code applicable to listed Companies are divided into five parts as set out below:
1
Leadership
The role of the FDM Board
The Board is collectively responsible to the Company’s shareholders for the long-term success of the Company. The Board
meets regularly to review strategic, operational and financial matters. It approves the interim, preliminary and annual
financial statements, the annual budget and longer term forecasts, significant contracts and capital investment in addition
to reviewing the effectiveness of the internal control systems and business risks faced by the Group. Where appropriate, it
has delegated certain responsibilities to the Audit, Remuneration and Nomination Committees. The Committees comprise
the independent Non-Executive Directors (and in the case of the Nomination Committee, also Ivan Martin and Rod Flavell)
and play a key role in supporting the Board. Information is supplied to the Board in advance of meetings and the Chairman
ensures that all Directors are properly briefed on the matters being discussed.
The Board closely monitors management and its delivery of a sustainable and profitable business, ensuring it operates within
the appropriate risk-reward culture. The Group has established a core set of values, which the Board adheres to and promotes
throughout the Group. These values have helped to further the entrepreneurial culture within FDM, which has been critical in
promoting the continued success of the Group without encouraging excessive risk-taking.
35
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Corporate Governance Report
A schedule of formal matters reserved for the Board’s decision and approval is available on the Company’s website,
www.fdmgroup.com. These relate to matters of governance and include the following:
• Approving financial results and other financial, corporate and governance matters;
• Approving material contracts;
• Approving material capital expenditure;
• Approving Group strategy;
• Approving appointments to the Board;
• Determining dividend policy, as well as approving and recommending dividends as appropriate;
• Reviewing material litigation;
• Reviewing annually the effectiveness of internal control and the nature and extent of significant risks identified by
management and associated mitigation strategies; and
• Approving the annual budget.
Board decisions are usually by consensus at Board meetings. On occasion, decisions may be taken by a majority of Board
members. In the case of an equality of votes, FDM’s Articles of Association provide the Chairman with a casting vote.
Where appropriate, the Board has delegated authority to its committees.
Details of the number of meetings of the Board (including sub-committees at which only certain Directors are required to
attend) and committees and individual attendances by Directors are set out in the table below.
Number of meetings held
in 2015
Ivan Martin
Rod Flavell
Sheila Flavell
Mike McLaren
Andy Brown
Peter Whiting
Jonathan Brooks
(resigned 30 October 2015)
Robin Taylor
Board
meetings
attended
13
13/13
13/13
13/13
13/13
13/13
13/13
11/11
13/13
Audit
Committee
meetings
attended
Remuneration
Committee
meetings
attended
Nomination
Committee
meetings
attended
4
n/a1
n/a1,3
n/a1
n/a1,3
n/a1
4/4
3/3
4/4
5
n/a1, 2
n/a1
n/a1
n/a1
n/a1
5/5
4/4
5/5
1
1/1
1/1
n/a1
n/a1
n/a1
1/1
1/1
1/1
1 Not applicable, not a member of the Committee and not required to attend.
2
Ivan Martin attended one meeting of the Remuneration Committee.
3 Rod Flavell and Mike McLaren attended Audit Committee meetings by invitation, not as Committee members. Rod Flavell attended 3/4 Audit Committee
meetings and Mike McLaren attended 4/4 meetings during the year.
36
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Governance
Chairman, Chief Executive and Senior Independent Director
The roles of the Chairman and Chief Executive are separate, with a clear division of responsibilities between them; the
responsibility for this separation of duties rests formally with the Board.
As Chairman, Ivan Martin presides over the Board and is responsible for its leadership and overall effectiveness. In doing
so, he fosters and helps to maintain an effective working relationship between the Executive and Non-Executive Directors.
As Chief Executive, Rod Flavell has responsibility for the day-to-day management of the Company’s business and the
implementation and delivery of the Board’s strategy.
This separation of roles enhances the independent oversight of executive management by the Board and more closely
aligns the Board with shareholders. It also means that no one individual within the Group has unfettered powers of
decision making. The Directors’ powers are set out in the Company’s Articles of Association.
Peter Whiting is the Group’s Senior Independent Director. In performing this role, Peter provides shareholders with
someone to whom they can turn if ever they have concerns which they cannot address through the normal channels, for
example with the Chairman or Executive Directors. Peter is also available as an intermediary between his fellow Directors
and the Chairman.
Whilst there were no requests from Directors or shareholders for access to the Senior Independent Director during the
year, the role serves as an important check and balance in FDM’s governance process. In the fulfilment of his role Peter
ensures he maintains a thorough understanding of the views of the Company’s shareholders.
Role of the Non-Executive Directors
The Group’s current Non-Executive Directors have a broad and complementary mix of business skills, knowledge and
experience acquired across sectors and geographies. This allows them to provide strong, independent and external
perspectives to Board discussions, which complement the skills and experience of the Executive Directors. In turn, this
leads to a diversity of views being aired at Board meetings, robust and constructive debate and optimal decision-making.
At the same time, it also reduces the likelihood of any one perspective prevailing unduly. A key role performed by the
Non-Executive Directors is the scrutiny of executive management in meeting agreed objectives and monitoring the
reporting of performance. They also ensure that financial controls and systems of risk management are both rigorous
and appropriate for the needs of the business. Following the resignation of Jonathan Brooks during the year, the Board
is further strengthened with the appointment of Michelle Senecal de Fonseca on 15 January 2016 and David Lister with
effect from 9 March 2016.
Non-Executive Directors are appointed for specified terms, up to a maximum of three years, and reappointment is
not automatic. The terms and conditions of appointment of Non-Executive Directors, including the expected time
commitment, are available for inspection at the Company’s registered office.
During the year, the Board considered the independence of each of the Non-Executive Directors. In doing so, it concluded
that, with the exception of Ivan Martin as detailed in the Statement of Compliance, each Non-Executive Director was
independent of management and free from any relationship that could interfere with the exercise of their independent
judgement. The Board will regularly review the independence of each of the Non-Executive Directors.
37
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Corporate Governance Report
2
Board effectiveness
Composition of the Board
The Board currently comprises four Executive Directors and four Non-Executive Directors. Their biographies, including
information on prior experience are set out on pages 33 and 34.
The Group’s policy is to hire the best candidates for all positions at all levels throughout the business, irrespective of
gender, including candidates at Board level. Board composition is regularly reviewed to ensure that the balance of skills,
knowledge and experience of the Company’s Board remains appropriate to the business.
With Sheila Flavell as Chief Operating Officer, and Michelle Senecal de Fonseca as a Non-Executive Director, the number
of female Board members has increased to two (2014: one). Further information and statistics on gender diversity can
be found within the Corporate Social Responsibility report on page 30. The Board has not set any specific aspirations
in respect of gender diversity at Board level and supports fully the Code principles in respect of diversity. The Board
recognises the benefits of diversity, of which gender is one aspect, and it will continue to ensure that this is taken into
account when considering any particular appointment, whilst ensuring appointments are made on merit and ability to
enhance the performance of the business. Jonathan Brooks resigned from the Board on 30 October 2015. The Board is
of the view that the appointments of Michelle Senecal de Fonseca and David Lister will provide additional experience and
capabilities to strengthen the Board and support the Group’s growth plans and strategic objectives.
Conflict of interests
Procedures are in place for the disclosure by Directors of any interest that conflicts, or possibly may conflict, with the
Company’s interests and for the appropriate authorisation to be sought if a conflict arises, in accordance with the
Company’s Articles of Association.
In deciding whether to authorise a conflict or potential conflict of interest only non-interested Directors (i.e. those that
have no interest in the matter under consideration) will be able to take the relevant decision. In taking such a decision the
Directors must act in a way they consider, in good faith, will be most likely to promote the success of the Company and
may impose such limits or conditions as they think fit. The Board has reviewed the procedures in place and considers
that they operate effectively. There were no actual conflicts of interest which arose during the year under review or to the
date of this report.
Appointments to the Board
The Board recognises its responsibility for planning and progressive refreshing of the Board. There is a formal and
transparent procedure for the appointment of new directors, the primary responsibility for which is delegated to the
Nomination Committee. Further details of the work undertaken by the Committee during the 2015 financial year are
contained on pages 45 and 46.
Board commitment
The Board has established a policy permitting its Executive Directors to hold only one external Non-Executive Directorship,
subject to any possible conflict of interest.
This ensures that the Executive Directors retain sufficient time for and focus on the Company’s business, whilst allowing
them to gain external board exposure as part of their leadership development. Executive Directors are permitted to
retain any fees paid for such services.
Details of remuneration received by each of the Executive Directors for the year ended 31 December 2015 are shown in
the single figure table presented on page 57 of the Remuneration Report.
38
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Governance
While the Company does not have a similar policy for Non-Executive Directors, their key external commitments are reviewed
each year to ensure that they too have sufficient time commitment for the fulfilment of their Board responsibilities. Key
external commitments of the Board are included within their biographies on pages 33 and 34.
The Board considered the commitments of the Chairman and is satisfied that he has sufficient time to devote to his Board
responsibilities with FDM. However, the Board will keep his commitment under review as a matter of good governance.
Board induction and development
On appointment, each Director takes part in a tailored induction programme which is designed to give him or her an
understanding of the Company’s business, governance and stakeholders.
Elements of the programme include:
• Senior management briefings to provide a business overview, update on current trading conditions and strategic
commercial issues;
• Meetings with the Company’s key advisors and major shareholders, where necessary;
• Head Office site visit (the location of Board meetings are periodically rotated to ensure the Board members have
exposure to different sites and employees);
• Provision of a legal and regulatory memorandum and briefing on the duties of Directors of listed companies;
• Details of the Group corporate structure, Board and Committee structures and arrangements and key policies and
procedures; and
• The latest statutory financial reports and management accounts.
The Chairman, in conjunction with the Company Secretary, ensures that Directors are provided with updates on changes
in the legal and regulatory environment in which the Company operates. These are incorporated into the annual agenda
of the Board’s activities along with wider business and industry updates; the Chairman also keeps under review the
individual training needs of Board members. The Company’s principal external advisors provide updates to the Board,
at least annually, on the latest developments in their respective fields, and relevant update sessions are included in the
Board’s meetings. The Company Secretary presents corporate governance reports to the Board as appropriate, together
with any relevant technical guidance. In this way, each Director keeps their skills and knowledge current so they remain
competent in fulfilling their role both on the Board and on any Committee of which they are a member. Training for
Directors is available as required and is provided by way of external courses.
Information and support
The Board meets regularly throughout the year and agrees a forward calendar of matters that it wishes to discuss at
each meeting. Standing items, including operational and financial reviews and Committee updates are considered
at each scheduled Board meeting, with unplanned items such as commercial or property-related decisions being
considered as and when required. The Chairman, in conjunction with the Chief Executive, plans the agenda for each
Board meeting and ensures that supporting papers are clear, accurate, timely and of sufficient quality to enable the
Board to discharge its duties.
39
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Corporate Governance Report
Specific areas of focus by the Board during the year included:
Strategy
• Group strategy update
• Separate consideration of strategic components, including graduate recruitment, IT and
international expansion
Operational
• Capital expenditure (including approval of new offices in Leeds, Glasgow, Hong Kong and
Toronto)
Financial
• Monthly trading statements
• Business updates from the UK, North America, EMEA and APAC management teams
• Full year and half year results
• Group budget and two year forecasts
Risk
• Group risk register
Governance
• Matters reserved for the Board
• Appointment of Nomination Committee and approval of its terms of reference
• Consideration of Board diversity
• Board effectiveness review
• Approved viability period and statement
• Going concern
Investors
• Investor Relations Strategy
• Markets – received market update from Investec
All Board Directors have access to the Company Secretary, who advises them on Board and governance matters. As well
as the support of the Company Secretary, there is a procedure in place for any Director to take independent external
professional advice at the Company’s expense in the furtherance of their duties, where considered necessary.
Board evaluation
A formal evaluation of the effectiveness of the Board was carried out during the year. The evaluation was carried out
internally and led by the Chairman. All Directors completed an evaluation questionnaire, followed up with one-to-one
meetings with the Chairman. The questionnaire covered a broad range of subjects, including board meeting agendas;
frequency of meetings; risk; strategy; board composition and member performance; and other challenges faced by the
Board and how those are managed.
Audit Committee and Remuneration Committee effectiveness were also assessed during the year in the same way as
outlined above. The Nomination Committee effectiveness review will be carried out in 2016.
40
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Governance
There was general agreement that, overall, the Board and its Committees continued to operate effectively throughout
the period. Board members’ experience remains a key strength, notwithstanding that it could be bolstered further with
additional member(s) with relevant experience which the Board has acted upon by recruiting two new Non-Executive
Directors. It was noted that interaction with regional and international management teams, particularly in Germany, could
be enhanced. An action plan has been put in place following the evaluation process to address this and other findings.
Re-election of Directors at the 2016 Annual General Meeting
The Company’s Articles of Association require that any newly appointed Non-Executive Directors retire at the Annual
General Meeting (“AGM”) and offer themselves for re-election. Accordingly, Michelle Senecal de Fonseca who was
appointed to the Board as a Non-Executive Director since the previous AGM and David Lister who joins the Board on 9
March 2016, will be retiring and standing for re-election at the AGM this year. In respect of existing directors, the Articles
of Association require that such Directors only offer themselves for re-election at intervals of no more than three years.
As all of the Directors (other than the two Non-Executive Directors referred to above) offered themselves for re-election
at the previous AGM, none of those Directors are required to stand for re-election this year. However, the Board is of
the view that it is more appropriate that a proportion of the Directors retire and seek re-election each year. As such Rod
Flavell, Peter Whiting and Robin Taylor will also retire at the AGM and offer themselves for re-election.
Having received advice from the Nomination Committee, the Board and the Chairman are satisfied that each Director is
qualified for re-election by virtue of their skills, experience and commitment to the Board.
3
Accountability
Financial and Business Reporting
In its reporting to shareholders, the Board recognises its responsibility to present a fair, balanced and understandable
assessment of the Group’s position and prospects. The Directors consider this Annual Report, taken as a whole, to be
fair, balanced, and understandable and that it provides the information necessary for shareholders to assess the Group’s
performance and strategy.
Risk management and internal control
The Board is ultimately responsible for maintaining sound risk management and internal control systems.
The Group’s risk management systems and internal control systems are designed to meet the Group’s needs and to manage
the risks to which it is exposed, including the risks of failure to achieve business objectives and of material misstatement
or loss. However such risks cannot be eliminated. The Group’s systems can only provide reasonable but not absolute
assurance. They can never completely protect against such factors as unforeseeable events, human fallibility or fraud.
The Board has established a continuous process for identifying, evaluating and managing the significant risks faced by the
Group (in accordance with the revised Turnbull Guidance). The Board’s view of the Group’s key risks and how the Group
seeks to manage those risks is set out on pages 18 to 22.
The Board regularly reviews the effectiveness of the Group’s internal controls which have been in place from the start
of the year to the date of approval of this report and believes that it is in accordance with the guidance ‘Internal Control:
Revised Guidance for Directors on the Combined Code’.
The key elements of the system of internal controls include:
• The Board meets on a regular basis and is responsible for the operational strategy, reviewing operating results,
identification and mitigation of risks and communication and application of the Group’s policies and procedures.
Where appropriate, matters are reported to the Board;
41
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Corporate Governance Report
• The Group has a clear organisational structure with defined responsibilities and accountabilities;
• Regular reports are made available to the Board on key developments, financial performance against budget and operational
issues in the business;
• Operational and financial controls and procedures are in place which include authorisation limits for expenditure, sales contracts
and signing authorities, IT application controls, organisation structure, segregation of duties and reviews by management. In
addition to these controls, there is a set of group-wide policies on procedures addressing non-quantifiable risks. These include the
Group’s code of conduct and ethics, anti-corruption policy and other arrangements;
• Centralised finance and support functions exist;
• A formal budgeting process occurs annually. The budgets and forecasts are reviewed, approved and monitored by the Board;
• Regular meetings occur between the Executive Board and Senior Management team; and
• Increased scope external audits are performed on specific areas of the business.
The Board, with the assistance of the Audit Committee, carried out an annual assessment of the effectiveness of the
Group’s risk management and internal control system during the reporting period. During the course of its review, the
Board did not identify or hear of any failings or weaknesses that it determined to be significant, which are not currently
being addressed.
The Audit Committee
The composition and work of the Audit Committee, including its relationship with the external auditors, is set out in the
Audit Committee Report on pages 47 to 51.
4
Remuneration
The Company’s policy on remuneration and details of the remuneration of each Director are given in the Remuneration
Report on pages 53 to 73.
5
Relationship with shareholders
In order to maintain dialogue with institutional shareholders, the Chief Executive Officer and Chief Financial Officer meet
with the Company’s major shareholders following interim and final results announcements, and otherwise as appropriate.
The Company uses the AGM as an opportunity to communicate with its shareholders and welcomes their participation.
Shareholders who attend the AGM will have the opportunity to ask questions and all Directors are expected to be available
to take questions.
Notice of the AGM, which will be held at 10.30am on 28 April 2016 at 5 New Street Square, London EC4A 3TW, is enclosed
with this report. In accordance with the Companies Act 2006, the Notice of AGM will be sent to shareholders at least 20
working days before the meeting and the notice for general meetings will be sent to shareholders at least 14 days before
each general meeting and will include details of the resolutions and the explanatory notes relating to them thereto.
42
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Governance
Corporate Governance Report
The Board proposes separate resolutions for each issue and proxy forms allow shareholders who are unable to attend
the AGM (or general meeting, as applicable) to vote for or against or to withhold their vote on each resolution. As soon as
practical following the conclusion of the AGM (or general meeting, as applicable), the proxy votes cast, including details of
votes withheld, shall be announced to the London Stock Exchange via regulatory News Service and published on our website.
The Company’s Articles of Association can only be amended by special resolution approved by the Company’s
shareholders.
The Group’s website (www.fdmgroup.com) is the primary source of information on the Group.
The Corporate Governance Report was approved by the Board on 8 March 2016 and signed on its behalf by:
Ivan Martin
Chairman
8 March 2016
43
FDM Group (Holdings) plcAnnual Report and Accounts 2015
The Group’s current
Non-Executive
Directors have a broad
and complementary
mix of business
skills, knowledge and
experience acquired
across sectors and
geographies
44
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Governance
Nomination Committee Report
Chairman’s introduction
I am pleased to present the report of the Nomination Committee for the year
ended 31 December 2015. Information on the activities of the Committee, including
the details of the process leading to the appointment of two new Non-Executive
Directors, is set out in this report.
I am delighted to welcome Michelle Senecal de Fonseca to the Board and am
very confident that Michelle will bring a new perspective to the Board based on
her previous professional experience. I am also delighted that David Lister will be
joining the Board on 9 March 2016.
Committee composition
Ivan Martin (Chairman)
Rod Flavell
Robin Taylor
Peter Whiting
Role of the Nomination Committee
The role of the Committee is summarised below and detailed in full in its terms of reference, a copy of which is available
on the Group’s website (www.fdmgroup.com).
The main responsibilities of the Committee are to:
• Review the composition of the Board and its Committees including its balance of skills and experience and make
recommendations to the Board with regard to any changes;
• Lead the process for Board appointments and recommend new appointments to the Board for approval; and
• Consider succession for Directors and other senior executives.
Committee activities during the year
The Committee meets when necessary and was convened once during the financial year. Specific matters considered at
the meeting included: Review of Board composition; Review of Committee’s terms of reference; and consideration of the
appointment of additional Non-Executive Directors (see below).
Non-Executive Director appointment process
The Committee’s key focus during the year was overseeing the process for the appointment of two new Non-Executive
Directors. Prior to Jonathan Brooks’ resignation, the Nomination Committee had started the process of recruiting
one additional Non-Executive Director, but widened the search to two Non-Executive Directors following Jonathan’s
resignation. The Committee set out the types of skills and attributes it envisaged the new Non-Executives would have,
which it communicated to two recruitment specialists, Sapphire Partners and Gillamor Stephens. Sapphire Partners and
Gillamor Stephens were selected following a tender process and have no other connection to the Group.
45
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Nomination Committee Report
Following the identification of potential candidates for the role by Sapphire Partners and Gillamor Stephens,
all Committee members interviewed the potential candidates with the final short list of candidates being
interviewed by the Executive Directors. The Board was delighted that Michelle Senecal de Fonseca and David
Lister accepted appointments to the Board, Michelle on 15 January 2016 and David with effect from 9 March 2016.
The Committee and the Board have sought to recruit the best candidates to promote the long term success of the Group
based on merit and with due regard for the benefits of diversity on the Board. The appointment of Michelle Senecal de
Fonseca increases the number of female Board members to two. Further information regarding Board diversity can be
found on page 38.
Looking ahead
The focus of the Committee in 2015 was very much the appointment of new Non-Executive Directors. In 2016, the
Committee will continue to assess the Board composition and will consider in greater detail succession planning for the
Board over the short, medium and longer terms. The Committee also plans to carry out an effectiveness review.
Ivan Martin
Chairman
8 March 2016
46
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Governance
Governance
Audit Committee Report
Chairman’s introduction
As Chairman of the Audit Committee, I am pleased to present our report for
the year ended 31 December 2015. The report is intended to give a meaningful
insight into the workings of the Committee during the financial year in order to
demonstrate how we have performed our responsibilities in relation to financial
reporting, internal controls and risk management and in relation to the external
auditors.
The Committee has supported the Board fully in addressing all of the requirements
of the new UK Corporate Governance Code (issued September 2014) with a
particular focus on risk identification and ensuring effective mitigating controls are
in place. Looking forward to 2016, in addition to undertaking its usual business,
the Committee will continue to look at ways in which the Group’s internal control
environment can be improved as the Group’s international operations continue to
expand.
Role of the Audit Committee
The Audit Committee is appointed by, and reports to, the Board. The Committee’s principal role is to assist the Board in
carrying out its oversight responsibilities in relation to financial reporting, internal control and risk management and in
maintaining an appropriate relationship with the Group’s auditors. The Committee sets its own agenda, in addition to
routine matters and those suggested by the main Board. More details on the Committee’s role and responsibilities can
be found in the Committee’s terms of reference which are available in the Governance section of the Company’s website
at www.fdmgroup.com. The terms of reference are reviewed annually.
Membership
The members of the Committee, who are all Non-Executive Directors of the Company, are Robin Taylor (Chairman),
Peter Whiting and Michelle Senecal de Fonseca. The Code requires that at least one member of the Committee should
have recent and relevant financial experience. The Chairman of the Committee, who is a chartered accountant with
considerable financial experience in a public company environment, fulfils this requirement. Peter Whiting and Michelle
Senecal de Fonseca have experience in financial matters through their other business activities.
Jonathan Brooks resigned from the Board and the Audit Committee on 30 October 2015. Michelle Senecal de Fonseca
was appointed to the Board and the Audit Committee on 15 January 2016. David Lister will join the Board and Audit
Committee on 9 March 2016.
Meetings
The Committee discharges its responsibilities through a series of scheduled meetings during the year, the agenda of
each being linked to events in the financial calendar of the Group. The Committee met four times during the financial
year and all members were in attendance at all meetings during their tenure.
During the year, the Group Chairman, Chief Executive Officer, Chief Financial Officer, Financial Controller and other senior
management, were invited to attend Committee meetings where appropriate in order to ensure that the Committee was
fully informed of events and developments within the business and to reinforce a strong risk management culture. The
Group’s auditors, PricewaterhouseCoopers LLP (“PwC”), attended all four Committee meetings during the financial year.
47
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Audit Committee Report
Activity
Principal activities during the year
Since the beginning of the financial year, the Committee undertook the following activities:
March 2015
• Reviewed and recommended the Preliminary Statements and Annual Report (including appropriateness of the
going concern basis of accounting) to the Board for approval
• Reviewed PwC’s reports to the Audit Committee
• Approved the annual Audit Committee programme for the remainder of 2015
• Reviewed the Group’s risk register and related controls
• Completed Audit Committee and External Auditor effectiveness reviews
June 2015
• Reviewed PwC’s interim review scope
• Considered PwC’s independence
• Reviewed Audit Committee Terms of Reference
• Reviewed processes governing signature of contracts in overseas offices
• Received a presentation from senior management in respect of planned IT systems improvements and upgrades
July 2015
• Reviewed PwC’s report to the Audit Committee (interim review)
• Reviewed and recommended the Interim Statement to the Board for approval
• Reviewed and approved PwC’s audit fees for the year ended 31 December 2015
December 2015
• Reviewed PwC’s audit plan
• Reviewed the Group’s risk register and related controls
• Reviewed the draft viability and going concern statements
• Reviewed the whistleblowing policy (annual review)
• Reviewed the anti-bribery policy (annual review)
• Received an IT Security update following a comprehensive presentation to the full Board in September
• Reviewed the Group’s updated accounting policies manual
• Considered the requirement for an internal audit function
Looking ahead
In 2015, the Committee benefited from a rolling series of presentations to the Board by senior members from Group and
regional management. For the 2016 financial year and with a view to maximising its effectiveness, the Committee plans
to avail itself of regular management briefings which will include the appraisal and management of key risks.
48
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Governance
Significant financial reporting items
The Audit Committee pays particular attention to matters it considers important by virtue of their potential impact on
the Group’s results or the level of estimates and judgements involved in their application to the Consolidated Financial
Statements. To this end, the Committee receives reports from the Chief Financial Officer and the Group’s external auditors,
PwC. The Committee has considered all significant estimates and judgements identified in note 4 to the Consolidated
Financial Statements.
The main areas of focus during the year are set out below:
Area of focus
Revenue
How addressed
Revenue in respect of non-receipted timesheets is accrued
at a percentage of the estimated contract value where
timesheets have not been received at the cut-off date
from Mounties or contractors.
The Committee discussed and reviewed revenue
recognition in detail with management and PwC and
remains satisfied that Group accounting policies with
regard to revenue recognition have been adhered to and
that judgements remain appropriate.
Share-based payments
During the year, the Company granted awards under the
FDM Performance Share Plan (the “PSP”). Associated with
accounting for these awards are judgements relating to
the number of shares which will vest.
The Committee discussed and reviewed the key
assumptions and judgements applied in calculating the
share-based payment charge with the Board and are
satisfied that they are appropriate.
Going concern and viability
The Audit Committee has considered the “Going
Concern” basis and viability period assumed within the
financial statements. The underlying assumptions, the
reasonableness of those assumptions and the headroom/
funding facilities available were considered as part of the
Audit Committee’s review. The review also considered the
impact of a range of sensitivities on the key assumptions.
The Committee is satisfied with the judgements in these
areas and that sufficient work was performed to enable
the Audit Committee to conclude on the adoption of
the going concern basis. The Committee reviewed and
concurred with the reasonableness of the viability period
included within the viability statement on page 23.
Internal control and risk management
The key elements of the Group’s internal control framework and procedures are set out on pages 41 and 42.
A review of the Group’s system of risk management begins on page 18.
As noted on page 18, the Board as a whole deals directly with the risk management process. The Committee proactively
supports the work of the Board in respect of risk and during the year it separately identified and progressed a number
of risk related projects. The Audit Committee regularly receives reports from management and PwC which enable it to
effectively review and assess the Group’s internal control environment.
49
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Audit Committee Report
External auditor
Both the Committee and the Board keep the external auditor’s independence under close scrutiny. PwC is the Group’s
current external auditor and was originally appointed in 2013. The Committee is satisfied with the effectiveness of the
audit and the Group is not required under the CMA order or EU Regulation to conduct a tender before the year ending
31 December 2023. Any recommendation relating to the re-appointment of the external auditors will continue to be the
subject of rigorous review each year.
Auditor independence and objectivity
The Audit Committee monitors the fees paid to the external auditors for non-audit work and delegates the authority
for approval of such work to the Chief Financial Officer where the level of fees involved is not material. The Group
receives a formal statement of independence and objectivity from PwC each year and obtains quotes in a competitive
tender for non-audit work performed. An analysis of non-audit fees in the year is provided in note 7 to the Consolidated
Financial Statements. Any significant non-audit work will, in future years, continue to require prior approval from the
Audit Committee. The Group does engage other independent accounting firms to perform tax consulting work and other
assignments to further ensure the independence and objectivity of the external auditors is not compromised.
Audit partners are rotated every five years. The current audit partner is Jaskamal Sarai. He replaced Alan Kinnear, who
stepped down from his role at the end of the 2014 financial year audit, following his retirement from PwC.
Effectiveness of external auditor
During the year, the Committee reviewed the effectiveness and independence of the external auditor, taking into account
the input from management, consideration of responses to questions from the Committee, the audit approach and the
audit findings reported to the Committee, including conducting one to one meetings with the audit partner. Based on
this, the Committee concluded that:
• the overall audit approach, materiality, threshold and areas of audit focus were appropriate to the business; and
• the audit team possessed the necessary quality, expertise and experience to provide an independent and objective
audit.
Internal audit
The Audit Committee regularly considers the need for the Group to have its own internal audit function and did so again
at its December Board meeting. The Committee is satisfied that no separate internal audit function is required as the
business model lacks complexity, significant risks are managed and controlled and a formal governance model is in place
ensuring the proper establishment of goals which are measured and managed closely by executive management. In
addition, the primary accounting and financial activities are centralised in a single location.
However the Committee plans to engage an independent firm of accountants to conduct additional reviews on systems,
controls and processes and with particular focus on overseas jurisdictions.
The Audit Committee will continue to review the need for the Group to have its own internal audit function annually.
Whistleblowing
A Whistleblowing policy enables employees to report concerns on matters affecting the Group or their employment,
without fear of recrimination.
The Committee reviewed the Group’s Whistleblowing policy and procedures in December 2015 and is satisfied that they
are appropriate to the size and scale of the Group.
50
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Governance
Audit Committee Report
Anti-bribery and corruption policy
The Group has a zero-tolerance policy to bribery and corruption. The Group’s Anti-Bribery and Corruption Policy is issued
to all employees. The Committee reviewed the effectiveness of the Policy in December 2015 and concluded that it was
sufficient for managing the anti-bribery and corruption risks faced by the Group.
Audit Committee effectiveness
The Committee last considered its own effectiveness in discharging its duties in March 2015. The effectiveness review was
carried out using a questionnaire which was completed by each member of the Committee together with a comparison
against the Committee’s terms of reference and general audit committee best practice. The Committee is satisfied that its
performance during the previous financial year was effective. Details of the main activities of the Committee and its role
and responsibilities have been detailed earlier in this report.
Robin Taylor
Chairman of the Audit Committee
8 March 2016
51
FDM Group (Holdings) plcAnnual Report and Accounts 2015
During the year, the
Company granted
awards under the
FDM Performance
Share Plan
52
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Governance
Remuneration Report
Statement from the Chairman of the
Remuneration Committee
On behalf of the Board, I am pleased to present our Remuneration Report for the year
ended 31 December 2015. This Report is presented in two sections:
• The Annual Report on Remuneration – this provides details of the amounts
earned by Directors in respect of the year ended 31 December 2015 and how
the Directors’ Remuneration Policy approved at the 2015 AGM will be operated
for the year commencing 1 January 2016. This will be subject to an advisory vote
at the 2016 AGM; and
• The Directors’ Remuneration Policy – this sets out the remuneration policy for
Directors approved by shareholders at the 2015 AGM. As noted below, we do not
propose to seek shareholder approval for any revisions to the policy, which will
continue to apply for 2016.
Consideration by the Directors of matters relating to Directors’ remuneration
The Committee comprises Peter Whiting (Chairman), Robin Taylor and Michelle Senecal de Fonseca. Jonathan Brooks was
a member of the Committee until his resignation on 30 October 2015. David Lister will join the Board and Remuneration
Committee on 9 March 2016. No Directors are involved in or present for discussions about their own remuneration.
The role of the Committee is to:
• Determine the Company’s remuneration policy for all Directors and the Chairman;
• Review and determine remuneration and incentive packages for each of the Company’s Executive Directors;
• Operate the Company’s incentive plans in line with the policy report and various plan rules; and
• Ensure it is kept abreast on issues affecting all aspects of executive remuneration.
The full Remuneration Committee terms of reference can be found on the Company’s website.
Our approach to remuneration and its link to our strategy
In 2014 in connection with Admission, the Remuneration Committee formulated a policy in respect of Executive Directors’
remuneration to ensure that the policy is aligned with best practice while continuing to enable the Company to attract the
right calibre of Executives and promote the long term success of the Company. I was delighted that the policy was strongly
supported by shareholders at the 2015 AGM, with over 98% of votes cast in favour of it. The policy is set out on pages 64 to
73 and took effect from the 2015 AGM, although in practice was applied throughout the year. As a Committee, we believe
that policy remains appropriate and, accordingly, it will continue to apply for 2016; we have set out in the Annual Report
on Remuneration on page 61 how we propose to implement the policy in 2016.
Our reward strategy, and the way in which we implement it, is driven by our overall strategy for the Company. The table
opposite illustrates how elements of remuneration are linked to that overall strategy.
53
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Remuneration Report
Our overall strategy
Our reward strategy
Our strategy: we aim to deliver customer led,
sustainable profitable growth on a consistant
basis
Our KPIs and key financial milestones
Our vision and values: We are committed to
our people
Our remuneration strategy is designed to promote the long term
success of the Company. Long term performance is measured by the
three year EPS performance metrics applying to our Performance
Share Plan (“PSP“). Performance targets are set so that maximum
awards can only be earned for the achievement of stretching levels
of performance.
We apply an underpin to our PSP awards so that vesting is subject to
an assessment of overall financial performance.
Mountie revenue, profitability and earnings per share are all key
performance indicators for the company. We reflect these in the
remuneration strategy as performance measures for the annual
bonus and PSP awards.
Employee share ownership is fundamental to our culture and
reflected in the wide participation in our share incentive plans. In
2015 we were able to extend participation in our PSP to employees
below Board level.
Alignment: Our Executive Directors’ interests
are aligned with the
interests of other
shareholders
All our Executive Directors have significant shareholdings in the
Company, aligning their interests with those of other shareholders.
We further align our Executive Directors and other shareholders
by structuring the remuneration package so that a substantial
proportion of the maximum opportunity is based on achieving
stretching performance conditions.
I maintain contact as required with the principal shareholders of the Company about remuneration to ensure that
interests are aligned so far as is practicable.
Remuneration decisions in respect of the year ended 31 December 2015
The year commencing 1 January 2015 was the Company’s first full year as a listed company and in which remuneration
arrangements for the Executive Directors were determined in accordance with the shareholder approved Directors’
Remuneration Policy.
The annual bonus earned by the Executive Directors during 2015 was determined by the Committee based on financial
performance relative to full-year targets, specifically group pre-tax profit and Mountie revenue. Bonuses earned by the
Executive Directors in respect of 2015 were 82.3% of salary, reflecting the strong performance by the Group during 2015
as detailed in the Strategic Report. Further details of the annual bonus outturn are included in the Annual Report on
Remuneration on page 58.
No long term incentives vested by reference to performance in 2015. However, on 20 April 2015 the first awards were
made under the Company’s 2014 PSP. These awards are in respect of the 2015 – 2017 performance period and incentivise
Executive Directors and employees to deliver challenging three-year adjusted earnings per share growth targets over this
period. Details of the awards granted to Executive Directors are included in the Annual Report on Remuneration on page
60. Although the Directors’ remuneration policy as approved by shareholders enables us to grant awards at the level of
up to 100% of salary, the 2015 awards to the Executive Directors were scaled back to 50,000 shares each to enable the
grant of awards to employees below the Board. Accordingly, in line with our culture of encouraging employee share
ownership and incentivising our colleagues to deliver increased shareholder value, in 2015 we extended participation in
the PSP to employees below Board level.
54
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Governance
Remuneration Report
Statement from the Chairman of the Remuneration Committee (continued)
Our Executive Directors’ salaries were increased in connection with Admission, and those salaries continued to apply for
the whole of 2015.
Executive Directors’ remuneration in 2016
The Committee has approved a 5% increase to the base salary levels for all Executive Directors with effect from 1
January 2016. Since these salaries were last reviewed at the time of Admission, this is equivalent to an annual increase
of 3.3%, which is within the range of increases awarded to the wider workforce. The Committee remains satisfied that
they represent competitive, though not excessive, salaries for a company of the size and complexity of FDM, particularly
taking into account the growth of the business as a whole since Admission. Mike McLaren’s base salary was subject to
an additional £30,000 increase (to which the same percentage increase was applied) to reflect the increased complexity
of his role, particularly given the rates of growth experienced in overseas territories, in recognition of his performance
and development within the role and in the context of market rates for CFOs in other companies of a similar size and
complexity, with the result that his salary is aligned with the rest of the executive team at FDM. The metrics in respect
of bonuses and the targets and vesting schedule in respect of the PSP will be unchanged in 2016 compared with 2015.
Feedback
We always welcome feedback from shareholders on any aspect of our Directors’ remuneration and will continue to
monitor our remuneration policy to ensure it remains aligned to the business strategy and delivery of shareholder value.
Peter Whiting
Chairman of the Remuneration Committee
8 March 2016
55
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Employee share
ownership is
fundamental to
our culture and
reflected in the wide
participation in our
share incentive plans
56
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Governance
Annual Report on Remuneration
Audited Section
The Audited Section of this report comprises only the following sections:
• Single figure table;
• Annual bonus for 2015;
• Long term incentive awards vesting in 2015;
• Total pension entitlements;
• Payments made to former Directors during the year;
• Payments for loss of office made during the year; and
• Statement of Directors’ shareholding and share
interests.
Single figure table
The table below details the total remuneration receivable by each Director for the financial years ended 31 December
2015 and 31 December 2014. Where necessary, further explanation of the values provided are included in the notes to
the table or the additional information that follows it in relation to the annual bonus and Long Term Incentives (“LTI“)
vesting in respect of performance in 2015.
Salary
and fees1
£000
Benefits
£000
Annual
bonus
£000
Long term
incentives
£000
Pension
£000
Other2
£000
Total
remuneration
£000
Executive Directors
Rod Flavell
Sheila Flavell
Mike McLaren
Andy Brown
2015
2014
2015
2014
2015
2014
2015
2014
Non-Executive Directors
Ivan Martin
Peter Whiting
2015
2014
2015
2014
Jonathan Brooks3
2015
Robin Taylor
John Hartz4
Richard Swann4
2014
2015
2014
2015
2014
2015
2014
350.0
335.9
260.0
244.3
220.0
200.6
260.0
244.3
122.5
108.4
45.0
23.7
37.5
23.7
40.8
21.1
–
–
–
–
19.5
19.3
13.2
20.8
13.1
13.1
13.4
13.2
–
–
–
–
–
–
–
–
–
–
–
–
288.1
153.0
214.0
111.6
181.1
92.0
214.0
111.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
10.5
10.0
7.8
–
6.7
6.3
7.9
8.1
–
–
–
–
–
–
–
–
–
–
–
–
–
140.3
–
140.3
–
–
–
140.3
–
–
–
–
–
–
–
–
–
–
–
–
668.1
658.5
495.0
517.0
420.9
312.0
495.3
517.5
122.5
108.4
45.0
23.7
37.5
23.7
40.8
21.1
–
–
–
–
1 The Executive Directors’ salaries were reviewed in connection with Admission. As disclosed in the 2014 Directors’ Remuneration Report, the salaries
that applied from Admission on 20 June 2014, as set out in the Prospectus, continued to apply in 2015. The increase in the Executive Directors’ salaries
between 2014 and 2015 shown in the above table is attributable to the 2014 salaries being calculated by reference to the pre-Admission salary in respect
of part of the year.
2 Comprises equity shares awarded during the period.
3 Comprises fees until his date of resignation on 30 October 2015.
4 John Hartz and Richard Swann received no remuneration from the Group. In 2015 there were no fees charged by Inflexion Private Equity LLP for their
services as Directors (2014: £42,500) as both Directors had resigned on 16 June 2014.
57
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Remuneration Report
The figures in the single figure table on the previous page are derived from the following:
Salary and fees
Benefits
Annual bonus
The total salaries and fees paid in respect of that year. John Hartz and Richard
Swann served as Directors until 16 June 2014 and the Company was billed in
respect of their fees and expenses by Inflexion Private Equity LLP.
Value of benefits received in the year, comprising private medical insurance and
car allowance.
The cash value of the bonuses earned in respect of the financial year, both pre and
post Admission in respect of 2014.
Long term incentives (“LTI”)
The value of LTI awards that vested in respect of that year (£nil for 2015 and 2014).
Pension
Other
The cash value of Company pension contributions paid on behalf of the Executive
Directors as part of the Company’s defined contribution scheme.
The value of the Joint Share Ownership Plan (“JSOP”) shares that were transferred
on Admission. These shares are valued at a price of £2.87, the offer price at
Admission.
In 2014, during the Admission process, some of the Directors received payment from the selling shareholders for
services provided in relation to realising their investment. As these services were not made for the benefit of or paid
by the Company, the remuneration is not disclosed in this report, nor is it shown as an expense in the Group’s financial
statements.
Annual bonus for 2015
Each Executive Director’s annual bonus opportunity for 2015 was based on an adjusted profit before tax target (governing
80% of the opportunity) and a Mountie revenue target (governing 20% of the opportunity). The targets set are detailed in
the table below, along with performance against those targets.
For the adjusted profit before tax element of the bonus, a threshold performance level was set at which the bonus paid
(20% of the maximum for that element of the bonus) would have been self-funding by reference to a target level of
performance of £28.4 million. While the remuneration policy permits a threshold payment of 20% of maximum payable,
the Committee decided not to set such a target concerning Mountie revenue. Had the target Mountie revenue of £112.0
million not been achieved, no bonus would have been payable concerning this metric.
Threshold
(20% of
maximum
payable)
Target
(50% of
maximum
payable)
Stretch
(100% of
maximum
payable)
Bonus earned
(percentage
of maximum
payable)
Actual
performance
Weighting
Adjusted profit before
tax and before bonus
Mountie revenue
80%
20%
n/a
£28.4m
£31.9m
£30.4m1
57.7%
n/a
£112.0m
£120.0m
£119.4m
92.6%
1 The adjusted profit before tax and before bonus figure of £30.4 million reflects the adjusted profit before tax and after bonus figure of £30.1 million.
Accordingly, each Executive Director earned a bonus equal to 82.3% of his/her salary in respect of 2015.
58
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Governance
Annual Report on Remuneration (continued)
Long term incentive awards vesting in 2015
No long term incentives vested in respect of a performance period ending during the year.
Total pension entitlements
Executive Directors participate in a defined contribution scheme to which the Company contributes an amount equivalent
to 3% of salary.
Payments made to former Directors during the year
No payments were made in the year to any former Director of the Company.
Payments for loss of office made during the year
No payments for loss of office were made in the year to any Director of the Company.
Statement of Directors’ shareholding and share interests
The current Executive Directors have shareholdings with values significantly in excess of two times’ salary, reflecting
the Company’s historic culture of share ownership and entrepreneurialism. The Committee has also adopted a formal
shareholding guideline of 100% of salary; while not relevant for the existing Directors given their significant holdings, the
Committee will keep the level of this guideline under review. Newly appointed Executive Directors will normally be given
three years to reach the shareholding guideline, subject to their individual circumstances.
The interests as at 31 December 20151 were as follows:
Ordinary shares
as at
31 December 2015
Ordinary shares
value as at
31 December 2015
Value
Ordinary shares as
at 8 March 2016
Number
£0002
(x base salary3)
Number
Executive Directors
Rod Flavell
Sheila Flavell
Mike McLaren
Andy Brown
Non-Executive Directors
Ivan Martin
Robin Taylor
Peter Whiting
Former Directors
Jonathan Brooks
8,201,255
8,201,254
499,295
4,540,801
–
5,226
10,453
–
42,852
42,852
2,609
23,726
–
27
55
–
122.4
164.8
11.9
91.3
–
0.7
1.2
–
8,201,255
8,201,254
499,295
4,540,801
–
5,226
10,453
–
1
In the case of Jonathan Brooks, the number and value of shares are stated as at 30 October 2015, the date on which he stepped down from the Board.
2 Calculated based on the closing share price of 522.5 pence on 31 December 2015.
3 Calculated on base salary at 31 December 2015.
59
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Remuneration Report
There have been no changes in the Directors’ holdings in the share capital of the Company between 31 December 2015
and the date the financial statements were approved.
Each Executive Director also holds awards under the Company’s PSP. All awards held by the Executive Directors were
granted in 2015 and remain unvested, with vesting subject to the satisfaction of performance conditions. Details of the
awards granted are disclosed below.
Performance Share Plan awards granted in 2015
Each Executive Director was granted awards under the Company’s 2014 PSP on 20 April 2015 as set out below, which
enables the Executive Director to benefit from the value of up to 50,000 shares subject to the satisfaction of performance
conditions based on compound annual growth in adjusted earnings per share.
Each Executive Director was granted an award over the same number of shares.
Award1
PSP award
Tax qualifying option
Number of shares
Exercise price per share
Face value of award
40,937
9,063
£0.01
£3.31
£165,500
1 Each award was granted as an “Approved PSP” award to take account of potential tax advantages for the participant and Company. In addition to the PSP
award and tax qualifying option, each Executive Director was granted a “Linked Award” under the PSP which is principally to fund the exercise price of
the option. If the tax qualifying option is exercised at a gain, the Linked Award will be exercisable over such number of shares as have a market value at
the date of exercise equal to the aggregate exercise price of the tax qualifying option. If the tax qualifying option is not capable of exercise at a gain and
is released, the Linked Award may be exercised in respect of up to 9,063 shares, subject to the satisfaction of the applicable performance conditions.
The face value of the award is calculated by multiplying the number of shares subject to the tax qualifying option and
the PSP award in total (50,000) by £3.31 being the average share price over the three business days preceding the date
of grant which was used to determine the exercise price of the tax qualifying option. As the Linked Award is principally to
fund the exercise price of the tax qualifying option, it is not taken into account for these purposes. In practice, the value
of the award is the same as if only a PSP award over 50,000 shares was awarded.
The awards will vest based on compound annual EPS growth in line with the following schedule:
Compound annual growth in adjusted2 EPS
Percentage of the award that will vest
10% p.a.
25%
Greater than 10% p.a. but less than 17% p.a.
Determined on a straight line basis between 25% and 100%
17% p.a. or greater
100%
2 The Committee has discretion to adjust EPS for the purposes of the PSP where it considers it appropriate to do so (for example to reflect a material
acquisition and/ or divestment of a Group business) and to assess performance on a fair and consistent basis from year to year.
The extent to which the awards vest (other than, in accordance with the requirements of the applicable tax legislation, any
tax qualifying option) will be subject to the Committee’s assessment of the overall financial performance of the Company
during the performance period. Final levels of vesting may be reduced should the Committee feel that these do not
reflect the performance of the Company.
60
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Governance
Annual Report on Remuneration (continued)
Implementation of the Directors’ remuneration policy for 2016
Base salary and fees
The Executive Directors’ salaries were increased with effect from 1 January 2016 as discussed in the statement from the
Chairman on page 55.
The Chairman’s fee was subject to a £6,000 increase with effect from 1 January 2016 and the other Non-Executive
Directors’ fees were subject to a £2,000 increase with effect from 1 January 2016. A fee of £5,000 was introduced for the
role of the Senior Independent Director.
Accordingly, the salaries and fees for 2016 are as set out below:
Rod Flavell (Chief Executive Officer)
Sheila Flavell (Chief Operating Officer)
Mike McLaren (Chief Financial Officer)
Andy Brown (Group Commercial Director)
Ivan Martin (Chairman)
Non-Executive Director
Senior Independent Director
Committee Chairman
Annual bonus for 2016
Base annual salary
£367,500
£273,000
£262,500
£273,000
Annual fee
£126,000
£42,000
£5,000
£5,000
In line with the policy set out on pages 64 to 73 the maximum annual bonus opportunity for all Executive Directors for 2016
is 100% of salary, 80% of the bonus opportunity will be dependent on adjusted group profit before tax, with the remaining
20% based on Mountie revenue. The Committee considers that the details of the 2016 targets are commercially sensitive
and they are not disclosed in this report, however the 2016 targets will be disclosed in next year’s report.
Long Term Incentives for 2016
The Committee proposes to grant awards under the PSP in respect of 2016. In accordance with the approved Directors’
Remuneration Policy, the maximum quantum of award granted to any Executive Director will be up to 100% of salary.
The vesting of the awards will be subject to performance conditions based on compound annual growth in adjusted
earnings per share over the three year performance period, with the targets and vesting schedule being the same as for
the awards granted in 2015.
61
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Remuneration Report
Performance graph and historical Chief Executive Officer remuneration outcomes
The graph below shows the Company’s Total Shareholder Return (“TSR”) performance since the date of listing compared
to the FTSE Small Cap Index which has been chosen as the Company is a member of that index.
FDM
FTSE Small Cap
)
0
0
1
o
t
d
e
s
a
b
e
r
(
n
r
u
t
e
R
r
e
d
o
h
e
r
a
h
S
l
a
t
o
T
l
200
190
180
170
160
150
140
130
120
110
100
90
Jun 14
Aug 14
Oct 14
Dec 14
Feb 15
Apr 15
Jun 15
Aug 15
Oct 15
Dec 15
The table below details the total remuneration, annual bonus and LTIP vesting (as a percentage of the maximum opportunity)
for the Chief Executive Officer (“CEO”) for the last six years. Note that for 2015 this is the remuneration received for the whole
of 2015 and so is not directly comparable to the TSR performance chart above, which is for the period from 20 June 2014.
2010
2011
2012
2013
2014
Total remuneration (£000)
Annual bonus as a % of
maximum opportunity
455.2
100%
639.2
100%
686.2
100%
547.7
68%
658.5
55%
2015
668.1
82%
Change in CEO remuneration in relation to the wider workforce
The table below shows the percentage change in salary, benefits and annual bonus for the CEO and the wider workforce
between 2014 and 2015. For these purposes, the wider workforce includes all UK employees excluding Mounties, and also
excludes employees based overseas in order to exclude the effects of fluctuating exchange rates. Mounties have been
excluded from the UK wider workforce numbers to ensure a more meaningful comparison to the CEO’s remuneration as
their remuneration is not subject to the same annual review process as the rest of the UK workforce.
Percentage change
Salary1
Taxable benefits
Annual bonus
CEO
0.0%
1.0%
88.3%
Wider workforce
4.8%
0.0%
11.3%
1 For these purposes, the salaries applying as at December 2015 are compared with the salaries as at December 2014 (rather than the salaries earned over
those years). In the single figure table on page 57, the CEO’s salary for 2015 is greater than his salary for 2014, which reflects the increase in his salary with
effect from Admission during 2014.
62
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Governance
Annual Report on Remuneration (continued)
Spend on pay
The following table sets out the percentage change in dividends and the overall expenditure on pay (as a whole across
the organisation).
Year ended
31 December 2014
£000
Year ended
31 December 2015
£000
Percentage change
Dividends
Overall expenditure on pay
–
58,900
16,665
78,487
n/a
33%
Statement of voting from last AGM
At the AGM held on 30 April 2015, the Board’s resolutions in relation to remuneration received strong support from
shareholders. The results of the vote on the various remuneration resolutions are set out below:
Resolution
Votes for % of votes
for
Votes
against
% of votes
against
Votes
withheld
Approve the Directors’ Remuneration
Policy
Approve the Directors’ Remuneration
Report
87,035,109
98.46%
1,359,484
1.54%
87,374,625
98.85%
1,019,968
1.15%
0
0
Advisors
During the financial year, the Committee received independent advice from Deloitte LLP, who were appointed by the
Committee, in relation to the Committee’s consideration of matters relating to Directors’ Remuneration. Deloitte LLP were
appointed in 2014 following a formal tender process. Fees for advice provided to the Remuneration Committee during
the year were £6,300. Fees were charged on a time and disbursements basis.
Deloitte LLP is a member of the Remuneration Consultants Group and voluntarily operates under its code of conduct in
its dealing with the Remuneration Committee. The Remuneration Committee continued to review the appointment of
Deloitte LLP and is satisfied that all advice received was objective and independent.
63
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Remuneration Report
Directors’ Remuneration Policy
The Company’s Directors’ remuneration policy was approved by shareholders at the AGM held on 30 April 2015. The
policy as approved is set out below except that we have not repeated the charts illustrating the application of the policy
in 2015, as these are historic, and we have updated date specific references. The full policy as approved at the 2015 AGM
is available on the Company’s website at www.fdmgroup.com.
Executive Directors
Purpose and link to strategy
Operation
Maximum opportunity
Performance measures
Base salary
Core element of fixed
Salary levels are determined
Whilst there is no maximum
Not applicable.
remuneration to reflect the
taking into account a range of
salary level, salary increases
individual’s role and experience
factors, which may include (but
will normally be in line with the
as part of a broadly market
are not limited to):
wider workforce in percentage
competitive total remuneration
of salary terms.
package, to enable the Group
• Underlying Group
to recruit and maintain the
performance;
required skills and expertise to
Salary increases above this
level may be awarded in
enable it to achieve its strategy.
• The size and scope of the
certain circumstances, such as:
Executive Director’s role and
responsibilities;
• Where an Executive Director
has been promoted or has
• The Executive Director’s
had a change in scope or
skill, experience and
responsibility;
performance;
• To reflect an individual’s
• Salary levels for equivalent
development or
roles at other listed
performance in role (e.g. a
companies of a similar size
newly appointed Executive
and/ or complexity to the
Director being moved to
Group; and
align with the market over
• Pay and conditions
elsewhere in the Group.
• Where there has been a
time);
change in market practice;
or
• Where there has been a
change in the size and/ or
complexity of the business.
Such increases may be
implemented over such time
period as the Committee
deems appropriate.
64
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Governance
Directors’ Remuneration Policy (continued)
Executive Directors (continued)
Purpose and link to strategy
Operation
Maximum opportunity
Performance measures
Benefits
To provide benefits as part of
Executive Directors receive
Whilst the Committee has not
Not applicable.
a broadly market competitive
benefits set at an appropriate
set an absolute maximum on
total remuneration package.
level taking into account total
the level of benefits Executive
remuneration, market practice,
Directors may receive, the
the benefits provided to other
value of benefits is set at a
employees in the Group and
level which the Committee
individual circumstances.
considers to be appropriately
Benefits provided currently
positioned taking into
include car allowances and
account relevant market
private health insurance.
levels based on the nature
and location of the role, the
Other benefits may be
level of benefits provided for
provided based on individual
other employees in the Group
circumstances. These
and individual circumstances.
may include, for example,
relocation expenses and
expatriate allowances.
Retirement benefits
To provide an appropriate
Executive Directors are eligible
Maximum company pension
Not applicable.
level of retirement benefit (or
to participate in the Company’s
contribution (or cash allowance
cash allowance equivalent)
defined contribution scheme.
equivalent) for existing
as part of a broadly
Executive Directors of 3% of
market competitive total
In appropriate circumstances,
salary.
remuneration package.
such as where contributions
exceed the annual or
However, the Committee may
lifetime allowance, Executive
permit a higher company
Directors may take a taxable
pension contribution (or cash
cash supplement instead of
allowance equivalent) for any
contributions to a pension
new Executive Director.
plan.
65
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Remuneration Report
Purpose and link to strategy
Operation
Maximum opportunity
Performance measures
Annual bonus
Rewards Executive Directors
Performance measures
Maximum bonus opportunity
Performance measures
for achieving financial, strategic
and targets are reviewed
for Executive Directors is 100%
and targets are set annually
and/ or individual targets in
annually and pay-out levels are
of base salary.
the relevant year, to provide
determined by the Committee
an incentive for the Group’s
after the year end based on
employees to achieve goals
performance against the
aligned with the Group’s
targets.
strategy.
The Committee has discretion
to amend the pay-out should
any formulaic outcome not
reflect the Committee’s
assessment of overall business
performance.
Recovery
For up to three years
following the payment of
an annual bonus award, the
Committee may require the
repayment of some or the
entire award in the event of
fraud or dishonesty leading
to a material misstatement of
financial results.
reflecting the Company’s
strategy and aligned with key
financial, strategic and/ or
individual targets.
Pay-out of up to 20% of
maximum for threshold
performance (the minimum
level of performance resulting
in any payment), 50% of
maximum for on-target
performance and full pay-out
for stretch performance with
straight-line vesting in between
each of the points.
At least 80% of the bonus
will be assessed against
key financial performance
measures which may include
revenue, pre-tax profit or other
key financial performance
metrics of the Company. The
balance of the bonus may be
assessed against non-financial
strategic measures and/ or
individual performance.
66
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Governance
Directors’ Remuneration Policy (continued)
Executive Directors (continued)
Purpose and link to strategy
Operation
Maximum opportunity
Performance measures
PSP
To incentivise Executive
Long-term incentive awards
The usual maximum award
Performance will be
Directors over the longer term,
are granted under the PSP
level under the PSP in respect
assessed against challenging
and to deliver performance-
which was approved on
of any financial year for
performance targets.
related pay, with a clear line of
16 June 2014. Awards under
Executive Directors is awards
sight for Executives and direct
the PSP will typically be
over shares with a value of
Performance will be based
alignment with shareholders’
granted as a conditional award
100% of salary.
interests.
or the grant of a nil-cost option,
typically on financial measures
including, but not limited to,
in either case vesting subject to
In certain circumstances, the
absolute EPS growth.
the achievement of specified
Committee may grant awards
performance conditions, over a
under the PSP in respect of
Awards (other than, in
period of at least three years.
any financial year for Executive
accordance with the
Directors up to a maximum of
requirements of the applicable
Awards may be settled in cash
200% of salary.
(or granted as a cash award
tax legislation, any approved
option granted as part of
over a notional number of
The Committee may at its
an APSP award) will also be
shares) at the discretion of the
discretion structure awards
subject to a financial underpin
Committee.
as Approved Performance
such that PSP awards will
Share Plan (“APSP”) awards
only vest if the Committee
Awards under the PSP may
to enable the participant and
is satisfied with the overall
be granted on the basis that
the Company to benefit from
performance of the Company.
the number of shares shall be
HMRC approved option tax
increased to reflect dividends
treatment in respect of part of
Performance measures (and
paid over the vesting period,
the award, without increasing
their weighting where there
or the Committee may make a
the pre-tax value delivered to
is more than one measure)
cash payment equal to those
participants. APSP awards may
are reviewed annually to
dividends on release of the
be structured as an approved
maintain appropriateness and
shares.
option up to the HMRC limit
relevance.
(currently £30,000) and a PSP
share award, with the share
For threshold performance
award scaled back to take
25% of the award will vest,
account of any gain made
rising to 100% of the award
on exercise of the approved
vesting for maximum
option.
performance with straight-line
vesting in between. Below
threshold performance, the
award will not vest.
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FDM Group (Holdings) plcAnnual Report and Accounts 2015
Remuneration Report
Purpose and
link to strategy
Operation
PSP (continued)
Maximum opportunity
Performance measures
Where a tax-favoured option
is granted as part of an APSP
award, the same performance
conditions will apply to the tax-
favoured option as apply to the
PSP award.
The Committee may at its discretion structure
awards as APSP awards comprising both a
HMRC tax-favoured option granted under the
Company Share Option Plan (“CSOP”) and a
PSP award. APSP awards enable an Executive
Director and the Company to benefit from
HMRC tax-favoured option treatment in respect
of part of the award without increasing the pre-
tax value delivered to participants.
APSP awards would be structured as a tax-
favoured option and a PSP award, with the
vesting of the PSP award scaled back to take
account of any gain made on exercise of the
tax-favoured option.
Other than to enable the grant of APSP awards,
the Company will not grant awards to Executive
Directors under the CSOP.
Recovery
At the discretion of the Committee, unvested
awards could be reduced, cancelled or
have further conditions imposed in certain
circumstances including (but not limited to):
• A material misstatement of the Company’s
audited financial results;
• A material failure of risk management by the
Company or any subsidiary company within
the Group; or
• A material miscalculation of any performance
measure.
For up to three years following the vesting of
an award, the Committee may require the
repayment of some or the entire award in
the event of fraud or dishonesty leading to a
material misstatement of financial results.
Save as set out in the table above in relation to the annual bonus and PSP, there are no provisions for the recovery or withholding of any element of remuneration.
68
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Governance
Directors’ Remuneration Policy (continued)
Information supporting the policy table
Explanation of performance measures chosen
Performance measures for the annual bonus and PSP awards which reflect the Company’s strategy are selected.
Stretching performance targets are set each year by the Committee taking into account a number of different factors.
The annual bonus can be assessed against financial, strategic and/ or individual targets determined by the Committee
with at least 80% subject to key financial targets. The Committee considers financial measures like profit before tax and
revenue to be important performance metrics because they encourage behaviours that facilitate profitable growth and
the successful future strategic development of the business.
Long-term performance measures are chosen by the Committee to provide a robust and transparent basis on which to
measure the Company’s performance over the longer term and to provide alignment with the business strategy. They
are selected to be aligned with the interests of shareholders and to drive business performance. Currently absolute EPS
growth is considered to be a key measure of success as it encapsulates the outcomes of many of the strategic drivers of
the business, and helps align management incentives with growth in shareholder value.
The Committee retains the discretion to adjust or set different performance measures or targets where it considers it
appropriate to do so (for example, to reflect a change in strategy, a material acquisition and/ or a divestment of a Group
business or a change in prevailing market conditions) and to assess performance on a fair and consistent basis from year
to year.
Operation of the PSP
The PSP will be operated by the Committee in accordance with the plan rules, including the ability to adjust the number
of shares subject to awards in the event of a variation of share capital, demerger, delisting, special dividend, rights issue
or other event which may, in the opinion of the Committee, affect the current or future value of shares.
Early vesting of awards
Awards may vest earlier than anticipated in “good leaver” circumstances, as determined by the Committee at their
discretion. In the event of a change of control of the Company or other relevant corporate event (such as a demerger,
delisting, special dividend or other event which may affect the value of an award), awards under the PSP may vest in
accordance with the rules of the PSP. The Committee shall determine the extent of vesting taking into account the extent
to which the relevant performance condition has been satisfied. Such vesting would ordinarily be on a time pro rata basis
although the Committee has discretion not to apply time prorating.
69
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Remuneration Report
Non-Executive Directors
Purpose and link to strategy
Operation
Other items
To enable the Company to attract and
The Chairman is paid a basic Chairman fee and additional
Non-Executive Directors may
retain Non-Executive Directors of the
fees for chairmanship of any Board Committees.
be eligible to be reimbursed
required calibre by offering market
travel and subsistence costs
competitive rates.
Non-Executive Directors receive a basic fee and additional
incurred in the performance of
fees for chairmanship of any Board Committees.
their duties.
The Chairman’s fee is determined by the Remuneration
The Non-Executive Directors
Committee and the fees of the other Non-Executive
do not participate in the
Directors are determined by the Board.
Company’s annual bonus,
share plans or pension
Fees are based on the time commitment and
schemes or other benefit in
contribution expected for the role and the level of fees
kind arrangements.
paid to Non-Executive Directors serving on the board of
similar-sized UK listed companies.
Overall fees paid to Non-Executive Directors will remain
within the limit of £1.0 million per annum set by the
Company’s Articles of Association.
Policy for the remuneration of employees more generally
The Group aims to provide a remuneration package that is competitive in an employee’s country of employment and
which is appropriate to promote the long term success of the Group. The Group intends to apply this policy fairly and
consistently and does not intend to pay more than is necessary to attract and motivate staff. In respect of Executive
Directors, a greater proportion of the remuneration package is “at risk” and determined by reference to performance
conditions.
Approach to recruitment remuneration
When hiring a new Executive Director, the Committee will seek to align the remuneration package with the above policy.
When determining appropriate remuneration arrangements, the Committee may include other elements of pay which
it considers are appropriate and necessary to recruit and retain the individual. However, this discretion is capped and is
subject to the limits referred to below:
• Base salary will be set at a level appropriate to the role and the experience of the Director being appointed. This may
include agreement on future increases up to a market rate, in line with increased experience and/ or responsibilities,
subject to good performance, where it is considered appropriate;
• Benefits will only be provided in line with the above policy;
• Pension contributions may be made above the limit for the existing Executive Directors (3% of salary) up to a
maximum of 15%. This flexibility recognises that future Executive Directors will not have the same significant levels of
shareholding in the Company as the existing Executive Directors and additional pension benefits may be needed in
order to offer a competitive remuneration package;
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FDM Group (Holdings) plcAnnual Report and Accounts 2015
Governance
Directors’ Remuneration Policy (continued)
Approach to recruitment remuneration (continued)
• The Committee will not offer non-performance related incentive payments (for example a “guaranteed sign-on
bonus” or “golden hello”);
• Other elements may be included in the following circumstances:
-
-
-
An interim appointment being made to fill an Executive Director role on a short term basis;
If exceptional circumstances require that the Chairman or a Non-Executive Director takes on an executive
function on a short term basis;
If an Executive Director is recruited at a time in the year then it would be inappropriate to provide a bonus or
long term incentive award for that year as there would not be sufficient time to assess performance. Subject to
the limit on variable remuneration set out below, the quantum in respect of the months employed during the
year may be transferred to the subsequent year so that reward is provided on a fair and appropriate basis; or
-
If the Director will be required to relocate in order to take up the position, it is the Company’s policy to allow
reasonable relocation, travel and subsistence payments. Any such payments will be at the discretion of the
Committee;
• The Committee may also alter the performance measures, performance period and vesting period of the annual bonus
or PSP, if the Committee determines that the circumstances of the recruitment merit such alteration. The rationale of
any such alterations will be clearly explained in the next Directors’ Remuneration Report; and
• The maximum level of variable remuneration which may be granted (excluding buyout awards as referred to below) is
300% of salary, in line with the Policy table set out on pages 64 to 68.
The Committee may make payments or awards in respect of hiring an employee to buyout remuneration arrangements
forfeited on leaving a previous employer. In doing so, the Committee will take account of relevant factors including any
performance conditions attached to the forfeited arrangements and the time over which they would have vested or
been paid. The Committee will generally seek to structure buyout awards or payments on a comparable basis to the
remuneration arrangements forfeited. Any such payments or awards are excluded from the maximum level of variable
remuneration referred to above. Buyout awards will ordinarily be granted on the basis that they are subject to forfeiture
or “clawback” in the event of departure within 12 months of joining the Company, although the Committee will retain
discretion not to apply forfeiture or clawback in appropriate circumstances.
Any share awards referred to in this section will be granted as far as possible under the Company’s existing share plans. If
necessary and subject to the limits referred to above, recruitment awards may be granted outside of these plans.
Where a position is filled internally, any ongoing remuneration obligations or outstanding variable pay elements shall be
allowed to continue in accordance with their terms.
Fees payable to a newly appointed Chairman or Non-Executive Director will be in line with the policy in place at the time
of appointment.
Letters of appointment for the Directors are available for inspection by shareholders at each AGM and during normal
business hours at the Company’s registered office.
Service contracts
Each Executive Director has a service contract with the Company which may be terminated by the Company or Director
by giving 12 months’ notice. This notice period is considered appropriate to the Company. Each Non-Executive Director
has a letter of appointment with the Company which may be terminated by the Company or Director by giving three
months’ notice.
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FDM Group (Holdings) plcAnnual Report and Accounts 2015
Remuneration Report
Details of the Directors’ service contracts (or letter of appointment in the case of a Non-Executive Director), notice periods
and, where applicable, expiry dates, are set out below:
Name
Commencement
Expiry
Notice period
Rod Flavell
Sheila Flavell
Mike McLaren
Andy Brown
Ivan Martin
Peter Whiting
Robin Taylor
20 June 2014
20 June 2014
20 June 2014
20 June 2014
20 June 2014
20 June 2014
20 June 2014
Michelle Senecal de Fonseca
15 January 2016
–
–
–
–
–
–
–
–
12 months
12 months
12 months
12 months
3 months
3 months
3 months
3 months
Payments for loss of office
The principles on which the determination of payments for loss of office will be approached are set out below:
Payment in lieu of notice
Each Executive Director’s service contract contains provision for payment in lieu of notice at the discretion of the Company.
Such payment would consist of basic salary plus benefits only for the notice period (or the balance of the notice period if
relevant) together with any accrued but untaken holiday pay entitlement.
Annual bonus
This will be at the discretion of the Committee on an individual basis and the decision as to whether or not to award a
bonus in full or in part will be dependent on a number of factors, including the circumstances of the individual’s departure
and their contribution to the business during the bonus period in question. Any bonus amounts paid will be prorated for
time in service during the bonus period and will be paid at the usual time (although the Committee retains discretion to
pay the bonus earlier in appropriate circumstances).
PSP
The extent to which any unvested award will vest will be determined in accordance with the rules of the PSP. Unvested
awards will normally lapse on cessation of employment. However, the Committee may, in its absolute discretion,
determine that on cessation of employment an award that has not yet vested will vest at cessation or at the normal vesting
date. In either case, the extent of vesting will be determined by the Committee taking into account the extent to which the
performance condition is satisfied and, unless the Committee determines otherwise, the period of time elapsed from the
date of grant to the date of cessation. Awards may then be exercised during such period as the Committee determines.
If an award has vested prior to an individual’s cessation of employment, the Committee may, in its absolute discretion,
allow the award to be exercised for such period as the Committee determines.
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FDM Group (Holdings) plcAnnual Report and Accounts 2015
Governance
Remuneration Report
Directors’ Remuneration Policy (continued)
Other payments
In appropriate circumstances, payments may also be made in respect of outplacement and legal fees. Where a buy-out
award is made, the leaver provisions would be determined at the time of the award. The Committee reserves the right to
make additional exit payments where such payments are made in good faith in discharge of an existing legal obligation
(or by way of damages for breach of such an obligation) or by way of settlement or compromise of any claim arising in
connection with the termination of a Director’s office or employment.
Existing contractual arrangements
The Committee retains discretion to make any remuneration payment or payment for loss of office outside the policy in
this report:
• Where the terms of the payment were agreed before the policy came into effect;
• Where the terms of the payment were agreed at a time when the relevant individual was not a Director of the Company
and, in the opinion of the Committee, the payment was not in consideration of the individual becoming a Director of
the Company;
• To satisfy contractual commitments; or
• Under legacy remuneration arrangements.
For these purposes, “payments” includes the satisfaction of awards of variable remuneration and, in relation to an award
over shares, the terms of the payment are agreed at the time the award is granted.
Statement of consideration of employment conditions elsewhere in the Company
The Committee generally considers pay and employment conditions elsewhere in the Company when considering the
Directors’ remuneration. When considering base salary increases, the Committee reviews overall levels of base pay
increases offered to other employees. Employees are not actively consulted on Directors’ remuneration. Employee share
ownership is fundamental to the Company’s culture and is reflected in the wide participation in our share incentive plans.
Statement of consideration of shareholder views
The Committee is committed to an ongoing dialogue with shareholders and welcomes feedback on Directors’
remuneration. The Committee intends to consult with shareholders in respect of any significant changes to the Director
remuneration arrangements.
Approval
This Report was approved by the Board on 8 March 2016 and signed on its behalf by:
Peter Whiting
Chairman of the Remuneration Committee
8 March 2016
73
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Directors’ Report
The Directors present the Directors’ Report and audited Consolidated Financial Statements of FDM Group (Holdings) plc
for the year ended 31 December 2015.
Principal activities, business review and future developments
The principal activity of the Group is the provision of professional services focusing principally on Information Technology.
The Strategic Report on pages 2 to 31 provides a review of the Group’s performance during the financial year as well as
its future prospects.
Results and dividends
The Group reported a profit after tax for the year of £22.0 million (2014: £13.5 million). Results for the year are set out in
the Consolidated Income Statement on page 85.
The Directors propose a final dividend of 8.5 pence per share and a special dividend of 5.0 pence per share. Subject to
shareholder approval, both of these dividends will be paid on 3 June 2016 to shareholders of record on 13 May 2016. An
interim dividend of 8.0 pence per share was declared by the Directors on 28 July 2015 and was paid on 25 September
2015 to holders of record on 21 August 2015. An interim dividend of 7.5 pence per share in respect of the period from
Admission of the Company’s shares to the Main Market of the London Stock Exchange on 20 June 2014 to 31 December
2014 was paid on 12 June 2015.
Directors
The Directors of the Company who were in office during the year and up to the date of signing the financial statements
unless otherwise stated, were:
Ivan Martin
Roderick Flavell
Sheila Flavell
Michael McLaren
Andrew Brown
Peter Whiting
Robin Taylor
Non-Executive Chairman
Chief Executive Officer
Chief Operating Officer
Chief Financial Officer
Group Commercial Director
Non-Executive Director
Non-Executive Director
Michelle Senecal de Fonseca
Non-Executive Director - appointed 15 January 2016
Jonathan Brooks
Non-Executive Director - resigned 30 October 2015
The biographies of the currently serving Directors are provided on pages 33 and 34 of this report.
Director share interests
Details of the interests of Directors in the shares of the Company are provided on page 59 of this report.
Director long term inventive schemes
For the purposes of the UK Listing Authority Listing Rules section 9.8.4C R, details of the Group’s long term incentive
schemes are disclosed in the Remuneration Report starting on page 53. All other information required to be disclosed by
Listing Rule section 9.8.4 R is not applicable for the year under review.
Directors’ indemnity and liability insurance
As permitted by the Articles of Association, the Directors have the benefit of an indemnity which is a qualifying third party
indemnity provision as defined by Section 234 of the Companies Act 2006. The indemnity was in force throughout the
last financial year and is currently in force. The Company also purchased and maintained throughout the financial year
Directors’ and officers’ liability insurance in respect of itself and its Directors.
74
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Governance
Risk management objectives and policies
The Group through its operations is exposed to a number of risks. Details of the Group’s financial risk management
objectives and policies are set out in note 28 to the Consolidated Financial Statements. The principal risks that the Group
faces are set out on pages 20 to 22 of the Strategic Report.
Corporate Governance
For details of the Corporate Governance Report see pages 35 to 43. The Corporate Social Responsibility report, on pages
29 to 31, includes information about the Group’s employment policies and greenhouse gas emissions.
Branches outside the UK
The Group continues to operate one branch in France.
Substantial shareholders
As at 31 December 2015 and as at 29 February 2016, the Company had been advised, in accordance with the Disclosure
and Transparency Rules of the Financial Conduct Authority, of the following notifiable interests (whether directly or
indirectly held) in 3% or more of its voting rights:
Substantial shareholder
Direct/ indirect
interest
Number of
shares
% of issued
share capital
Number of
shares
% of issued
share capital
As at 31 December 2015
As at 29 February 2016
Indirect
9,540,067
8.9
9,536,762
Columbia Threadneedle
Investments
Roderick Flavell
Sheila Flavell
Standard Life Investments
Majedie Asset Management
Andrew Brown
River & Mercantile Asset
Management
AXA Investment Managers
Old Mutual Global Investors
Independent Investment Trust
Investec Asset Management
Direct
8,201,255
Direct
8,201,254
Indirect
7,644,351
Indirect
4,669,910
Direct
4,540,801
Indirect
4,055,056
Indirect
4,013,553
Indirect
4,005,184
Direct
4,000,000
Direct
3,853,040
Artemis Investment Management
Indirect
3,496,271
Invesco Asset Management
Direct
3,325,252
Unicorn Asset Management
Indirect
3,101,000
75
7.6
7.6
7.1
4.3
4.2
3.8
3.7
3.7
3.7
3.6
3.3
3.1
2.9
8,201,255
8,201,254
8,177,727
4,614,611
4,540,801
3,608,633
4,043,717
4,298,334
3,797,500
3,610,086
3,387,060
3,325,252
3,254,042
8.9
7.6
7.6
7.6
4.3
4.2
3.4
3.8
4.0
3.5
3.4
3.2
3.1
3.0
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Directors’ Report
Political donations
The Group made no political donations in the year (2014: £nil).
Going concern
The Group’s business activities, together with the factors that are likely to affect its future development, performance and
position are summarised in the Strategic Report. The principal risks, uncertainties and risk management processes are
also described in the Strategic Report.
The Group’s continued and forecast global growth, positive operating cash flow and liquidity position, together with its
distinctive business model and infrastructure, enables the Group to manage its business risks successfully. The Group’s
forecasts and projections show that it will continue to operate with adequate cash resources and within the current
working capital facilities. The Group passed all bank covenants tested in the year and forecasts that all covenants will be
passed for a period of at least twelve months from the date of signing this Annual Report.
The Directors therefore have a reasonable expectation that the Company and the Group will have adequate resources
to continue in operational existence for the foreseeable future. Accordingly the Directors continue to adopt the going
concern basis for preparing the financial statements.
Greenhouse gas emissions
Details of the Group’s compliance with legislation relating to greenhouse gas emissions are set out on page 31 in the
Corporate Social Responsibility report.
Employee information
Information on the Group’s employee policies is included on page 29 in the Corporate Social Responsibility report.
Capital structure
The Group’s capital structure is detailed in note 22 to the Consolidated Financial Statements.
Change of control
The Group has agreements in place with certain of its banking customers that give the bank the right to terminate the
contract on a change of control following a takeover bid for the Group. In addition, the Group has a Revolving Credit
Facility (“RCF”) with HSBC Bank plc, which contains a clause such that HSBC Bank plc has the right to terminate the facility
upon a change of control of the Group.
The Group has no agreements with employees or Directors that provide for compensation for loss of office or employment
that occurs resulting from a takeover bid.
The Group knows of no agreements under which holders of securities in the Company may restrict votes or transfers in
the Company’s shares.
76
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Governance
Post balance sheet events
There have been no significant events to report since the date of the balance sheet.
Related party transactions
The Group’s related party transactions are detailed in note 27 to the Consolidated Financial Statements.
Independent auditors
In accordance with Section 487 of the Companies Act 2006, a resolution for the re-appointment of PricewaterhouseCoopers
LLP as auditors of the Company is to be proposed at the forthcoming Annual General Meeting.
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and Accounts, including the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors
have prepared the Group and Parent Company Financial Statements in accordance with International Financial Reporting
Standards (“IFRS”s) as adopted by the European Union (“EU”). Under company law the Directors must not approve the
financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and
the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors
are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable IFRSs as adopted by the EU have been followed, subject to any material departures disclosed
and explained in the financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company
will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and
the Group and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with
the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also
responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess a company’s performance, business model and strategy.
77
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Directors’ Report
Responsibility statement of the Directors in respect of the Annual Report
Each of the Directors, whose names and functions are listed on pages 33 and 34, confirm that, to the best of their knowledge:
• the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true
and fair view of the assets, liabilities, financial position and profit of the Group; and
• the Strategic Report contained in this Annual Report includes a fair review of the development and performance of the
business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.
Disclosure of information to the auditors
In accordance with Section 418 of the Companies Act 2006, Directors’ reports shall include a statement, in the case of each
Director in office at the date the Directors’ Report is approved, that:
• so far as the Director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and
• he has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit
information and to establish that the Company’s auditors are aware of that information.
The Directors’ Report has been approved by the Board of Directors of FDM Group (Holdings) plc on 8 March 2016 and
signed on its behalf by:
Rod Flavell
Chief Executive Officer
8 March 2016
Mike McLaren
Chief Financial Officer
8 March 2016
78
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Financial Statements
Independent auditors’ report to the
members of FDM Group (Holdings) plc
Report on the group financial statements
Our opinion
In our opinion, FDM Group (Holdings) plc’s group financial statements (the “financial statements”):
• give a true and fair view of the state of the group’s affairs as at 31 December 2015 and of its profit and cash flows for the year then ended;
• have been properly prepared in accordance with International Financial Reporting Standards (“IFRSs”) as adopted by the European
Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation.
What we have audited
The financial statements, included within the Annual Report and Accounts (the “Annual Report”), comprise:
• the consolidated statement of financial position as at 31 December 2015;
• the consolidated income statement and statement of comprehensive income for the year then ended;
• the consolidated statement of cash flows for the year then ended;
• the consolidated statement of changes in equity for the year then ended; and
• the notes to the financial statements, which include a summary of significant accounting policies and other explanatory
information.
Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the financial statements.
These are cross-referenced from the financial statements and are identified as audited.
The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and IFRSs as
adopted by the European Union.
Our audit approach
Overview
Materiality
Audit scope
Areas of
focus
79
• Overall group materiality: £1,500,000 which represents 5% of adjusted profit before tax.
• The group financial statements are a consolidation of 13 reporting units.
• We performed full scope audits of the UK and USA operating reporting units.
• We audited the revenue, trade and other receivables and cash and cash equivalent balances of the
Germany and Switzerland trading reporting units.
• We also performed full scope audits of the centralised functions in the UK, comprising the parent
and intermediate holding companies.
• Our full scope audits covered 87% of revenue (with a further 6% coverage obtained through our
work on the Germany and Switzerland reporting units) and 91% of adjusted profit before tax.
• Revenue recognition in respect of uninvoiced amounts.
• Share option plan expense.
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Independent auditors’ report to the members of FDM Group (Holdings) plc
The scope of our audit and our areas of focus
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”).
We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. In particular,
we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates that involved
making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of
management override of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk
of material misstatement due to fraud.
The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and effort, are
identified as “areas of focus” in the table below. We have also set out how we tailored our audit to address these specific areas in order
to provide an opinion on the financial statements as a whole, and any comments we make on the results of our procedures should be
read in this context. This is not a complete list of all risks identified by our audit.
Area of focus
Revenue recognition in respect of uninvoiced amounts
Refer to note 3.3 (b) to the Consolidated Financial Statements for the
directors’ disclosures of the related accounting policies and page 49
(‘Significant financial reporting items’) within the Audit Committee
Report.
At the year-end, revenue is accrued for work performed that has
not yet been invoiced. Within this estimate, revenue is recognised
for contracts either where services have been provided but
customer purchase orders have not yet been finalised, or where
consultants’ timesheets have not yet been approved by the
customer or have not been received by the group.
There is some judgement in the recognition of this revenue, in
order to estimate the amount of work performed by consultants
before receipt of approved timesheets or purchase orders, which
could lead to an under or overstatement of revenue and profit,
whether intentionally or in error.
Share option plan expenses
Refer to notes 3.3 (n) and 4 to the Consolidated Financial statements
for the directors’ disclosures of the related accounting policies,
judgements and estimates, and page 49 (‘Significant financial
reporting items’) within the Audit Committee Report.
During the year, the group has implemented a share option plan
for management and senior employees. The assumptions used
in calculating the charge recognised in the income statement are
judgemental and complex, including an estimate of the number
of leavers from the scheme in each period as well as an estimate
of the future growth in adjusted earnings per share of the group
(refer to page 60 (‘Annual Report on Remuneration’) for details on
the share option plan).
These judgements could lead to an under or overstatement of the
share option plan expense, whether intentionally or in error.
How our audit addressed the area of focus
We gained an understanding from management of the key
assumptions underpinning the year end sales adjustments and
compared these assumptions with the prior year.
We evaluated management’s estimate for unreceived timesheets
by comparing a sample of estimated timesheets to the timesheet
received post year end. We found the estimate to be appropriate.
We substantively tested the year end adjustment for timesheets
received but not invoiced by agreeing to subsequent cash receipt
or customer approval, in order to identify any inappropriate
recognition of revenue, noting no material exceptions in our
testing.
We gained an understanding from management of the key
assumptions underpinning the share option valuation model.
We evaluated the assumption made by management for forecast
growth in adjusted earnings per share by comparing to recent
historical performance as well as reviewing budgets and forecasts
approved by the Board of Directors, and found it to be appropriate.
We evaluated management’s assumption for the number of
leavers from the scheme by comparing to historical leavers from
the scheme, and found it to be appropriate.
We evaluated the sensitivity analysis performed by management
to assess the potential impact of changes in key assumptions,
noting that a significant change in the assumptions would
be needed to cause a material error in the share option plan
expense. We concluded that stress testing these assumptions did
not have a material impact on the income statement charge.
We checked the mathematical integrity of the model, and found
it to be accurate.
We tested a sample of options granted to deeds of grant and
leavers from the scheme to resignation letters, noting no
exceptions in our testing.
We also considered the disclosures made in note 25 to the
financial statements and determined that they are consistent
with the requirements of accounting standards.
80
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Financial Statements
Report on the group financial statements (continued)
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements
as a whole, taking into account the geographic structure of the group, the accounting processes and controls, and the industry in
which the group operates.
The group is structured by division, with significant reporting units in the UK and USA, and further smaller reporting units in locations
across Europe, Canada, Asia and South Africa. The group financial statements are a consolidation of 13 reporting units, comprising
the group’s operating businesses and centralised functions.
The accounting and financial management for all reporting units is controlled from the UK, so we as the group engagement team
have performed all audit work.
We determined the type of work that needed to be performed at the reporting units to be able to conclude that sufficient appropriate
audit evidence had been obtained as a basis for our opinion on the group financial statements as a whole. Accordingly, we determined
that audits of the complete financial information were required for four reporting units, comprising the UK and USA trading reporting
units and the parent and intermediate holding companies (which contain, amongst other balances, the group’s borrowing facilities
and central costs). To support our work on the USA reporting unit, we visited the group’s offices in New York, where we met with
local management and inspected original copies of certain documents. We also included in our audit scope the revenue, trade and
other receivables and cash and cash equivalents in the next two largest reporting units, being Germany and Switzerland, which we
performed from the group’s head office in the UK, where the accounting is administered. Finally, following discussion with the Audit
Committee and group Management, we performed certain specified procedures on the Canada reporting unit, where growth is
accelerating rapidly. To facilitate the performance of some of these procedures, we visited the group’s offices in Toronto, where we
met with local management and inspected original copies of certain documents.
As a result, full scope audit procedures were conducted on reporting units representing 91% of the group’s adjusted profit before tax
and 87% of revenue, with a further 6% coverage of revenue obtained through our work on the Germany and Switzerland reporting units.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our
audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall group materiality
£1,500,000 (2014: £1,200,000).
How we determined it
5% of adjusted profit before tax.
Rationale for
benchmark applied
We believe that adjusted profit before tax provides us with the most appropriate basis for
determining materiality as we believe this aligns with the principal consideration of the
shareholders of the company.
Our benchmark is consistent with the prior year, except in the prior year adjusted profit before tax
also included the removal of one-off IPO transaction costs.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £70,000 (2014:
£60,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
81
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Independent auditors’ report to the members of FDM Group (Holdings) plc
Going concern
Under the Listing Rules we are required to review the directors’ statement, set out on page 76, in relation to going concern. We have
nothing to report having performed our review.
Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to
the directors’ statement about whether they considered it appropriate to adopt the going concern basis in preparing the financial
statements. We have nothing material to add or to draw attention to.
As noted in the directors’ statement, the directors have concluded that it is appropriate to adopt the going concern basis in preparing
the financial statements. The going concern basis presumes that the group has adequate resources to remain in operation, and that
the directors intend it to do so, for at least one year from the date the financial statements were signed. As part of our audit we have
concluded that the directors’ use of the going concern basis is appropriate. However, because not all future events or conditions can
be predicted, these statements are not a guarantee as to the group’s ability to continue as a going concern.
Other required reporting
Consistency of other information
Companies Act 2006 opinions
In our opinion:
•
the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
•
the information given in the Corporate Governance Statement set out pages 35 to 43 with respect to internal control and risk
management systems and about share capital structures is consistent with the financial statements.
ISAs (UK & Ireland) reporting
Under ISAs (UK & Ireland) we are required to report to you if, in our opinion:
• information in the Annual Report is:
• materially inconsistent with the information in the audited financial statements; or
• apparently materially incorrect based on, or materially inconsistent with, our knowledge of
the group acquired in the course of performing our audit; or
• otherwise misleading.
We have no exceptions to
report.
• the statement given by the directors on page 41, in accordance with provision C.1.1 of the UK
Corporate Governance Code (the “Code”), that they consider the Annual Report taken as a whole
to be fair, balanced and understandable and provides the information necessary for members to
assess the group’s performance, business model and strategy is materially inconsistent with our
knowledge of the group acquired in the course of performing our audit.
We have no exceptions to
report.
• the section of the Annual Report on pages 47 to 51, as required by provision C.3.8 of the
Code, describing the work of the Audit Committee does not appropriately address matters
communicated by us to the Audit Committee.
We have no exceptions to
report.
82
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Financial Statements
Other required reporting (continued)
The directors’ assessment of the prospects of the group and of the principal risks
that would threaten the solvency or liquidity of the group
Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in
relation to:
• the directors’ confirmation on pages 18 to 22 of the Annual Report, in accordance with provision
C.2.1 of the Code, that they have carried out a robust assessment of the principal risks facing the
group, including those that would threaten its business model, future performance, solvency or
liquidity.
We have nothing material to
add or to draw attention to.
• the disclosures in the Annual Report that describe those risks and explain how they are being
managed or mitigated.
• the directors’ explanation on page 23 of the Annual Report, in accordance with provision C.2.2
of the Code, as to how they have assessed the prospects of the group, over what period they
have done so and why they consider that period to be appropriate, and their statement as to
whether they have a reasonable expectation that the group will be able to continue in operation
and meet its liabilities as they fall due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or assumptions.
We have nothing material to
add or to draw attention to.
We have nothing material to
add or to draw attention to.
Under the Listing Rules we are required to review the directors’ statement that they have carried out a robust assessment of the
principal risks facing the group and the directors’ statement in relation to the longer-term viability of the group. Our review was
substantially less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting
their statements; checking that the statements are in alignment with the relevant provisions of the Code; and considering whether
the statements are consistent with the knowledge acquired by us in the course of performing our audit. We have nothing to report
having performed our review.
Adequacy of information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion, we have not received all the information and
explanations we require for our audit. We have no exceptions to report arising from this responsibility.
Directors’ remuneration
Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors’ remuneration
specified by law are not made. We have no exceptions to report arising from this responsibility.
Corporate governance statement
Under the Companies Act 2006 we are required to report to you if, in our opinion, a corporate governance statement has not been
prepared by the parent company. We have no exceptions to report arising from this responsibility.
Under the Listing Rules we are required to review the part of the Corporate Governance Statement relating to ten further provisions of
the Code. We have nothing to report having performed our review.
83
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Independent auditors’ report to the members of FDM Group (Holdings) plc
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Statement of Directors’ Responsibilities set out on pages 77 to 78, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK & Ireland).
Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the parent company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, 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 an audit of financial statements involves
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance
that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:
• whether the accounting policies are appropriate to the group’s circumstances and have been consistently applied and adequately
disclosed;
• the reasonableness of significant accounting estimates made by the directors; and
• the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the directors’ judgements against available evidence, forming our own judgements,
and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable
basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a
combination of both.
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited
financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies
we consider the implications for our report.
Other matter
We have reported separately on the parent company financial statements of FDM Group (Holdings) plc for the year ended 31 December
2015 and on the information in the Directors’ Remuneration Report that is described as having been audited.
Jaskamal Sarai (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
8 March 2016
84
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Financial Statements
Consolidated Income Statement
for the year ended 31 December 2015
Revenue
Cost of sales
Gross profit
Administrative expenses
Exceptional administrative expenses
Total administrative expenses
Operating profit
Financial income
Financial expense
Net finance expense
Analysis of profit before income tax
Note
2015
£000
2014
£000
6
160,656
123,257
(97,207)
(74,859)
63,449
48,398
(33,932)
(23,530)
–)
(5,412)
(33,932)
(28,942)
29,517
19,456
16
(168)
(152)
4
(490)
(486)
10
7
11
11
Operating profit before exceptional Items
29,517
24,868
Exceptional items
Net finance expense
Profit before income tax
Taxation
Profit for the year
Earnings per ordinary share
Basic and diluted
10
–)
(5,412)
(152)
(486)
29,365
18,970
12
(7,344)
(5,473)
22,021
13,497
2015
pence
20.5
2014
pence
12.7
13
The results for the year shown above arise from continuing operations.
The notes on pages 90 to 116 are an integral part of these Consolidated Financial Statements.
85
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Financial Statements
Consolidated Statement of
Comprehensive Income
for the year ended 31 December 2015
2015
£000
2014
£000
Profit for the financial year
22,021
13,497
Items that may be subsequently reclassified to profit or loss
Exchange differences on retranslation of foreign operations (net of tax)
Total other comprehensive (expense)/ income
(67)
(67)
97
97
Total comprehensive income recognised for the year
21,954
13,594
The notes on pages 90 to 116 are an integral part of these Consolidated Financial Statements.
86
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Financial Statements
Consolidated Statement of
Financial Position
as at 31 December 2015
Non-current assets
Property, plant and equipment
Intangible assets
Deferred income tax assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Non-current liabilities
Deferred income tax liabilities
Current liabilities
Trade and other payables
Current income tax liabilities
Total liabilities
Net assets
Equity attributable to owners of the parent
Share capital
Share premium
Capital redemption reserve
Other capital reserves
Translation reserve
Retained earnings
Total equity
Note
14
15
20
17
18
20
19
22
2015
£000
4,264
19,550
173
23,987
24,593
22,360
2014
£000
2,522
19,429
–)
21,951
25,072
12,287
46,953
37,359
70,940
59,310
282
282
19,168
3,089
22,257
259
259
14,013
2,515
16,528
22,539
16,787
48,401
42,523
1,075
7,873
52
589
76
38,736
48,401
1,127
8,364
–
–
143
32,889
42,523
The notes on pages 90 to 116 are an integral part of these Consolidated Financial Statements.
The financial statements on pages 85 to 116 were approved by the Board of Directors on 8 March 2016 and were signed
on its behalf by:
Rod Flavell
Chief Executive Officer
8 March 2016
87
Mike McLaren
Chief Financial Officer
8 March 2016
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Financial Statements
Consolidated Statement
of Cash Flows
for the year ended 31 December 2015
Cash flows from operating activities
Group profit before tax for the year
Adjustments for:
Depreciation and amortisation
Finance income
Finance expense
Share-based payment charge (including associated social security costs)
Decrease/ (increase) in trade and other receivables
Increase in trade and other payables
Cash flows generated from operations
Interest received
Income tax paid
Note
2015
£000
2014
£000
7
11
11
29,365
18,970
753
(16)
168
710
479
5,027
643
(4)
490
421
(4,044)
2,852
36,486
19,328
16
4
(6,920)
(4,898)
Net cash generated from operating activities
29,582
14,434
Cash flows from investing activities
Acquisition of property, plant and equipment
Acquisition of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Repayment of borrowings
Finance costs paid
Dividends paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Exchange (losses)/ gains on cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
(2,437)
(172)
(601)
(70)
(2,609)
(671)
–
–
(161)
(16,665)
7,902
(15,000)
(466)
–
(16,826)
(7,564)
10,147
(74)
12,287
6,199
78
6,010
22,360
12,287
21
23
18
18
The notes on pages 90 to 116 are an integral part of these Consolidated Financial Statements.
88
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Financial Statements
Consolidated Statement of
Changes in Equity
for the year ended 31 December 2015
Share
capital
Share
premium
Treasury
shares
Capital
redemption
reserve
Other
capital
reserves
Translation
reserve
Retained
earnings
£000
£000
£000
£000
Balance at 1 January 2015
£000
1,127
£000
8,364
Profit for the year
Other comprehensive
expense for the year
Total comprehensive
(expense)/ income
for the year
Share-based payments
(note 25)
Closure of Employee
Benefit Trust (note 26)
Purchase of deferred
shares (note 22)
Dividends (note 23)
–
–
–
–
–
(52)
–
–
–
–
–
(491)
–
–
Balance at
31 December 2015
1,075
7,873
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
52
–
52
–
–
–
–
589
–
–
–
Total
equity
£000
32,889
42,523
22,021
22,021
–
(67)
£000
143
–
(67)
(67)
22,021
21,954
–
–
–
–
–
589
491
–
–
–
(16,665)
(16,665)
589
76
38,736
48,401
Share
capital
Share
premium
Treasury
shares
£000
1,018
£000
543
£000
(22)
–
–
–
–
–
–
81
28
–
–
–
–
–
–
–
(53)
7,972
(98)
1,127
8,364
–
–
–
–
–
22
–
–
–
–
Capital
redemption
reserve
Other
capital
reserves
£000
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
421
(421)
–
–
–
–
–
Balance at 1 January 2014
Profit for the year
Other comprehensive
income for the year
Total comprehensive
income for the year
Share-based payments
(note 25)
Transfer to
retained earnings
Sale of treasury shares
Bonus issue of shares
Proceeds from shares
issued
Cost of shares issued
Balance at
31 December 2014
Translation
reserve
Retained
earnings
Total
equity
£000
£000
19,021
20,606
13,497
13,497
–
97
13,497
13,594
–
421
421
(22)
(28)
–
–
–
–
–
8,000
(98)
£000
46
–
97
97
–
–
–
–
–
–
143
32,889
42,523
The notes on pages 90 to 116 are an integral part of these Consolidated Financial Statements.
89
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Financial Statements
Notes to the Consolidated
Financial Statements
1
General information
The Group is an international professional services provider focusing principally on Information Technology, specialising
in the recruitment, training and placement of its own permanent IT 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.
The Consolidated Financial Statements consolidate those of the Company and its subsidiaries. Subsidiaries and their
countries of incorporation are presented in note 3 to the Parent Company Financial Statements.
The Consolidated Financial Statements present the results for the year ended 31 December 2015. The Consolidated
Financial Statements were approved by Rod Flavell and Mike McLaren on behalf of the Board of Directors on 8 March
2016.
2
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position
are summarised in the Strategic Report. The principal risks and uncertainties and risk management processes are also
described in the Strategic Report.
The Group’s continued and forecast global growth, positive operating cash flow and liquidity position, together with its
distinctive business model and infrastructure, enables the Group to manage its business risks. The Group’s forecasts and
projections show that it will continue to operate with adequate cash resources and within the current working capital
facilities. The Group passed all bank covenants tested in the year and forecasts that all covenants will be passed for a
period of at least twelve months from the date of signing this Annual Report.
The Directors therefore have a reasonable expectation that the Company and the Group will have adequate resources
to continue in operational existence for the foreseeable future. Accordingly the Directors continue to adopt the going
concern basis for preparing the financial statements.
3
Accounting policies
3.1
Basis of preparation
The Consolidated Financial Statements have been prepared in accordance with IFRSs as adopted by the EU, IFRS
Interpretations Committee (“IFRS IC”) interpretations and the Companies Act 2006 as applicable to companies reporting
under IFRSs.
The Consolidated Financial Statements have been prepared on a historical cost basis. The Consolidated Financial
Statements are presented in Pounds Sterling and all values are rounded to the nearest thousand (£000), except where
otherwise indicated.
The Group’s accounting policies have been applied consistently.
90
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Financial Statements
3.2
Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of the Group and its subsidiaries as at
31 December 2015.
Subsidiaries
Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are
prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group
balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated
in full.
Details of the subsidiaries owned by the Group are presented in note 3 to the Parent Company Financial Statements.
There are no minority interests in the subsidiaries of the Company.
3.3
Summary of significant accounting policies
a)
Business combinations and goodwill
The Group applies the acquisition method to account for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of
the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any
asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.
The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair
value or at the non-controlling interest’s proportionate share of the recognised amounts of the acquiree’s identifiable net
assets. Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held
equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such
re-measurement are recognised in profit or loss.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-
date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired
is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held
interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase,
the difference is recognised directly in the income statement.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of
impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the Group’s
cash-generating unit that is expected to benefit from the combination, irrespective of whether other assets or liabilities of
the acquiree are assigned to that unit.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill
associated with the operation disposed of is included in the carrying amount of the operation when determining the gain
or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values
of the operation disposed of and the portion of the cash-generating unit retained.
91
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Notes to the Consolidated Financial Statements
b)
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and excluding sales taxes.
Rendering of services
Revenue from the provision of IT consultants to third party customers is recognised as follows:
• The revenue is recognised in the period in which the IT consultants perform the work at the contracted rates for each
IT consultant. Revenue is based on timesheets from its IT consultants which are authorised by the Group’s customers
detailing the hours and service provided;
• Revenue in respect of non-receipted timesheets is accrued at the estimated contract value.
• Volume rebates are accrued in the period in which the revenue is incurred, with the value of the rebate offset against revenue.
They are calculated with regard to the threshold revenue in a contractual period.
c)
Foreign currency translation
The individual financial statements of each Group entity are presented in the currency of the primary economic
environment in which the company operates (its functional currency). For the purpose of the Consolidated Financial
Statements, the results and financial position of each entity are expressed in Pounds Sterling (£), which is the functional
currency of the parent company and the presentation currency for the Consolidated Financial Statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recorded at the rate prevailing at the time of the transaction. At the end of each reporting
period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of the
reporting period.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are
translated using exchange rates at the date when the fair value was determined.
For the purpose of presenting Consolidated Financial Statements, the assets and liabilities of the Group’s foreign operations
are expressed in the Group’s presentation currency using exchange rates prevailing at the end of the reporting period.
Income and expense related items are translated at the average exchange rates for the period. Exchange differences
arising are classified as other comprehensive income and transferred to the Group’s translation reserve.
d)
Taxes
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted at the reporting date in the countries where the Group operates and generates income.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the income statement.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax
regulations are subject to interpretation and establishes provisions where appropriate.
92
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Financial Statements
3.3
Summary of significant accounting policies (continued)
d)
Taxes (continued)
Deferred tax
Deferred tax is provided in full, using the liability method, on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: goodwill not deductible for tax purposes, the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or
substantively enacted at the reporting date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related
tax benefit will be realised.
e)
Property, plant and equipment
Property, plant and equipment are stated at cost net of accumulated depreciation. Cost includes the original purchase
price of the asset and the costs attributable to bringing the asset to its working condition for its intended use.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an
item of property, plant and equipment. The estimated useful lives are as follows:
Motor vehicles
Plant and equipment
Fixtures and fittings
4 years
4 years
4 years
Leasehold improvements
Length of lease
The assets’ residual values, useful lives and methods of depreciation are reviewed each financial year end and adjusted if
appropriate.
f)
Operating leases
Operating lease payments are recognised in the income statement on a straight-line basis over the term of the lease.
Lease incentives received are recognised in the income statement as part of the total lease expense.
g)
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The costs of intangible assets acquired
in a business combination are their fair values as at the date of acquisition.
Software and software licences
The Group holds acquired software and software licences as intangible assets. Acquired software and software licences
are capitalised on the basis of cost and amortised over the estimated useful lives of the software which is estimated to
be four years or the licence term if shorter. The estimated useful life and amortisation method are reviewed at the end of
each annual reporting period and adjusted if appropriate.
93
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Notes to the Consolidated Financial Statements
Goodwill
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purposes of
impairment testing, goodwill is allocated to the Group’s cash-generating units.
Goodwill is reviewed annually or when there is an indication of impairment. Impairment of goodwill is determined by
assessing the recoverable amount of the cash-generating unit to which the goodwill relates. Where the recoverable
amount of the cash-generating unit is less than the carrying value of the cash-generating unit to which the goodwill has
been allocated, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future
periods.
h)
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less provision for
impairment. A provision for impairment of trade receivables is established when there is objective evidence that the
Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or
delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision
is the difference between the assets’ carrying amount and the present value of estimated future cash flows, discounted
at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance
account, and the amount of the loss is recognised in the income statement within administrative expenses. When a trade
receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of
amounts previously written off are credited against administrative expenses in the income statement.
i)
Cash and cash equivalents
Cash and cash equivalents comprise cash at banks and on hand and short-term deposits with a maturity of three months
or less.
j)
Financial liabilities
Initial recognition and measurement
Financial liabilities are recognised initially at fair value and subsequently held at amortised cost. The Group’s financial
liabilities include trade and other payables and a revolving credit facility. During 2014 the Group’s bank loans were repaid
in full and in February 2015 the Group’s working capital facility expired.
Loans and financial liabilities
Borrowing costs paid on the establishment of credit facilities are recognised as an expense in the income statement over
the expected usage period of the facility.
k)
Pensions and other post-employment benefits
The Group operates a number of defined contribution pension schemes. The assets of each scheme are held separately
from those of the Group in an independently administered fund. The amount charged to the income statement represents
the contributions payable to the schemes, in respect of the accounting period.
94
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Financial Statements
3.3
Summary of significant accounting policies (continued)
l)
Exceptional items
Exceptional items are disclosed and described separately in the financial statements where it is necessary to do so to
provide a better understanding of the financial performance of the Group. They are items of expense or income that
are material or one-off in nature and are shown separately due to the significance of their nature or amount. Further
information on the expenses classified as exceptional is included in note 10.
m)
Equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
Equity instruments that are reacquired (treasury shares) are recognised at cost, including any directly attributable
incremental costs (net of income taxes), and deducted from equity attributable to the Company’s equity holders until the
shares are cancelled or reissued. No gain or loss is recognised in the income statement on the purchase, sale, issue or
cancellation of the Group’s own equity instruments. Any difference between the carrying amount and consideration (net
of any directly attributable incremental transaction costs and the related income tax effects), if reissued, is recognised in
Share premium. Treasury shares relate to those shares held by the Employee Benefit Trust and are consolidated in the
results of the Group. The Company is the sponsoring entity of the Employee Benefit Trust. The Employee Benefit Trust,
which was inactive in 2015, was closed during the year ended 31 December 2015. Until its closure during 2015, the share
transactions of the Employee Benefit Trust were consolidated in the results of the Group.
Other capital reserves represent the cost of equity on settled share-based payments until such share options are
exercised or lapse.
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements
of foreign operations.
n)
Share-based payments
Employees (including senior executives) of the Group receive remuneration in the form of share-based payments,
whereby employees render services as consideration for equity instruments (equity-settled transactions).
Equity-settled transactions
The cost of equity-settled transactions is recognised, together with a corresponding increase in other capital reserves
in equity, over the period in which the performance and/ or service conditions are fulfilled. The cumulative expense
recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the
vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest.
The income statement expense or credit for a period represents the movement in cumulative expense recognised as at
the beginning and end of that period and is recognised in employee benefits expense. The equity-settled transactions are
fair valued at the grant date and the expense recognised over the duration of the vesting period.
No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions for which vesting
is conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the
market or non-vesting condition is satisfied, provided that all other performance and/ or service conditions are satisfied.
When the terms of an equity-settled transaction award are modified, the minimum expense recognised is the expense
as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognised for
any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to
the employee as measured at the date of modification.
95
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Notes to the Consolidated Financial Statements
When an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. This includes any award where non-vesting conditions within the
control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award,
and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they
were a modification of the original award, as described in the previous paragraph.
o)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting to the Board of Directors. The
Executive Directors have been identified as the chief operating decision maker.
p)
Dividends
Dividends are recognised as a liability in the year in which they are fully authorised, or in the case of interim dividends
when paid.
4
Significant accounting estimates and assumptions
The preparation of the Group’s financial statements requires management to make judgements, 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 year. However, 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 are considered to be the Group’s significant areas of judgement:
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 EPS 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 key assumptions in respect of the share-
based payment charges are set out in note 25.
Impairment of goodwill
For impairment testing of goodwill the weighted average cost of capital (“WACC”) is calculated to reflect a required rate
of return. The WACC is used to discount the estimated future cash flows of the Group to arrive at a value in use, which is
compared to the carrying value of the goodwill and other net assets of the respective cash generating unit at the balance
sheet date. If the value in use is greater than the carrying value of goodwill and other net assets at the balance sheet date,
there is no impairment. For further information, see note 16.
96
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Financial Statements
5
New standards and interpretations
The International Accounting Standards Board (“IASB”) and IFRS IC have issued the following amendment which was
effective during the year and was adopted by the Group in preparing the financial statements. The adoption of this
amendment has not had a material impact on the Group’s financial statements in the year:
Effective in 2015
Amendments
Effective for accounting
periods beginning on or after
Endorsed by the EU
Amendment to IAS 19, ‘Employee benefits’, on defined
benefit plans
1 July 2015
Yes
The IASB and IFRS IC have issued the following standards and amendments with an effective date of implementation for
accounting periods beginning after the date on which the Group’s financial statements for the current year commenced.
With the exception of IFRS 16 ‘Leases’, the Directors do not anticipate that the adoption of these standards and
interpretations will have a material impact on the Group’s financial statements in the period of initial application. The
Directors have not yet carried out an assessment of the likely impact of IFRS 16 ‘Leases’.
Effective after 31 December 2015
Effective for accounting
periods beginning on or after
Endorsed by the EU
New standards
IFRS 9, ‘Financial instruments’
IFRS 14, ‘Regulatory deferral accounts’
IFRS 15, ‘Revenue from contracts with customers’
IFRS 16, ‘Leases'
Amendments
Amendments to IAS 1, 'Presentation of financial statements'
disclosure initiative
Amendments to IAS 7, ‘Statement of cash flows’
Amendments to IAS 12,'Income taxes' on recognition of deferred tax
assets for unrealised losses
Amendment to IAS 16, 'Property, plant and equipment' and IAS 38,
'Intangible assets', on depreciation and amortisation
Amendments to IAS 16, 'Property, plant and equipment' and IAS 41,
'Agriculture' on bearer plants
Amendments to IAS 27, 'Separate financial statements' on equity
accounting
Amendments to IAS 28, ‘Investments in Associates’
Amendments to IAS 38, ‘Intangible Assets’
Amendments to IAS 41, ‘Agriculture’
Amendment to IFRS 9,'Financial instruments', on general hedge
accounting
Amendments to IFRS 10, 'Consolidated financial statements' and
IAS 28, 'Investments in associates and joint ventures' on sale or
contribution of assets
Amendments to IFRS 10, 'Consolidated financial statements' and IAS
28, 'Investments in associates and joint ventures' on applying the
consolidation exemption
Amendment to IFRS 11, 'Joint arrangements on acquisition of an
interest in a joint operation'
Amendment to IFRS 12, ‘Disclosure of interests in other entities'
Annual improvements 2012 – 2014 cycle
97
1 January 2018
1 January 2016
1 January 2018
1 January 2019
1 January 2016
1 January 2017
1 January 2017
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2018
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
No
Yes
No
No
Yes
No
No
Yes
Yes
Yes
No
No
No
No
No
No
Yes
No
Yes
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Notes to the Consolidated Financial Statements
6
Segmental reporting
Management has determined the operating segments based on the operating reports reviewed by the Board of Directors
that are used to assess both performance and strategic decisions. Management has identified that the Executive Directors
are the chief operating decision maker in accordance with the requirements of IFRS 8 ‘Operating segments’.
At 31 December 2015, the Board of Directors consider that the Group is organised on a worldwide basis into four core
geographical operating segments:
(1)
(2)
(3)
(4)
UK and Ireland;
North America;
Rest of Europe, Middle East and Africa, excluding UK and Ireland (“EMEA”); and
Asia Pacific (“APAC”).
Each geographical segment is engaged in providing services within a particular economic environment and is subject to
risks and returns that are different from those of segments operating in other economic environments.
All segment revenue, profit before taxation, assets and liabilities are attributable to the principal activity of the Group,
being an international IT services provider.
During the year to 31 December 2015 the measurement methods used to determine operating segments and reported
segmental profit or loss was updated to include all recharges from operating segments, and where appropriate, central
costs. This analysis provides a clearer understanding of the underlying performance in each segment. The comparative
numbers have been restated for comparability.
For the year ended 31 December 2015
Revenue
UK and
Ireland
£000
110,011
North
America
£000
36,154
EMEA
£000
10,672
APAC
£000
3,819
Total
£000
160,656
Depreciation and amortisation
(559)
(176)
(15)
(3)
(753)
Segment operating profit
22,370
5,892
Finance income
Finance costs
14
(152)
–
(4)
909
2
(9)
346
29,517
–
(3)
16
(168)
Profit before tax
22,232
5,888
902
343
29,365
Total assets
57,127
8,652
3,601
1,560
70,940
Total liabilities
(15,861)
(4,258)
(1,600)
(820)
(22,539)
98
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Financial Statements
6
Segmental reporting (continued)
For the year ended 31 December 2014 (restated)
Revenue
UK and
Ireland
£000
90,313
North
America
£000
22,122
EMEA
£000
8,909
APAC
£000
1,913
Total
£000
123,257
Depreciation and amortisation
(456)
(165)
(20)
(2)
(643)
Operating profit before exceptional items
21,191
3,133
Exceptional expenses
(5,339)
(73)
Segment operating profit
15,852
3,060
Finance income
Finance costs
4
(473)
–
(5)
488
–
488
–
(11)
56
–
56
–
(1)
24,868
(5,412)
19,456
4
(490)
Profit before tax
15,383
3,055
477
55
18,970
Total assets
47,101
7,546
3,676
987
59,310
Total liabilities
(11,551)
(3,435)
(1,357)
(444)
(16,787)
Information about major customers
One customer represents 10% or more of the Group’s revenues from all four operating segments and is presented as
follows:
Revenue from customer
7
Operating profit
Operating profit for the year has been arrived at after charging/ (crediting):
Hire of property – operating leases
Net foreign exchange differences
Depreciation and amortisation
99
2015
£000
2014
£000
44,714
30,252
2015
£000
2014
£000
2,627
2,048
(69)
753
(46)
643
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Notes to the Consolidated Financial Statements
Auditors’ remuneration
During the year the Group (including its overseas subsidiaries) obtained the following services from the Group’s auditors:
Fees payable to the Group’s auditors for the audit of the Parent Company
and Consolidated Financial Statements
Fees payable to the Group’s auditor for other services:
- The audit of the Group’s subsidiaries
- Fees in relation to Admission process
- Non-audit services
2015
£000
65
114
–
84
1
263
2014
£000
65
100
725
–
890
8
Staff numbers and costs
The monthly average number of persons employed by the Group (including Executive Directors) during the year, analysed
by category, was as follows:
IT Consultants
Sales
Administration
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Other pension costs
Share-based payments
2015
Number
2014
Number
1,992
79
237
1,390
71
196
2,308
1,657
2015
£000
70,148
6,818
932
589
2014
£000
52,358
5,517
604
421
78,487
58,900
100
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Financial Statements
8
Staff numbers and costs (continued)
Retirement benefits
The Group operates a number of defined contribution pension plans. The pension charge for the year represents
contributions payable by the Group to the schemes. The pension contributions payable at 31 December 2015 was
£143,000 (2014: £107,000). There were no outstanding prepaid contributions at the end of the financial years 2015
and 2014.
9
Directors’ remuneration
Details of the Directors’ (who also represent the key management personnel of the Group) remuneration in respect of the
year ended 31 December 2015 is set out below:
Short term employee benefits
Post-employment benefits
Share-based payments
2015
£000
2,292
33
–
2014
£000
1,780
24
421
2,325
2,225
For further information on Directors’ remuneration, see the audited sections of the Remuneration Report as defined on
page 57.
10
Exceptional items
The Group incurred no exceptional costs in 2015.
During 2014, the Group incurred £5,412,000 of exceptional expenses. These comprised £4,887,000 in respect of the
Company’s Admission to the London Stock Exchange, and exceptional staff costs, including share-based payments
relating to a scheme that existed prior to Admission of £525,000.
101
FDM Group (Holdings) plcAnnual Report and Accounts 2015
11
Financial income and expense
Bank interest
Financial income
Interest payable on working capital facility
Interest payable on revolving credit facility
Finance fees and charges
Notes to the Consolidated Financial Statements
2015
£000
16
16
2015
£000
(11)
(109)
(48)
2014
£000
4
4
2014
£000
(51)
(351)
(88)
Financial expense
(168)
(490)
12
Taxation
The major components of income tax expense for the years ended 31 December 2015 and 2014 are:
Current income tax:
Current income tax charge
Adjustments in respect of prior periods
Deferred tax:
Relating to origination and reversal of temporary differences
Adjustments in respect of prior periods
2015
£000
7,494
–
2014
£000
5,540
(301)
(150)
–
67
167
Total tax expense reported in the income statement
7,344
5,473
The standard rate of corporation tax in the UK changed from 23% to 21% with effect from 1 April 2014, and to 20% with
effect from 1 April 2015. Accordingly, the profits for the respective accounting periods are taxed at an effective rate of
20.25% (2014: 21.5%). The tax charge for the year is higher (2014: higher) than the standard rate of corporation tax in the
UK. The differences are set out on the next page:
102
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Financial Statements
12
Taxation (continued)
Profit before income tax
Profit multiplied by UK standard rate of corporation tax of 20.25% (2014: 21.5%)
Effect of different tax rates on overseas earnings
Adjustments in respect of prior periods
Expenses not deductible for tax purposes
Total tax charge
Factors affecting future tax charges
2015
£000
2014
£000
29,365
18,970
5,946
1,283
–
115
4,079
644
(135)
885
7,344
5,473
Deferred tax assets and liabilities are measured at the rate that is expected to apply to the period when the asset is
realised or the liability is settled, based on the rates that have been enacted or substantively enacted at the reporting
date. Therefore, at each year end, deferred tax assets and liabilities have been calculated based on the rates that have
been substantively enacted by the reporting date.
In 2015 the UK government announced legislation setting out that the main UK corporation tax rate will be 19% with
effect from 1 April 2017, and 18% with effect from 1 April 2020. At 31 December 2015 and 31 December 2014, deferred
tax assets and liabilities have been calculated based upon the rate at which the temporary difference is expected to
reverse. These reductions may also reduce the Group’s future current tax charges accordingly.
13
Earnings per ordinary share
Basic earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the Parent Company
by the weighted average number of ordinary shares in issue during the year. There is no difference between basic and
diluted earnings per share for the year as there are no dilutive shares.
Profit for the year
£000
2015
22,021
2014
13,497
Average number of ordinary shares in issue
Number
107,517,506
106,219,238
Earnings per share (ordinary shares)
Pence
20.5
12.7
Adjusted earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the Parent
Company, excluding exceptional items and performance share plan expense (including social security costs), by the
weighted average number of ordinary shares in issue during the year.
103
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Notes to the Consolidated Financial Statements
Profit for the year (basic earnings)
Exceptional items (net of tax) (note 10)
Share-based payment expense (including social security costs) (note 25)
Tax effect of share-based payment expense
£000
£000
£000
£000
2015
22,021
–
710
(173)
2014
13,497
5,137
–
–
Adjusted profit for the year
£000
22,558
18,634
Average number of ordinary shares in issue
Number
107,517,506
106,219,238
Adjusted earnings per share
Pence
21.0
17.5
14
Property, plant and equipment
2015
Cost
At 1 January 2015
Additions
Disposals
Effect of movements in foreign exchange
Leasehold
improvements
Motor
vehicles
Fixtures and
fittings
Plant and
equipment
£000
£000
£000
£000
2,361
1,610
(330)
16
23
–
–
–
)
642
362
–
5
1,414
465
–
(2)
Total
£000)
4,440
2,437
(330)
19
At 31 December 2015
3,657
23
1,009
1,877
6,566
Accumulated depreciation
At 1 January 2015
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
At 31 December 2015
623
293
(330)
3
589
Net book value at 31 December 2015
3,068
23
–
–
–
23
–
355
156
–
6
517
492
917
253
–
3
1,918
702
(330)
12
1,173
2,302
704
4,264
104
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Financial Statements
14
Property, plant and equipment (continued)
2014
Cost
At 1 January 2014
Additions
Disposals
Effect of movements in foreign exchange
At 31 December 2014
Accumulated depreciation
At 1 January 2014
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
At 31 December 2014
2,171
202
(28)
16
2,361
427
222
(28)
2
623
Net book value at 31 December 2014
1,738
15
Intangible assets
2015
Cost
At 1 January 2015
Additions
Effect of movements in foreign exchange
Leasehold
improvements
Motor
vehicles
Fixtures and
fittings
Plant and
equipment
£000
£000
£000
£000
Total
£000
23
–
–
–
23
21
2
–
–
23
–
479
155
–
8
642
224
125
–
6
355
287
1,284
3,957
244
(121)
7
601
(149)
31
1,414
4,440
781
254
(121)
3
917
497
1,453
603
(149)
11
1,918
2,522
Software and
software licences
Goodwill
£000
£000
Total
£000
419
172
1
19,322
19,741
–
–
172
1
At 31 December 2015
592
19,322
19,914
Accumulated amortisation
At 1 January 2015
Amortisation for the year
Effect of movements in foreign exchange
At 31 December 2015
312
51
1
364
–
–
–
–
312
51
1
364
Net book value at 31 December 2015
228
19,322
19,550
105
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Notes to the Consolidated Financial Statements
Software and
software licences
£000
Goodwill
£000
Total
£000
347
70
2
419
270
40
2
312
107
19,322
19,669
–
–
70
2
19,322
19,741
–
–
–
–
270
40
2
312
19,322
19,429
2014
Cost
At 1 January 2014
Additions
Effect of movements in foreign exchange
At 31 December 2014
Accumulated amortisation
At 1 January 2014
Amortisation for the year
Effect of movements in foreign exchange
At 31 December 2014
Net book value at 31 December 2014
The amortisation charge is recognised in administrative expenses in the income statement. The amortisation period of
the software and software licences is 4 years. Goodwill is not amortised but is subject to an annual impairment test.
The goodwill has been allocated to cash generating units (“CGUs”) summarised as follows:
Cost and net book value
At 31 December 2015 and 2014
14,843
3,082
1,397
–
19,322
UK and
Ireland
£000
North
America
£000
EMEA
£000
APAC
£000
Total
£000
16
Impairment testing of goodwill
An overview of impairment reviews performed by CGUs is set out below. The recoverable amount of each CGU has been
determined on value in use calculations using cash flow projections from financial budgets and forecasts approved by
the Board covering a three year period from the date of the relevant impairment review. The key assumptions in the
projections, for all CGUs, were as follows:
• Revenue and gross margin were based on expected levels of activity under existing major contractual arrangements
together with growth based upon medium term historical growth rates and having regard to expected economic and
market conditions for other customers.
• Administrative expenses were forecast to move in line with expected levels of activity in the CGU.
• The growth rate used to extrapolate the cash flows beyond the three year forecast period was 2.0% up to a period of
15 years in total.
106
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Financial Statements
16
Impairment testing of goodwill (continued)
The pre-tax discount rates used in the calculations were as follows:
UK and Ireland
North America
EMEA
2015
%
10.24
13.95
10.08
2014
%
11.81
13.58
10.39
As a result of the review the Directors did not identify any impairment for the goodwill in each CGU. In considering
sensitivities, no reasonable change in any of the above key assumptions would cause the recoverable amount to fall
below the carrying value of the CGUs.
17
Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
The trade receivables as at 31 December are aged as follows:
Not overdue
Not more than three months past due
More than three months but not more than six months past due
More than six months but not more than one year past due
Older than one year past due
Provision for impairment
2015
£000
20,990
341
3,262
2014
£000
21,654
191
3,227
24,593
25,072
2015
£000
15,324
5,336
338
78
48
(134)
2014
£000
14,795
6,461
388
87
–
(77)
20,990
21,654
An analysis of the provision for impairment by the aged receivable category it relates to is set out below:
Not overdue
Not more than three months past due
More than three months but not more than six months past due
More than six months but not more than one year past due
Older than one year past due
107
Provision for
impairment
Provision for
impairment
2015
£000
2
30
35
29
38
134
2014
£000
–
–
–
77
–
77
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Notes to the Consolidated Financial Statements
The movement in the provision for impairment is as below:
At 1 January
Charge for the year
At 31 December
2015
£000
77
57
134
The carrying amounts of the Group’s trade receivables are denominated in the following currencies:
Pounds Sterling
US Dollar
Canadian Dollar
Euro
Swiss Franc
Hong Kong Dollar
Singapore Dollar
Chinese Renminbi
South African Rand
Swedish Krona
18
Cash and cash equivalents
Cash at bank and in hand
2014
£000
66
11
77
2014
£000
14,915
3,722
447
1,329
678
212
156
8
183
4
2015
£000
13,872
4,047
599
996
553
235
345
282
52
9
20,990
21,654
2015
£000
2014
£000
22,360
12,287
Cash and cash equivalents denominated in currencies other than Pounds Sterling amount to £5,404,000 (2014:
£4,362,000), denominated in US Dollar, Canadian Dollar, Euro, Swiss Franc, Hong Kong Dollar, Singapore Dollar, Chinese
Renminbi, South African Rand and Swedish Krona.
The Group has issued guarantees in favour of Rptre Sarl for €31,548, Commerzbank for CHF150,000, CRP/ Capstone 14W
Property Owner LLC totalling US$242,399 and Roza 14W LLC for a leasehold property in the USA for US$25,973.
108
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Financial Statements
18
Cash and cash equivalents (continued)
The credit quality of financial assets can be assessed by reference to external credit ratings issued by credit ratings
agencies registered in the European Union. Cash at bank is held with banks with the following ratings:
Cash at bank by credit rating
AA
A
(i)
Revolving credit facility
2015
£000
20,989
1,371
2014
£000
11,467
820
22,360
12,287
The Group has a £20,000,000 Revolving Credit Facility (“RCF”) with HSBC Bank plc, expiring on 14 August 2018. The facility
is available to be repaid and redrawn at the discretion of the Group.
The RCF is secured by way of a debenture on the assets of the Company, Astra 5.0 Limited, FDM Group Limited and FDM
Group Inc. The interest rate on the RCF is fixed at 2.75% over LIBOR per annum. Since February 2015 the charge on non-
utilised funds reduced from 1.0% to 0.4% per annum.
(ii)
Working capital facility
At 31 December 2014 the Group had a working capital facility of £10,000,000 provided by HSBC. The facility expired in
February 2015 at the end of the facility term.
19
Trade and other payables
Trade payables
Other payables
Other taxes and social security
Accruals and deferred income
2015
£000
3,172
883
5,257
9,856
2014
£000
2,730
881
4,504
5,898
19,168
14,013
Trade and other payables denominated in currencies other than Pounds Sterling amount to £723,000 (2014: £2,305,000),
denominated in US Dollars, Canadian Dollars, Euros, Swiss Francs, Hong Kong Dollars, Singapore Dollars, Chinese
Renminbi, South African Rand and Swedish Krona.
109
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Notes to the Consolidated Financial Statements
20
Deferred income tax assets/ (liabilities)
Group deferred tax assets/ (liabilities) are attributable to the following:
Non-current:
Non-current temporary differences
Deferred tax asset
Non-current:
Non-current temporary differences
Deferred tax liability
2015
£000
173
173
2015
£000
2014
£000
–
–
2015
£000
(282)
(259)
(282)
(259)
Based on the Group’s approved forecasts, the Directors consider the deferred tax asset is recoverable within two to five years.
Movement in deferred tax during 2015:
Share-based payments
Property, plant and equipment
Movement in deferred tax during 2014:
Property, plant and equipment
1 January 2015
Recognised
in income
statement
31 December
2015
£000
£000
£000
–
(259)
(259)
173
(23)
150
173
(282)
(109)
1 January 2014
Recognised
in income
statement
31 December
2014
£000
£000
£000
(25)
(25)
(234)
(234)
(259)
(259)
110
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Financial Statements
21
Analysis of net cash/ (debt) (non-GAAP measure)
Analysis of net cash
Cash and cash equivalents
2015
£000
2014)
£000)
22,360
12,287
Net debt is defined as borrowings less net cash and cash equivalents. The Group had undrawn facilities at 31 December
2015 of £20,000,000 (2014: £30,000,000).
Movement of net cash/ (debt)
Net cash/ (debt) at beginning of year
Net increase in cash and cash equivalents
Repayment of borrowings
Exchange (losses)/ gains
Total net cash
22
Share capital
Authorised, called up, allotted and fully paid share capital
2015
£000
2014
£000
12,287
(8,990)
10,147
–
(74)
6,199
15,000
78
22,360
12,287
Ordinary shares of £0.01 each
Deferred shares of £0.01 each
Ordinary shares
2015
Number of
shares
2015
£000
2014
Number of
shares
107,517,506
1,075
107,517,506
–
–
5,200,392
2014
£000
1,075
52
107,517,506
1,075
112,717,898
1,127
All ordinary shares rank equally for all dividends and distributions that may be declared on such shares. At general
meetings of the Company, each shareholder who is present (in person, by proxy or by representative) is entitled to one
vote on a show of hands and, on a poll, to one vote per share.
Deferred shares
At the Company’s Annual General Meeting held on 30 April 2015, shareholders approved the purchase by the Company
of 5,200,392 deferred shares for £1.00; the deferred shares had a nominal value of £0.01 each. The deferred shares were
not entitled to any dividend or distribution and the holders had no right to attend, speak or vote at any general meeting
of the Company by virtue of their holdings of any deferred shares. The holder of each deferred share had the right to
receive, after the holders of all other shares in the capital of the Company (other than the deferred shares) then in issue
had received £10,000,000 in respect of each such share held by them.
111
FDM Group (Holdings) plcAnnual Report and Accounts 2015
23
Dividends
Dividends paid
Paid to shareholders
Notes to the Consolidated Financial Statements
2015
£000
2014
£000
16,665
–
An interim dividend of 8.0 pence per share (2014: nil pence per share) was declared by the Directors on 28 July 2015
and paid on 25 September 2015 to holders of record on 21 August 2015. An interim dividend of 7.5 pence per share
in respect of the period from Admission of the Company’s shares to the Main Market of the London Stock Exchange
on 20 June 2014 to 31 December 2014 was paid on 12 June 2015.
The Board is proposing the following dividends in respect of the year to 31 December 2015, for approval by shareholders
at the AGM on 28 April 2016:
• A final dividend of 8.5 pence per share; and
• A special dividend of 5.0 pence per share.
Subject to shareholder approval, both of these dividends will be paid on 3 June 2016 to shareholders of record on 13 May
2016.
This brings the Company’s total dividend for the year to 21.5 pence per share (2014: 7.5 pence per share), comprising
total ordinary dividends of 16.5 pence per share (2014: 7.5 pence per share) and the special dividend of 5.0 pence per
share (2014: nil pence per share). The total ordinary dividends of 16.5 pence per share will be covered 1.2 times by basic
earnings per share.
The Board has adopted a progressive dividend policy; the Group will retain sufficient capital to fund ongoing operating
requirements, maintain an appropriate level of dividend cover and sufficient funds to invest in the Group’s longer term growth.
24
Operating leases
The Group has entered into commercial leases on certain properties. Future minimum payments under non-cancellable
operating leases are as follows:
Less than one year
Between one and five years
More than five years
2015
£000
2,805
12,210
6,277
2014
£000
1,366
6,292
5,023
21,292
12,681
There are no contingent rents, purchase options, escalation clauses or significant restrictions on any of the Group’s
operating leases.
112
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Financial Statements
25
Share-based payments
Expenses arising from equity settled share-based payment transaction (i)
Expenses arising from equity settled share-based payment transaction (ii)
2015
£000
589
–
589
2014
£000
–
421
421
i)
2015 share-based payments
As disclosed in the Directors’ Remuneration Report, the Company granted awards on 20 April 2015 and 10 August 2015,
in the form of nominal cost options over ordinary shares in the Company under the FDM 2014 Performance Share Plan
(“PSP”). The vesting of the awards is subject to the achievement of a three year performance condition relating to earnings
per share.
Awards granted to UK participants have been structured as Approved Performance Share Plan (“APSP”) awards to enable
participants to benefit from UK tax efficiencies. Each APSP award consists of a tax qualifying option under the FDM 2014
Company Share Option Plan (”CSOP”) over shares with a value of up to £30,000 and a separate award under the PSP for
amounts in excess of the HMRC £30,000 limit. A Linked Award is also provided under the PSP to enable participants to
fund the exercise price of the CSOP option.
PSP and CSOP options are exercisable no later than the tenth anniversary of the date of grant.
The table below summarises the outstanding share options:
Outstanding at 1 January 2015
Granted during 2015
Forfeited during 2015
Exercised during 2015
Expired during 2015
Outstanding at 31 December 2015
Exercisable at the end of the year
Weighted average remaining contractual life (years)
Number of
shares
Weighted
average
exercise
price
–
1,220,698
123,126
–
–
1,097,572
–
2
–
103p
n/a
–
–
103p
–
n/a
113
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Notes to the Consolidated Financial Statements
The fair values of the PSP and CSOP options made during the year were determined using the Black-Scholes valuation
model. The significant inputs to the model were as follows:
Share price at date of grant
Exercise price
Dividend yield
Expected volatility
Risk free interest rate
Expected life
Fair value at date of grant – issue on 20 April 2015
Fair value at date of grant – issue on 10 August 2015
PSP
CSOP
331p
1p
4%
31%
1.22%
4 years
281p
388p
331p
331p
4%
31%
1.22%
4 years
56p
125p
The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may not
necessarily be the actual outcome. As the Company has only a limited history of quoted share price volatility, the expected
volatility has been partly based on the historical volatility of comparator companies.
ii)
2014 share-based payments
On 20 June 2014 the FDM Employee Benefit Trust transferred ownership of 146,520 B shares to three Directors of the
Company for £nil consideration. The share-based payment arises as a result of the exercise price being at a lower price
than the fair value share price at the transfer date, being the date when the shares were valued. The fair value of the
shares at the time of the transfer has been calculated using the share price on Admission of £2.87.
26
Closure of Employee Benefit Trust
On 28 December 2015 the Employee Benefit Trust, of which the Company was the sponsor, was closed, resulting in
a transfer of £491,000 from the consolidated share premium account to retained earnings. There is no impact on the
Parent Company share premium, retained earnings or distributable reserves.
27
Related parties
During the year the Group paid rental of £36,000 (2014: £33,000) 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 year end (2014: £nil).
During the year the Group paid £58,000 (2014: £nil) for contractor IT services to Viper Business Solutions Limited, which
is a limited company wholly owned by the daughter of Sheila Flavell. The IT services performed were charged at market
rate, no balances were outstanding at year end (2014: £nil).
Inflexion Private Equity partners invoiced fees to the value of £nil (2014: £43,000) for Directors’ fees and expenses. No
balances were outstanding at year end (2014: £nil). Inflexion Private Equity partners had owned 61.5% of the voting rights
of the Company until Admission in 2014.
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.
114
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Financial Statements
28
Financial risk management
The Group manages its capital to ensure the Company and all its subsidiaries will be able to continue as a going concern
whilst maximising the return to shareholders.
The use of financial instruments is managed under policies and procedures approved by the Board. These are designed
to reduce the financial risks faced by the Group and Company, which primarily relate to credit, interest, liquidity, capital
management and foreign currency risks, which arise in the normal course of the Group’s business.
There are no adjustments between the amounts presented in the Statement of Financial Position and the fair values of
the assets and liabilities.
Credit risk
Credit risk is managed on a Group basis and arises from cash and cash equivalents and trade receivables. The Group
provides credit to customers in the normal course of business and the amount that appears in the Statement of Financial
Position is net of an allowance of £134,000 (2014: £77,000) for specific doubtful receivables.
All material trade receivable balances relate to sales transactions with the Group’s blue-chip customer base. At the
reporting date, although the Group had significant balances with key customers, there were no significant concentrations
of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset.
Credit risk is managed through agreed procedures which include managing and analysing the credit risk for new
customers and managing existing customers.
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily
to the Group’s long term debt facility which has an interest rate of 2.75% above LIBOR. At the year end the Group had
no borrowings therefore it has limited exposure to interest rate risk. The Group manages its interest rate risk through
regular reviews of its exposure to changes in interest rates.
Liquidity risk
The Group manages liquidity risk by maintaining adequate cash reserves and continuously monitoring forecast and
actual cash flows and where appropriate matches the maturity of financial assets and liabilities.
The Group has no borrowings from third parties at the year end and therefore liquidity risk is not considered a significant
risk at this time.
Capital management
The Group’s policy is to maintain a strong capital base so as to maintain investor market, creditor, customer and
employee confidence and to sustain future investment and development of the business. The capital structure of the
Group consists of equity attributable to the equity holders of the Group comprising issued share capital, other reserves
and retained earnings.
The Board monitors the capital structure on a regular basis and determines the level of annual dividend. The Group is not
exposed to any externally imposed capital requirements.
115
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Notes to the Consolidated Financial Statements
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates
primarily to the Group’s operating activities (when revenue or expense is denominated in a different currency from the
Group’s functional currency) and the Group’s net investments in foreign subsidiaries.
The currencies giving rise to this risk are primarily the US Dollar, Canadian Dollar, Swiss Franc and Euro. The Group has
both cash inflows and outflows in these currencies that create a natural hedge. The Group has not entered into hedging
contracts for cash positions denominated in foreign currencies.
Fair values
There is no significant difference between the carrying amounts shown in the Consolidated Statement of Financial
Position and the fair values of the Group and Company’s financial instruments. For current trade and other receivables or
payables with a remaining life of less than one year, the amortised cost is deemed to reflect the fair value.
116
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Independent auditors’ report to the
members of FDM Group (Holdings) plc
Report on the group financial statements
Our opinion
In our opinion, FDM Group (Holdings) plc’s parent company financial statements (the “financial statements”):
• give a true and fair view of the state of the parent company’s affairs as at 31 December 2015 and of its cash flows for the year then ended;
• have been properly prepared in accordance with International Financial Reporting Standards (“IFRSs”) as adopted by the European Union
and as applied in accordance with the provisions of the Companies Act 2006; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
What we have audited
The financial statements, included within the Annual Report and Accounts (the “Annual Report”), comprise:
• the parent company statement of financial position as at 31 December 2015;
• the parent company statement of cash flows for the year then ended;
• the parent company statement of changes in equity for the year then ended; and
• the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information.
Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the financial statements.
These are cross-referenced from the financial statements and are identified as audited.
The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and IFRSs as
adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006.
Other required reporting
Consistency of other information
Companies Act 2006 opinion
In our opinion, the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
ISAs (UK & Ireland) reporting
Under International Standards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”) we are required to report to you if, in our opinion,
information in the Annual Report is:
• materially inconsistent with the information in the audited financial statements; or
• apparently materially incorrect based on, or materially inconsistent with, our knowledge of the parent company acquired in the course
of performing our audit; or
• otherwise misleading.
We have no exceptions to report arising from this responsibility.
Adequacy of accounting records and information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting
records and returns.
We have no exceptions to report arising from this responsibility.
117
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Directors’ remuneration
Directors’ remuneration report - Companies Act 2006 opinion
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
Other Companies Act 2006 reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors’ remuneration specified
by law are not made. We have no exceptions to report arising from this responsibility.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Statement of Directors’ Responsibilities set out on pages 77 to 78, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK &
Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the parent company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, 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 an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK & Ireland). An audit involves obtaining evidence about the amounts and disclosures
in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement,
whether caused by fraud or error. This includes an assessment of:
• whether the accounting policies are appropriate to the parent company’s circumstances and have been consistently applied and
adequately disclosed;
• the reasonableness of significant accounting estimates made by the directors; and
• the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the directors’ judgements against available evidence, forming our own
judgements, and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a
reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive
procedures or a combination of both.
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the
audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent
with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements
or inconsistencies we consider the implications for our report.
Other matter
We have reported separately on the group financial statements of FDM Group (Holdings) plc for the year ended 31 December 2015.
Jaskamal Sarai (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
8 March 2016
118
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Financial Statements
Parent Company Statement of
Financial Position
as at 31 December 2015
Non-current assets
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Total liabilities
Net assets
Equity attributable to equity holders of the parent
Share capital
Share premium
Capital redemption reserve
Other capital reserves
Retained earnings/ (accumulated losses)
Total equity
Note
3
4
5
6
7
2015
£000
589
589
2014
£000
–
–
34,602
10
4,351
5
34,612
4,356
35,201
4,356
165
165
103
103
35,036
4,253
1,075
7,873
52
589
1,127
7,873
–
–
25,447
(4,747)
35,036
4,253
The Parent Company made a profit for the year of £46,859,000 (2014: loss of £4,835,000). In accordance with section 408
of the Companies Act 2006, the Parent Company’s individual profit and loss account is not included in these financial
statements.
The notes on pages 122 to 126 are an integral part of the Parent Company Financial Statements.
These financial statements on pages 119 to 126 were approved by the Board of Directors on 8 March 2016 and were
signed on its behalf by:
Rod Flavell
Chief Executive Officer
8 March 2016
119
Mike McLaren
Chief Financial Officer
8 March 2016
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Financial Statements
Parent Company Statement of
Cash Flows
for the year ended 31 December 2015
Cash flows from operating activities
Company profit/ (loss) before tax for the year
Adjustments for:
Dividends received
Increase in trade and other receivables
Increase in trade and other payables
Net cash flow used in operating activities
Cash flows from investing activities
Dividends received
Proceeds from issuance of ordinary shares
Note
2015
£000
2014
£000
46,859
(4,835)
(47,000)
(30,251)
62
–
(3,170)
103
(30,330)
(7,902)
10
47,000
–
–
7,902
Net cash generated from investing activities
47,000
7,902
Cash flows from financing activities
Dividends paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
10
(16,665)
(16,665)
5
5
10
Cash and cash equivalents at end of year
5
The notes on pages 122 to 126 are an integral part of the Parent Company Financial Statements.
–
–
–
5
5
120
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Financial Statements
Parent Company Statement of
Changes in Equity
for the year ended 31 December 2015
Share
premium
Capital
redemption
reserve
Other
capital
reserves
(Accumulated
losses)/
retained
earnings
£000
£000
£000
£000
Share
capital
£000
Total
equity
£000
Balance at 1 January 2015
1,127
7,873
Profit for the year
Total comprehensive income for
the year
Dividends paid
Share-based payments (note 3)
Purchase of deferred shares
(note 7)
–
–
–
–
(52)
–
–
–
–
–
Balance at 31 December 2015
1,075
7,873
–
–
–
–
–
52
52
–
–
–
–
589
–
(4,747)
4,253
46,859
46,859
46,859
46,859
(16,665)
(16,665)
–
–
589
–
589
25,447
35,036
Share
premium
Capital
redemption
reserve
Other
capital
reserves
Retained
earnings/
(accumulated
losses)
£000
£000
£000
£000
Share
capital
£000
Total
equity
£000
Balance at 1 January 2014
1,018
Loss for the year
Total comprehensive expense
for the year
Bonus issue
Proceeds from shares issued
Costs of shares issued
–
–
81
28
–
52
–
–
(53)
7,972
(98)
Balance at 31 December 2014
1,127
7,873
–
–
–
–
–
–
–
–
–
–
–
–
–
–
116
1,186
(4,835)
(4,835)
(4,835)
(4,835)
(28)
–
–
–
8,000
(98)
(4,747)
4,253
The notes on pages 122 to 126 are an integral part of the Parent Company Financial Statements.
121
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Notes to the Parent Company
Financial Statements
1
Going concern
The Directors have a reasonable expectation that with the continued support of other Group companies, the Company
will have adequate resources to continue in operational existence as a holding company for the foreseeable future.
Accordingly the Directors continue to adopt the going concern basis for preparing the financial statements.
2
Accounting policies
The Company financial statements have been prepared in accordance with IFRSs as adopted by the EU and in accordance
with the Companies Act 2006 as they apply to the financial statements of the Company for the year ended 31 December
2015 and in accordance with IFRIC interpretations.
The Company has taken the exemption under section 408 of the Companies Act 2006 not to present the parent company
income statement. The profit for the year was £46,859,000 (2014: loss of £4,835,000).
The financial information has been prepared on a historical cost basis.
The accounting policies of the Company are the same as those of the Group and have been applied consistently. These
are set out in note 3 in the Notes to the Consolidated Financial Statements, except that the Company has no policy in
respect of consolidation. Investments are carried at historical cost.
Details of the Company’s significant accounting estimates, being the share-based payments, are consistent with those
disclosed in note 4 to the Consolidated Financial Statements on page 96.
3
Investments
At 1 January
Additions
At 31 December
2015
£000
–
589
589
2014)
£000)
–
–
–
The addition to investments represents a recharge from the Company to its subsidiary undertakings in respect of the costs
associated with the FDM 2014 PSP. For further details of the PSP see note 25 to the Consolidated Financial Statements.
122
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Financial Statements
3
Investments (continued)
The Company holds the following investments in its subsidiaries:
Company
Astra 5.0 Limited
FDM Group Limited
FDM Astra Ireland Limited
FDM Group Inc.
FDM Group Canada Inc.
FDM Group NV
FDM Group GmbH
FDM Switzerland GmbH
FDM Group SA
FDM South Africa (PTY) Limited
FDM Singapore Consulting PTE Limited
FDM Technology (Shanghai) Co. Limited
FDM Group HK Limited
Country of
incorporation
Class of
share held Direct/ indirect
Ownership
Great Britain
Great Britain
Ireland
USA
Canada
Belgium
Germany
Switzerland
Luxembourg
South Africa
Singapore
China
Hong Kong
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
The total cost of investments in subsidiaries, excluding the addition in the year, is £2 (2014: £2).
Astra 5.0 Limited acts as an intermediate holding company and provides human resources and marketing services to the
Group. The remaining subsidiaries carry out the principal activity of the Group.
4
Trade and other receivables
Amounts owed by subsidiary undertakings
Prepayments and accrued income
2015
£000
34,539
63
2014
£000
4,345
6
34,602
4,351
All trade and other receivables are receivable in Pounds Sterling and are fully performing. Amounts owed by subsidiary
undertakings are unsecured, non-interest bearing and repayable on demand.
123
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Notes to the Parent Company Financial Statements
5
Cash and cash equivalents
Cash at bank and in hand
2015
£000
2014
£000
10
5
The Company’s cash is held with a financial institution with a credit rating of AA at the date of signing the financial
statements.
6
Trade and other payables
Trade payables
Accruals and deferred income
7
Share capital
Ordinary shares of £0.01 each
Deferred shares of £0.01 each
Ordinary shares
2015
£000
55
110
2014
£000
–
103
165
103
2015
2015
2014
2014
Number of
shares
107,517,506
–
£000
1,075
–
Number of
shares
107,517,506
5,200,392
£000
1,075
52
107,517,506
1,075
112,717,898
1,127
All ordinary shares rank equally for all dividends and distributions that may be declared on such shares. At general
meetings of the Company, each shareholder who is present (in person, by proxy or by representative) is entitled to one
vote on a show of hands and, on a poll, to one vote per share.
124
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Financial Statements
7
Share capital (continued)
Deferred shares
At the Company’s Annual General Meeting held on 30 April 2015, shareholders approved the purchase by the Company
of 5,200,392 deferred shares for £1.00; the deferred shares had a nominal value of £0.01 each. The deferred shares were
not entitled to any dividend or distribution and the holders had no right to attend, speak or vote at any general meeting
of the Company by virtue of their holdings of any deferred shares. The holder of each deferred share had the right to
receive, after the holders of all other shares in the capital of the Company (other than the deferred shares) then in issue
had received £10,000,000 in respect of each such share held by them.
8
Related parties
The Company holds inter-company balances with certain of its subsidiary undertakings. The transactions that have taken
place are in relation to inter-company loan repayments/ additions which are listed below:
Astra 5.0 Limited
FDM Group Limited
Dividends
from
related
parties
2015
£000
47,000
–
Amounts
owed by
related
parties
2015
£000
4,340
30,199
47,000
34,539
Dividends
from
related
parties
2014
£000
–
–
–
Amounts
owed by
related
parties
2014
£000
4,345
–
4,345
9
Financial risk management
The financial risks and uncertainties the Company faces are the same as those of the Group. These are set out on pages
115 and 116.
10
Dividends
Dividends received
Received from subsidiaries
Dividends paid
Paid to shareholders
125
2015)
£000)
47,000
16,665
2014)
£000)
–
–
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Notes to the Parent Company Financial Statements
An interim dividend of 8.0 pence per share (2014: nil pence per share) was declared by the Directors on 28 July 2015 and
paid on 25 September 2015 to holders of record on 21 August 2015. An interim dividend of 7.5 pence per share in respect
of the period from Admission of the Company’s shares to the Main Market of the London Stock Exchange on 20 June 2014
to 31 December 2014 was paid on 12 June 2015.
The Board is proposing the following dividends in respect of the year to 31 December 2015, for approval by shareholders
at the AGM on 28 April 2016:
• A final dividend of 8.5 pence per share; and
• A special dividend of 5.0 pence per share.
Subject to shareholder approval, both of these dividends will be paid on 3 June 2016 to shareholders of record on 13 May
2016.
This brings the Company’s total dividend for the year to 21.5 pence per share (2014: 7.5 pence per share), comprising
total ordinary dividends of 16.5 pence per share (2014: 7.5 pence per share) and the special dividend of 5.0 pence per
share (2014: nil pence per share). The total ordinary dividends of 16.5 pence per share will be covered 1.2 times by basic
earnings per share.
The Board has adopted a progressive dividend policy; the Company will retain sufficient capital to fund ongoing operating
requirements, maintain an appropriate level of dividend cover and sufficient funds to invest in the Group’s longer term
growth.
An interim balance sheet as at 28 February 2015 was prepared and delivered to Companies House to enable the interim
dividend to be paid on 12 June 2015. The total value of distributable reserves as at 31 December 2015 was £25,447,000.
11
Directors’ remuneration
Directors’ remuneration was paid by FDM Group Limited in both the current and prior year and no recharge was made to
the Company. For further details see note 9 to the Consolidated Financial Statements on page 101.
12
Auditors’ remuneration
Auditors’ remuneration was paid by FDM Group Limited in both the current and prior year and no recharge was made
to the Company.
126
FDM Group (Holdings) plcAnnual Report and Accounts 2015
Financial Statements
Shareholder Information
Directors
Ivan Martin
Roderick Flavell
Sheila Flavell
Michael McLaren
Andrew Brown
Peter Whiting
Robin Taylor
Non-Executive Chairman
Chief Executive Officer
Chief Operating Officer
Chief Financial Officer
Group Commercial Director
Non-Executive Director
Non-Executive Director
Michelle Senecal de Fonseca
Non-Executive Director
Company Secretary
Jonathan Mark Heather
Registered office
3rd Floor
Cottons Centre
Cottons Lane
London
SE1 2QG
Independent Auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
Bankers
Registrars
Stock brokers (joint)
Legal advisors
Financial PR advisors
127
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London
E14 5HQ
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Investec Bank plc
2 Gresham Street
London
EC2V 7QP
Taylor Wessing LLP
5 New Street Square
London
EC4A 3TW
Weber Shandwick
No 2 Waterhouse Square
140 High Holborn
London
EC1N 2AE
Stockdale Securities Limited
Beaufort House
15 St. Botolph Street
London
EC3A 7BB
FDM Group (Holdings) plcAnnual Report and Accounts 2015 Notes
128
FDM Group (Holdings) plcAnnual Report and Accounts 2015 FDM Group
3rd Floor, Cottons Centre, Cottons Lane, London SE1 2QG
Tel: +44 (0) 20 3056 8240
Fax: +44 (0) 870 757 7634
Email: enquiries@fdmgroup.com
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