Highlights
FDM has delivered on its key financial and operational objectives.
Financial
Mountie revenue1 (£m)
Adjusted operating profit2
(£m)
£207.3m +24%
£47.3m
207.3
167.3
119.4
37.6
30.2
+26%
47.3
2015
2016
2017
2015
2016
2017
Profit before tax (£m)
Adjusted profit before tax2
(£m)
£43.7m +24%
£47.2m
43.7
35.3
29.4
37.5
30.1
+26%
47.2
2015
2016
2017
2015
2016
2017
Basic earnings per share
(pence)
29.8 pence +22%
Adjusted basic earnings per
share2 (pence)
32.6 pence +26%
29.8
32.6
24.4
20.5
25.8
21.0
2015
2016
2017
2015
2016
2017
Cash flow generated from
operations (£m)
Adjusted cash conversion2
(%)
£48.3m +23%
102.2%
-3%
36.5
39.4
48.3
121.3
104.9
102.2
2015
2016
2017
2015
2016
2017
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Operational
• Mounties assigned to client sites
at week 523 were up 17% at
3,170 (2016: 2,705)
• 72 new clients secured globally
(2016: 49)
• Mountie utilisation rate4 for the
year to 31 December 2017 was
97.3% (2016: 97.4%)
• Continued sector diversification,
with 72% (2016: 67%) of new
clients won during the year outside
the financial services sector
• Further successful geographic
expansion particularly in APAC,
which grew Mounties assigned
by 31% compared with week 52
2016
• 29% increase in number of
online applications received
• 1,626 training completions in
2017 (2016: 1,807)
• Continued investment in
training Academies, with global
training capacity at year-end up
by 9% over December 2016
• Final dividend of 14.0 pence per
share giving a total ordinary
dividend for the year of 26.0 pence,
an increase of 33% on 2016
• 2017 saw the Group report a
median differential of 0.0% in its
UK Gender Pay Gap Report
1 Mountie revenue excludes revenue from contractors.
See page 33 for analysis of revenue.
2 The adjusted operating profit, adjusted profit before tax
and adjusted cash conversion are calculated before
Performance Share Plan expenses (including social
security costs) of £3.6m (2016: £2.2m). The adjusted
basic earnings per share is calculated before the impact
of Performance Share Plan expenses (including social
security costs and associated deferred tax). Adjusted
cash conversion is calculated by dividing cash flow from
operations by adjusted profit before tax. See also
page 34 for further details of adjusted items.
3 Week 52 in 2017 commenced on 18 December 2017
(2016: week 52 commenced on 26 December 2016).
4 Utilisation is calculated as the ratio of cost of utilised
Mounties to the total Mountie payroll cost.
1
Contents
Strategic Report
1
2
6
8
20
22
26
32
37
48
Highlights
About FDM
Chairman’s Statement
Chief Executive’s Review
Key Performance Indicators
Business Model
Our Markets
Financial Review
Risk Management
Corporate Social Responsibility
Financial Statements
Governance
58
61
68
74
75
95
Board of Directors
Corporate Governance Report
Audit Committee Report
Nomination Committee Report
Remuneration Report
Directors’ Report
98
105
106
107
108
109
110
130
131
132
133
137
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
Parent Company Statement of Financial Position
Parent Company Statement of Cash Flows
Parent Company Statement of Changes in Equity
Notes to the Parent Company Financial Statements
Shareholder Information
FDM Group (Holdings) plcAnnual Report and Accounts 2017
About FDM
The Group
FDM Group (Holdings) plc ("the Company") and its
and experience required to successfully launch or re-launch their
subsidiaries (together "the Group" or "FDM") is a global
career. FDM has dedicated training centres and sales operations
professional services provider with a focus on Information
located in London, Leeds, Glasgow, New York, Virginia, Toronto,
Technology ("IT"). FDM brings people and technology
Frankfurt, Singapore and Hong Kong. FDM also operates in China,
together; creating and inspiring exciting careers that shape
Ireland, France, Switzerland, Austria, Denmark, Spain, Australia
our digital future.
and South Africa.
The Group's principal business activities involve sourcing,
FDM is a strong advocate of diversity and inclusion in the
training and placing its own permanent IT and business
workplace, with over 75 nationalities working together as a team.
consultants ("Mounties") at client sites. The Group also
The Group became an early adopter of the UK's Gender Pay Gap
supplies contractors to clients, either to supplement its own
reporting policy, making FDM the sixth company in the UK to
employed consultants' skill sets or to provide additional
release its figures. FDM was featured as one of the Best
experience where required. FDM specialises in a range of
Employers for Race by Business in the Community and in the first
technical and business disciplines including Development,
Social Mobility Employer Index by the Social Mobility Foundation
Testing, IT Service Management, Project Management Office,
and Social Mobility Commission in 2017. FDM was also recognised
Data Services, Business Analysis, Business Intelligence and
as Company of the Year at the TechWomen50 Awards 2017.
Cyber Security.
The FDM Careers Programme bridges the gap for graduates,
ex-Forces and returners to work, providing them with the training
Watch our Defining our Values video
Partnering with 72 new
clients worldwide in 2017
One of the UK's leading
IT graduate employers
FTSE 250 multi award-
winning employer
Driving diversity and
inclusion in the
workplace
Hiring graduates,
ex-Forces and returners
to work
Working in
multiple sectors
FDM’s vision and values
FDM's vision is to be recognised as the leading provider and preferred choice for innovative and specialised IT and business
services, whilst creating and inspiring exciting careers that shape our digital future. This is driven through the following values:
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.
2
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
FDM Group (Holdings) plcAnnual Report and Accounts 2017 About FDM
Industry awards received during the year included:
Best Employer Brand
• The Job Crowd’s Top 100 Companies For Graduates To Work For 2017/18
• The Guardian UK 300 Most Popular Graduate Employers for 2017/18
• Top 50 Employer in the UK Social Mobility Index 2017
• Business in the Community Best Employers for Race 2017
• TechWomen50 Awards – Company of the Year 2017
• Scotland Women in Technology Awards – Lifetime Achievement Award – FDM COO
• Computing Women in IT Excellence Awards – Woman of the Year 2017 – FDM COO
• Computer Weekly 50 Most Influential Women in UK IT 2017 – FDM COO
• MoD Employer Recognition Scheme (ERS) – Gold Award
• The Herald and GenAnalytics Diversity Awards – Diversity Star Performer
(1000+ employees) 2017
• s1 Recruitment Awards – Best Employer Brand and Best Employer
Training & Development 2017
• Best in Biz Awards North America – Fastest Growing Company of the Year – Large
(Silver Award) 2017
• US Veterans Magazine Best of the Best Top Veteran-Friendly Companies 2017
• Military Times Best for Vets Employer 2017
• RecruitMilitary Most Valuable Employers (MVE) for Military 2017
• Virginia Values Veterans (V3) Readiness Award 2017
• Fair Company 2017 and MINT Minded Company 2017
• Kununu Top Company and Open Company 2017
4
FDM Group (Holdings) plc
Annual Report and Accounts 2017
FDM is a strong advocate of diversity and
inclusion in the workplace, with over 75
nationalities working together as a team
Chairman’s Statement
Group revenues
+23%
Group revenues increased by 23%
to £234 million with growth in
revenues being delivered by each
operating region
Total ordinary
dividend
+33%
The total ordinary dividend for 2017
is 26 pence, up 33% on 2016 enabled
by the strong cash generative
performance by the Group in 2017
Ivan Martin
Chairman
Continued strong performance in a year that saw
us become a FTSE 250 company.
Chairman's Statement
Performance
People
I am pleased to report a strong performance for 2017, with
Our results this year once again reflect the dedication and
the Group delivering 17% growth in Mountie headcount,
professionalism of all our employees across the Group in
including growth of at least 15% in Mountie headcount in
2017. We are very proud that our unique and proven
each of our operating regions, and ending the year with a
business model enables us to create and inspire exciting
record 3,170 Mounties placed on client sites.
careers that shape our digital future. On behalf of the
The Group’s financial position remains strong with a
significant contribution to the performance of the Group.
Board, I would like to thank all our employees for their
closing cash balance £9.0 million higher than 2016 at
£36.8 million and no debt.
The Board
Strategic progress
It is the successful implementation of our strategy that has
enabled us to deliver another year of strong operational
and financial performance. I am delighted with the
progress we have made in the year against all four of our
stated strategic objectives: we welcomed almost 2,000 new
recruits into the FDM Careers Programme; we increased
the total number of our training Academies to nine; we
gained 72 new clients across and the Group and we placed
Mounties for the first time in Australia and Spain.
Culture and values
We continue to be rated highly by our employees in the
areas of culture, colleagues and career progression. Our
values of ambition, collaboration, energy, inclusivity,
professionalism and growth are all ingrained within our
culture and are actively promoted by the Board. We work
to inspire commitment to and promotion of these values in
each of our employees.
Governance
The Board firmly believes that robust Corporate
Governance and risk management are essential to
maintaining the stability of the Group. Our approach to risk
management and our risk management procedures were
independently reviewed during the year and the findings
were positive. I report separately on Corporate
Governance on page 61 of the Annual Report.
I have informed the Board that I intend to step down later
in the current year and have asked the Board to start the
process to find a new Chairman to succeed me. The current
intention is that I will step down once that search has been
successfully completed.
I have served as Chairman of FDM since October 2006. Since the
Company’s IPO in June 2014, FDM has reported four consecutive
years of strong profit performance while continuing to
expand overseas and grow revenue. This has been reflected
in the Company's share price, which has increased by around
280% since the Company’s IPO in June 2014. The continued
success of FDM in the period since the IPO has also resulted
in the Company’s entry into the FTSE 250 in June 2017 –
marking a key milestone in the Company’s evolution.
In recognition of the fact that I am in my 12th year as
Chairman, and having recently adopted a new three-year
strategic plan, the Board is looking ahead to the next phase of
the Company’s development and growth. In the light of this,
the Board and I believe that the time is now right to begin the
search for a new independent Non-Executive Chairman.
The search has commenced and will be led by the
Company's Nomination Committee, to be chaired by the
Senior Independent Director. A further update will be
provided to shareholders in due course.
Outlook
The new year has begun positively for the Group and I am
confident that 2018 will see FDM continue to deliver against
its strategic objectives.
Dividend
The Group has a progressive dividend policy, aimed at
increasing the annual dividend broadly in line with growth
in the Group’s earnings per share. We intend to pay a final
dividend of 14.0 pence, taking the total ordinary dividend
to 26.0 pence, up 33% on 2016.
Ivan Martin
Chairman
6 March 2018
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FDM Group (Holdings) plcAnnual Report and Accounts 2017
Chief Executive’s Review
Chief Executive's Review
Mounties placed
with clients
+17%
Mounties placed with clients grew 17%
to 3,170 at week 52 2017, exceeding
3,000 for the first time during 2017
Overview
We ended the year with an impressive 3,170 Mounties placed with clients. The Group achieved growth in revenue of
£44.2 million and delivered an adjusted profit before tax1 of £47.2 million. Each of our operating regions delivered good
growth as outlined on pages 26 to 30.
I have set out in detail below how we delivered on our key strategic objectives in 2017. Our strategic objectives, which are
closely aligned to our business model, have provided a disciplined framework to focus our plans for investing in new and
existing territories and for investing in the infrastructure needed to attract the highest calibre of people to join our business.
Our strategy
FDM’s strategy is to deliver customer led, sustainable, profitable growth on a consistent basis, through its well-established
Mountie model. This strategy requires that all activities and investments produce the appropriate level of profit and return on
cash, that they deliver sustained and measurable improvements for all our stakeholders including customers, staff and
shareholders, and that they further FDM’s objective of launching the careers of talented people worldwide.
FDM’s strategy is underpinned by four key objectives: Attract, train and develop high-calibre Mounties; Invest in leading-edge
training Academies; Grow and diversify our client base; and Expand our geographic presence.
Rod Flavell
Chief Executive Officer
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The Group returned a strong performance in 2017, generating
growth in Mountie numbers, revenue and profit while continuing to
invest, in each of its territories, in sustainable and long term growth.
During the early part of 2018 FDM has seen continued strong
momentum across all of its markets and I am confident FDM will
deliver another year of good operational and financial
performance in 2018.
Risks 1, 2, 3,
Attract, tr
high-calib
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5
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BRINGING
PEOPLE AND
TECHNOLOGY
TOGETHER
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Risk 6
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For further details on our Business Model see pages 22 to 25
For further details on our Risks and Risk Management see pages 37 to 45
1 The adjusted profit before tax is calculated before Performance Share Plan expenses (including social security costs).
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FDM Group (Holdings) plcAnnual Report and Accounts 2017
Chief Executive's Review
Attract, train and develop high-calibre Mounties
In the UK, FDM is one of the leading graduate employers, an achievement we are
looking to emulate across the Group. We have worked to develop relationships with
leading universities and multiple arms of the military. With online applications up 29%
year-on-year, FDM is in a strong position at the start of 2018.
FDM is currently one of the top 50 companies on the Social Mobility Employer Index.
FDM provides sponsorship for student societies and university skills awards across all
subject disciplines, as well as industry events such as the FDM everywoman in
Technology Awards. 2017 saw 1,626 training completions across the Group (2016:
1,807 training completions). Investment in training has generated an 18% increase in
training staff, with 99 employed across the Group’s training Academies at
31 December 2017. During the year over 200 courses were delivered covering our ten
core streams. In 2017 over 1,000 certificates for formally accredited training
programmes were awarded, including SCRUM, ITIL, ISTQB and Prince.
Our programme provides thousands of people each year with the opportunity to
launch or further their careers – with a permanent and meaningful employment role
for a minimum of two years. Supported by a network of peers, our Mounties have the
opportunity to work for a broad range of well-known international businesses having
received comprehensive, role-specific training. Of our UK Graduate intake, 86%
attended a state school and 32% were the first in their family to go to university. 9% of
our Mounties on site at week 52 have advanced through our Ex-Forces Programme.
Whilst our business model operates on the premise that the average length of a
Mountie’s engagement with FDM is approximately three years, the training provided
by FDM enables our Mounties to develop exciting and rewarding careers beyond their
time with us.
Our pathways
Each of our pathways follows the three step business model; Recruit, Train, and
Deploy. This model is designed to provide trainees with the relevant support to
develop and grow professionally and to open doors to an exciting career in IT.
Graduate
At a critical time in their lives, FDM supports graduates in the transition from university
to the world of professional employment. Opportunities are available to graduates,
who may not previously have considered a career in the disciplines in which FDM
operates. Approximately 90% of FDM’s Mounties placed on site at 31 December 2017
progressed through our graduate pathway and the inspiration and motivation of these
individuals provide the backbone of FDM’s business. FDM has been recognised as a
top graduate employer, featuring in ‘The Job Crowd’s Top 100 Companies For
Graduates to Work For’ for seven consecutive years.
10
FDM Group (Holdings) plc
Annual Report and Accounts 2017
FDM is currently one of the top 50
companies in the Social Mobility
Employer Index
Chief Executive's Review
Ex-Forces
Our dedicated Ex-Forces Programme in the UK and USA supports ex-Forces
personnel by offering the opportunity to pursue a career in IT and business.
We recognise that people who have served in the Armed Forces have many
transferable skills, ranging from adaptability and maturity to responsibility and
leadership that are crucial to a successful career in the corporate world. Our
Ex-Forces Programme is managed by ex-service personnel and employs
ex-servicemen and women from all ranks and across all three services.
Ex-Forces ranks at FDM in the UK:
Junior Ranks
Senior NCOs
Officers
41% 34% 25%
Returners to Work
FDM’s ‘Getting Back to Business’ Programme is designed specifically to provide
employment opportunities for high-calibre individuals who have taken an
extended career break, facilitating their re-entry into the workplace. The support
offered by FDM enables our candidates to regain confidence, upskill and
interview to join one of our clients as part of an effective business team.
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We recognise that people who have
served in the Armed Forces have
many transferable skills, ranging
from adaptability and maturity to
responsibility and leadership
FDM Group (Holdings) plcAnnual Report and Accounts 2017
Chief Executive's Review
Invest in leading-edge training Academies
FDM Academies are dynamic, high-technology facilities, where our skilled and knowledgeable trainers provide first class training. The
opening of our Academy in Singapore during 2017 brings the total number of our permanent Academies to nine.
Training capacity (the number of available training seats at a given point in time) has increased by 9% over the year to 777 at 31 December
2017. Over 1,600 individuals have completed training through FDM’s Academies during 2017.
In line with our strategy to increase our presence in new markets, a temporary training centre opened in Sydney in January 2017. Staffed by
trainers from across the Group, this pop-up Academy trained the 20 Mounties successfully placed in Australia in 2017.
Academy development is key to securing a flow of Mounties to support our growth. As our training capacity continues to increase, so has
our ratio of trainers to trainees, demonstrating our commitment to ensuring trainees have the required level of support during their
development. FDM currently employs 99 training staff across the Group.
The journey so far: Our Academies
FDM’s involvement in our key projects has been
invaluable to Virgin Media. Young, enthusiastic
individuals who are keen to progress and always
give their best. Looking forward to getting more
FDM graduates in!
Taz Hussein
Senior Commercial Manager
Virgin Media
800
700
600
500
400
300
200
100
June
2014
December
2014
June
2015
December
2015
June
2016
December
2016
June
2017
December
2017
Training seats at 31 December 2017
Singapore
Hong Kong
Frankfurt
30
40
48
Reston
Toronto
New York
80
74
111
Glasgow
Leeds
London
72
140
182
Grow and diversify our client base
FDM is committed to delivering the highest level of service to its clients. The Group has a concentration of clients in the financial
services sector and is continually expanding the number of service streams that it offers to financial services clients. We are
continuing to develop our presence in other sectors, of the 72 new customers gained in the year, 52 were outside the financial
services sector. FDM’s presence in the public sector has improved significantly and Mountie headcount in this market increased by
34% in the year.
14
We have worked with FDM Group
over the last four years to help
build a strong and diverse talent
pipeline for the IT function. They
have identified skilled and capable
men and women who are helping
us create a workforce that’s
representative of the societies in
which we operate, and essential for
the sustainability and growth of our
global operations.
Ed Alford
CIO and VP of IT Services
BP Group
FDM Group (Holdings) plcAnnual Report and Accounts 2017
Chief Executive's Review
Expand our geographic presence
Good progress has been made in each of the geographic markets in which we operate with the number of Mounties on site increasing
in each region. The largest increase came in the UK and Ireland, which saw Mountie headcount increase by 239 (16%), followed by
North America which increased headcount by 133 (16%), APAC which was up by 73 heads (31%), and EMEA which was up by 20 heads
(15%). The growth in APAC includes 20 Mounties placed for the first time in Australia.
A permanent training Academy and sales centre was opened in Singapore in April 2017, with the aim of mirroring the growth and
success demonstrated by our Hong Kong operations. We expanded our Frankfurt training Academy during 2017 and are about to
expand our existing Academy in Toronto. We also opened a branch in Spain, as planned. Our continuing investment each year in our
training facilities demonstrates our commitment to increasing our presence in new and existing markets for our business.
An overview of the financial performance and developments in each of the markets in which we operate is set out on pages 26 to 30.
Our service offerings
FDM continues to monitor industry trends to identify new opportunities for services, working closely with existing and potential
clients to understand their strategy and expected future technology direction.
In 2017 we conducted a “soft launch” into Robotic Process Automation (“RPA”) taking Mounties from the standard Business Analysis
and Software Development programmes and providing additional training in specific RPA tools to meet client demand. Also during
2017, as coding and automation skills become more relevant across the delivery pipeline, FDM delivered an increasing number of Test
Automation & DevOps engineers using Mounties from our standard technical programmes who had been trained to meet the needs
of specific clients.
The IT landscape continues to become more complex year on year, requiring more diverse skillsets underpinned by core
competencies in one or more disciplines including coding, data analytics, operations and cyber security. To meet this challenge FDM
constantly re-evaluates its training to ensure we deliver, at scale, a consultant workface best suited to the wide range of technology
roles required.
During 2018, FDM’s core training proposition will continue to evolve, remaining flexible to best meet the needs of our clients.
Delivering effective training requires a combination of learning delivery methods including classroom-based training, e-learning and
an emphasis on gaining practical experience using appropriate tools and methodologies.
We pursue appropriate partnerships with industry leading product vendors and suppliers to support the training programmes
developed and maintained in-house to ensure the best possible preparation for our Mounties.
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FDM Group (Holdings) plc
Annual Report and Accounts 2017
Our continuing investment each year in
our training facilities demonstrates our
commitment to increasing our presence
in new and existing territories
Chief Executive's Review
Our people - talented, ambitious,
enthusiastic and diverse
Empowered by working for an award winning company, our employees are
hardworking, motivated and ambitious, which results in a dynamic working
environment. Rewarding our team is important. We offer networking opportunities
alongside a variety of social and corporate events as well as granting achievement
awards each month for exemplary work. Our focus is on ensuring that our team is
performing successfully and delivering strong results which together support the
continuing growth and development of FDM. Our people are prepared to go the extra
mile and take pride in contributing towards the Group’s success.
FDM continues to champion a number of people initiatives. It employs over 280
ex-Forces personnel in the UK and USA and in 2017 FDM USA was recognised as a Most
Valuable Employer for Military (by RecruitMilitary.com) and a Best for Vets Employer
(by The Military Times) for the fourth year running. The Group supports the advancement
of women in the IT industry through the global “FDM Women in IT” initiative, with 28%
of the workforce now female. We were delighted to be the sixth company in the UK to
publish its UK Gender Pay Gap Report, showing a median pay gap of 0%.
We continue to seek ways to retain and develop our best people. During 2017 further
awards were made under the Performance Share Plan. Since its launch in 2015,
employees from all parts of the Group have benefited from these awards. The first
awards, granted in 2015 are due to vest in April 2018, rewarding our employees for
their dedication and hard work over the last three years.
I would like to extend the Board’s thanks to every FDM employee, as it is their
commitment and performance that enable us to continue to grow our business
successfully. During 2017, the Group trained 1,626 Mounties and ended the year with
3,170 Mounties at client sites, an achievement made possible by the strength and
commitment of our management, recruitment, sales and training teams.
Looking forward
I anticipate that 2018 will be another year in which FDM delivers good operational and
financial performance.
Rod Flavell
Chief Executive Officer
6 March 2018
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FDM Group (Holdings) plc
Annual Report and Accounts 2017
Our employees are hardworking,
motivated and ambitious, creating a
dynamic working environment
Key Performance Indicators
We focus on a number of Key Performance Indicators (“KPIs”) to identify trends in the operating and trading performance of the
Group. The Group aims to increase profitability, maintain a robust balance sheet and invest in operations and new locations to
underpin the organic growth of the Group. The Group continues to deliver strong margins and converts profits into operating cash
flow for investment and to provide a return to shareholders. 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 costs associated with the Performance Share Plan, to provide a clear
FDM’s four key strategic objectives:
Attract, train and develop high-calibre Mounties
Invest in leading-edge training Academies
understanding of the underlying trading performance.
Grow and diversify our client base
Expand our geographic presence
Financial KPIs
Performance
Description
Link to strategy
Link to business model
Link to risk
Key Performance Indicators
Mountie revenue (£m)
+24%
Adjusted operating profit1 (£m)
+26%
Adjusted basic earnings per
share1 (pence)
+26%
Cash flow generated from
operations (£m)
+23%
Adjusted cash conversion1 (%)
-3%
Operational KPIs
Mounties on client sites (week 52)
+17%
Mountie utilisation rate (%)
-0.1%
Training completions
-10%
2017
2016
2015
2017
2016
2015
2017
2016
2015
2017
2016
2015
2017
2016
2015
2017
2016
2015
2017
2016
2015
2017
2016
2015
207
Significant growth in Mountie
167
headcount resulting in a 24% growth
119
in Mountie revenue
47
32.6
38
30
25.8
21.0
The Group delivered operating profit
growth through increasing Mountie
headcount whilst investing in its
operational capacity
We have delivered earnings growth in
line with our targets
48
The Group closed the year with cash
balances of £36.8 million
(2016: £27.8 million)
The improvements in working capital
management in 2016 have been
maintained in 2017 and our cash
39
36
102
105
121
conversion remains in line with our
target of 100%
3,170
Increase in Mountie headcount
2,705
across all regions with 72 new clients
2,022
won during 2017
97.3
97.4
97.8
Change in Mountie utilisation rate in
2017 was negligible and remained
within expected tolerances
1,626
1,807
1,240
The number of Mounties completing
training decreased by 10%, a factor of
the timing of training completions
around year end
Deploy
1
2
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Recruit
Train
Deploy
Recruit
Train
Deploy
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Train
Deploy
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Train
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Train
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(including social security costs). The adjusted basic earnings per share is calculated before the impact of Performance Share
FDM’s four key strategic objectives are explained in more detail on pages 9 to 16.
Plan expenses (including social security costs and associated deferred tax).
The components of FDM’s business model are shown on pages 22 to 24.
21
1 The adjusted operating profit and adjusted cash conversion are calculated before Performance Share Plan expenses
FDM’s principal risks are detailed on pages 37 to 45.
FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Business Model
Bringing People and Technology together
What sets us apart
How our business works
The value we create
Business Model
Our people
• As employees of FDM, our Mounties are trained to
the latest industry standards
Global coverage
•
International presence with localised support in nine
dedicated locations
• State of the art training facilities
Track record of success
• Robust credentials with 26 years of operational success
• Cost effective, value added business model
Bespoke approach
• Low-risk solution as FDM retains full accountability
for Mounties
• Scalable capacity with no minimum requirement
• Ability to tailor recruitment and training
• Guaranteed resource for up to two years
• Option to transfer from FDM to permanent after
two years
We recruit
We train
We recruit the best people
amongst:
• Graduates
• Ex-Forces
• Returners to work
We offer extensive training
to successful candidates
through our award-
winning training
For more information see page 24
For more information see page 24
We deploy
Beyond the two years
We place Mounties at a
diverse range of clients,
when placed Mounties enter
a two-year bond period
For more information see page 24
Following completion of
the two-year bond period
there is the option for
Mounties to transition
permanently with clients or
embark on a new
placement with FDM
For our customers
We provide our clients with a first-class, flexible
resource at a competitive price.
3,000+
Mounties on client site
For our shareholders
FDM has consistently delivered value for our
shareholders.
22%
growth in earnings per share
33%
growth in annual dividends
For our employees
On-going professional development and support
available to our employees throughout their career
at FDM.
4,100
FDM employees globally
75+
nationalities
For our trainees
Our award-winning training enables our trainees
to transition into professional IT and business
consultants, with relevant technical skills and
commercial experience.
1,626
training completions in 2017
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Underpinned by our values
Ambition
Collaboration
Energy
Inclusivity
Professionalism
Growth
We set ourselves challenging
goals and are determined to
achieve them
We work best when we
work together
We thrive on activity and
getting things done
We embrace and bring together
the best people with diverse
backgrounds and experiences
We work to high standards
We like to be challenged and
have a willingness to learn,
innovate and improve
22
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Business Model
We recruit
The FDM recruitment teams work to ensure that the highest calibre of candidates are
recruited for our training programmes. We have three pathways to success: Graduate;
Ex-Forces; and Getting Back to Business.
We have recruitment teams in each of our permanent centres, which enable us to
deliver our global experience locally.
Our successful partnerships with key universities provide a link to top graduates.
During 2017, we held over 600 graduate recruitment events reaching over 400
universities and attracted a record 81,000 online applications.
Our recruitment teams engage with candidates and guide them through a three-stage
application process, which begins with an online application. Successful applicants are
invited to the second stage: a phone or video interview to determine IT or commercial
industry knowledge, career aspirations and communication skills. The final stage is an
assessment day at one of our centres, involving aptitude tests and various interviews,
to determine suitability for the programme and each candidate’s fit with FDM’s culture.
The assessment day provides our candidates with an opportunity to visit one of our
centres to see our training facilities.
We train
After assessment, successful candidates are offered a place on our award-winning
training programme which offers extensive training, commercial experience and an
opportunity for fast-track career progression. Our trainees are supported throughout
by a peer support system.
FDM has nine permanent Academies strategically located across the world, staffed
with highly-skilled trainers.
A standard programme involves an intensive three-month training period and
combines a technical education with industry-standard certifications and professional
training, resulting in a high quality professional IT or business consultant – the FDM
Mountie. Prior to completing the training programme, our trainees are interviewed by
our clients, ready for placement at client sites.
We deploy
Interviews are arranged with our clients during which they select a Mountie best
suited to their requirements. Upon securing a placement the new Mounties enter a
two-year bond period. As training is matched to client requirements, our flexible and
trained consultants are operational from day one.
Every Mountie is assigned a relationship manager as a sustained point of contact
throughout their time at FDM. FDM provides support via a network of Consultant Peer
Support Ambassadors, a mentoring programme and ME+®scheme, a career self-
development mobile app.
Following completion of the two-year bond period there is the option for Mounties to
transition permanently with clients or embark on a new placement with FDM.
24
CASE STUDY: University Relations
Birmingham University
One of the world’s top 100 universities and part of the UK’s Russell Group of leading universities
Through dedicated contacts within the careers service and academic department, we have formed a partnership with
the University of Birmingham. Both the university and FDM have spent time getting to understand each other’s
opportunities and have developed a clear strategy around the work we are delivering at the university. With our activity
on campus focused on Computer Science undergraduate and conversion courses, Mathematics and all the Sciences, we
have seen a marked increase in the number of students participating in our work experience and graduate programmes,
particularly in technical subjects. As a result, we now have a dedicated student Brand Ambassador on campus
supporting our activities, including curriculum input, workshops, networking sessions and presentations to sponsorship
of the annual Women in Tech Conference organised and run by the Women in Science and Engineering Society.
FDM Group (Holdings) plcAnnual Report and Accounts 2017 Our Markets
North America
2017
2016
Mountie revenue
£73.8m
£54.2m
Adjusted operating profit1
£15.3m
£9.3m
Mountie numbers
Training completions
965
534
832
521
+36%
North America
Mountie revenue
+13%
UK and Ireland
Mountie revenue
UK and Ireland
2017
2016
Mountie revenue
£106.7m
£93.9m
Adjusted operating profit1
£31.5m
£27.8m
Mountie numbers
Training completions
1,744
839
1,505
1,068
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EMEA
2017
2016
Mountie revenue
£13.1m
£12.0m
Adjusted operating profit1
£0.9m
£1.2m
Mountie numbers
Training completions
155
98
135
89
+9%
EMEA
Mountie revenue
+90%
APAC Mountie
revenue
APAC
2017
2016
Mountie revenue
£13.7m
£7.2m
Adjusted operating loss1
£(0.3)m
£(0.7)m
Mountie numbers
Training completions
306
155
233
129
26
1 The adjusted operated profit / (loss) is calculated before Performance Share Plan expenses (including social security costs).
27
FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Our Markets
UK and Ireland
We closed the year with 1,744 Mounties placed on client sites, an increase of 16%
on the 1,505 at week 52 2016. Adjusted operating profit1 increased by 13% to
£31.5 million (2016: £27.8 million). The UK and Ireland gained 43 new clients in
2017, 77% of which were from outside the financial services and banking sector.
Growth in government work continued in 2017, with 315 Mounties placed with UK
government clients at the end of the year (2016 week 52: 206).
Our geographic presence in the UK increased with the opening of a temporary
training centre in Birmingham, allowing us to meet and generate client demand
and tap into the local graduate market. At week 52, 55% of UK placements were
based outside of London (2016: 57%).
2017 saw 839 Mounties complete their training (2016: 1,068). While there was no
material change to training capacity, this reflects phasing of courses during the
year, including an update to the training timetable, to better align training
completions with the increase in client demand which follows the traditional end
of year break and a varying mix of the disciplines trained.
The number of ex-Forces Mounties placed with clients grew by 55% to 239; this
represents 14% of total UK and Ireland Mountie headcount at week 52 (2016 week
52: 154 representing 10% of total Mountie headcount). FDM has been a signatory
to the Ministry of Defence (“MoD”) Armed Forces Covenant since 2015. This was
recognised in 2017 when the MoD awarded FDM the prestigious Employer
Recognition Scheme Gold Award, for “Outstanding support for those who serve
and have served”.
Getting Back to Business courses were delivered from our London and Glasgow
Academies, as we introduced the programme to our Scottish clients. The number
of Getting Back to Business Mounties deployed on client sites at week 52 2017
was 44 (2016: 7). In 2017 FDM in Scotland won ‘Best Employer Training and
Development 2017’ at the s1 Recruitment Awards and the ‘Diversity Star
Performer 2017’ at the Herald and GenAnalytics Diversity Awards.
As highlighted above, contractor revenue increased by 19% on the prior year, the
result of meeting specific customer needs primarily during the first three
quarters of 2017.
1 The adjusted operating profit/ (loss) is calculated before Performance Share Plan expenses (including
social security costs).
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FDM in Scotland won ‘Best Employer
Training and Development 2017’ at the
s1 Recruitment Awards and the ‘Diversity
Star Performer 2017’ at the Herald and
GenAnalytics Diversity Awards
FDM Group (Holdings) plcAnnual Report and Accounts 2017
Our Markets
North America
North America Mountie revenue grew 36%, with demand from both existing and new
clients. twelve new clients were won in the year. Adjusted operating profit1 increased
by 65% to £15.3 million (2016: £9.3 million), benefiting from operational gearing as we
scaled the business.
Following the significant investment in training capacity in 2016, 2017 saw a modest 4%
increase in capacity, achieved through internal reorganisation of existing classrooms.
In October 2017 FDM committed to an additional lease allowing us to double the floor
space of our Toronto Academy in 2018. The work to design and develop the new space,
including the addition of six new classrooms, commenced in January 2018, and has an
expected completion date of mid-2018.
FDM was recognised as Fastest Growing Company of the Year at the Best in Biz Awards
2017 (silver winner) for its impressive performance.
EMEA (Europe, Middle East and Africa,
excluding UK and Ireland)
Mountie revenue from our EMEA business grew by 9% to £13.1 million (2016: £12.0
million). Adjusted operating profit1 was 25% lower at £0.9 million (2016: £1.2 million)
reflecting investment during the year in facilities and people.
Mounties on client sites increased to 155 at week 52 2017 compared with 135 at week
52 2016. The German business benefitted from FDM’s pro-active approach to the
introduction of the new labour leasing laws. Growth in demand has been supported
by a 140% increase in the training capacity of the Frankfurt Academy in the first half of
the year. The larger Frankfurt centre has enabled us to hire more operational staff,
strengthening the foundation for continued business growth in the future. Swiss
Mountie headcount tailed off in 2017 following changes to client resource planning.
During 2017 FDM’s Austrian subsidiary was incorporated; this will provide a further
arm for the EMEA business to develop.
APAC (Asia Pacific)
APAC Mountie revenue increased by 90% over 2016, to £13.7 million (2016: £7.2 million).
Customer growth in 2017 was generated by eight new customers, as well as diversification
of services provided to existing customers. This led to a healthy increase in Mountie
numbers, with 306 Mounties placed on client site at week 52 (week 52 2016: 233).
The adjusted operating loss1 decreased from £0.7 million in 2016 to £0.3 million in 2017,
reflecting the growth of the business following investment in our two Academies,
additional operational staff in the region as well as the operating costs associated with
development of the Australian facility. The Singapore Academy and sales centre opened
in April 2017, and the Hong Kong Academy and sales centre opened in January 2016.
These dedicated facilities, together with our temporary training facility in Sydney, have
resulted in APAC training completions increasing 20% from 129 to 155 during the year.
Our first locally sourced and trained Mounties were placed with clients in Australia during
2017. In the second half of 2017, APAC recorded a break-even operating performance.
1 The adjusted operating profit/ (loss) is calculated before Performance Share Plan expenses (including social
security costs).
30
FDM North America was recognised as
Fastest Growing Company of the Year
at the Best in Biz Awards 2017 for its
impressive performance
FDM Group (Holdings) plcAnnual Report and Accounts 2017 Financial Review
Adjusted profit
before tax
+26%
Adjusted profit before tax increased
to £47.2 million, compared to
£37.5 million in 2016
Adjusted basic EPS
+26%
Adjusted basic EPS increased to 32.6
pence compared to 25.8 pence in 2016
Mike McLaren
Chief Financial Officer
2017 was a year of strong financial performance and continued
growth as we delivered 23% growth in revenue to
£233.6 million (2016: £189.4 million) and a 26% increase
in both adjusted operating profit, to £47.3 million (2016:
£37.6 million), and adjusted basic earnings per share, to
32.6 pence (2016: 25.8 pence). We are well-positioned for
future growth with a healthy balance sheet and a proven
business model.
Financial Review
Summary income statement
Revenue
Mountie revenue
Contractor revenue
Adjusted operating profit1
Adjusted profit before tax1
Profit before tax
Adjusted basic EPS1
Basic EPS
Overview
Year ending
31 December 2017
Year ending
31 December 2016
% change
£233.6m
£207.3m
£26.3m
£47.3m
£47.2m
£43.7m
£189.4m
£167.3m
£22.1m
£37.6m
£37.5m
£35.3m
23%
24%
19%
26%
26%
24%
Pence per share
Pence per share
% change
32.6
29.8
25.8
24.4
26%
22%
Mountie revenue increased by 24% to £207.3 million (2016: £167.3 million), a 21% increase at constant currencies. Contractor
revenue increased by 19% to £26.3 million (2016: £22.1 million), the result of meeting specific customer needs during the first
three quarters of 2017. Reflecting this mix of revenues, gross margin was lower at 44.6% (2016: 45.5%). The Group’s strategy
remains focussed on growing Mountie numbers and revenues whilst contractor revenues remain ancillary to the Group and
will continue, over the longer term, in managed decline.
An analysis of Mountie revenue and headcount by region is set out in the table below:
UK and Ireland
North America
EMEA
APAC
2017
Mountie revenue
£m
2016
Mountie revenue
£m
2017
Mounties assigned
to client site
at week 522
2016
Mounties assigned
to client site
at week 522
106.7
73.8
13.1
13.7
207.3
93.9
54.2
12.0
7.2
167.3
1,744
965
155
306
3,170
1,505
832
135
233
2,705
The Group has used cash generated from operations to continue significant investment in people and infrastructure.
Overheads have increased to £60.5 million (2016: £50.7 million), reflecting the Group’s investment in its management, support,
recruitment, sales and training teams during the year with average headcount in these areas of the business increasing to 447
in 2017 compared with 371 in 2016. Despite the increase in overheads, adjusted operating margin in 2017 has increased to
20.2% (2016: 19.9%).
Brexit has created some uncertainty in the economy and it is difficult to predict the medium to long term potential impact on
the Group. FDM has a global footprint and is diversified from a geographic perspective as it operates from well-established,
self-contained operating units. Although the risks associated with the uncertainty in the UK and the potential impact across
Europe remain, to date no material negative impact on trading has been noted.
1 The adjusted operating profit and adjusted profit before tax are calculated before Performance Share Plan expenses (including social security costs). The adjusted
basic earnings per share is calculated before the impact of Performance Share Plan expenses (including social security costs and associated deferred tax).
2 Week 52 in 2017 commenced on 18 December 2017 (2016: week 52 commenced on 26 December 2016).
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FDM Group (Holdings) plcAnnual Report and Accounts 2017
Financial Review
Adjusting items
Dividends
The Group presents adjusted results, in addition to the
Subject to shareholders’ approval of the final dividend of
statutory results, as the Directors consider that they provide a
14.0 pence, the Group’s total dividend for the year will be
useful indication of underlying performance. The adjusted
26.0 pence per share (2016: 19.6 pence per share). The total
results are stated before Performance Share Plan expenses
ordinary dividends of 26.0 pence per share will be covered 1.15
including associated taxes. The Performance Share Plan
times by basic earnings per share (2016: 1.2 times covered).
expenses including social security costs were £3.6 million in
2017 (2016: £2.2 million). Details of the Performance Share Plan
The Group has adopted a progressive dividend policy. The aim
are set out in note 23 to the Consolidated Financial Statements.
of this policy is to steadily increase the Group’s base dividend,
The Directors believe that, as these excluded costs are
on an annual basis, approximately in line with growth in the
non-cash items, it better allows a comparison of performance
Group’s earnings per share. The Board reviews the Group’s
and cash generation.
Net finance costs
dividend policy on a regular basis and is confident that there
are currently no significant constraints which would impact
this policy. The Group is debt free, has no significant capital
commitments (its properties are all leasehold) and has
sufficient distributable reserves and cash balances to continue
As the Group has no borrowings, finance costs are minimal.
to apply this policy. As at 31 December 2017, the Company had
The net charge for the year comprises £29,000 (2016: £28,000)
distributable reserves of £35.4 million.
of finance income and a finance expense of £130,000
(2016: £128,000) representing non-utilisation charges on the
undrawn element of the Group’s revolving credit facility.
Taxation
Cash flow and net funds
Net cash inflow generated from operating activities increased
from £30.7 million in 2016 to £35.0 million in 2017. Adjusted
cash conversion was 102%, with the reduction from 105% in
The Group’s total tax charge for the year was £11.6 million,
2016 attributable to movements in working capital. At the
equivalent to an effective tax rate of 26.7%, on profit before
end of the financial year, the Group had cash balances of
tax of £43.7 million (2016: effective tax rate of 25.9% based
£36.8 million (2016: £27.8 million) and undrawn facilities of
on a tax charge of £9.1 million and a profit before tax of
£20.0 million available until 31 August 2018 (2016: £20.0 million).
£35.3 million). The effective tax rate in 2017 is higher than the
underlying UK tax rate of 19.25% primarily due to Group profits
earned in higher tax jurisdictions.
Balance sheet
Earnings per share
The Group has a robust balance sheet, with no debt and
£36.8 million of cash and cash equivalents.
The basic earnings per share increased in the year to 29.8
pence (2016: 24.4 pence) whilst adjusted basic earnings per
share was 32.6 pence (2016: 25.8 pence). Diluted earnings per
share was 29.4 pence (2016: 24.2 pence).
Mike McLaren
Chief Financial Officer
6 March 2018
34
The growth in APAC includes 20 Mounties
placed for the first time in Australia
FDM Group (Holdings) plcAnnual Report and Accounts 2017 Risk Management
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 with a focus on evaluating the nature and extent of the
significant risks which the Board is willing to take in achieving its strategic
objectives, its ‘risk appetite’. The Board maintains direct control over the
approach to risk management and the procedures for the identification,
assessment, management, mitigation and reporting of risks. The Audit
Committee takes responsibility for overseeing the effectiveness of sound risk
management and internal control systems.
During the year, a review of the Group’s risk management process was carried out
by the Internal Audit team. The review concluded that the risk management
process is operating effectively across the business.
Identifying and monitoring key risks
The Board uses the risk register as its principal tool for monitoring and
reporting risk. The preparation of the register is led by the Chief Financial
Officer, supported by the senior management team and it 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. Input
is obtained from all areas of the business, including support functions, as
appropriate. The Board formally reviews the risk register at the half year and at
the year-end. The Internal Audit review concluded that the approach is
appropriate given the current scale and complexity of the business.
The current risk register includes 25 risks categorised between strategic,
operational, compliance and financial risks, of which 11 are considered to be the
Group’s principal risks.
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Our risk management procedures were
independently reviewed during the year
and the findings were positive
FDM Group (Holdings) plcAnnual Report and Accounts 2017
Risk Management
Principal risks
The principal risks faced by the Group, their current status and how the Group
mitigates these risks are set out on pages 40 to 45. The status of each of the
Group’s principal risks is considered unchanged from the prior year. The
alignment to strategy indicates those aspects of the business strategy that would
be impacted by the risk, were it to materialise.
Key risks facing the Group
High
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Unlikely
Likelihood
Almost
certain
Changes in the macro-economic environment
Concentration exposure in the financial services sector
Balancing supply and demand – insufficient Mountie resource
Balancing supply and demand – excess Mountie resource
Recruitment and development of highly skilled Mounties
Ability of business to effectively upscale – Academies
Ability of business to effectively upscale – people
Development of new service offerings
Business interruption – caused by successful cyber attack or natural disaster
Reputation
International regulatory non-compliance
Returners to work are a source of talent
that fuel businesses with a much-needed
pipeline of experience, ultimately tackling
the skills shortage whilst improving
gender, age and cognitive diversity
FDM Group (Holdings) plcAnnual Report and Accounts 2017 Risk Management
Strategic risks
Risk and impact
Mitigation
Movement in the year
Risk and impact
Mitigation
Movement in the year
1. Changes in the macro-economic
environment
No change
3. Balancing supply and
demand (i)
No change
A global downturn or a downturn in
Whilst external factors such as macro-
The Board is of the view that the
the territories in which FDM
economic risks are outside of the
economic environment is still a key
operates, principally the UK and
Group’s control, the Group has
risk to the Group although
North America, could curtail demand
effective measures in place to
unchanged in the year. There has
significantly and the ability of the
respond to changes, including robust
been some political instability in the
Group to deploy its Mountie
planning, budgeting and forecasting
UK in 2017 with the results of the UK
resource, resulting in: an adverse
and resource allocation procedures.
general election in June and the
impact on revenue and operating
profit; shrinking customer base;
negative impact on share price.
Risk owner: Chief Financial Officer
Alignment to Strategic Objectives:
Mounties, Clients, Markets
2. Concentration exposure in the
financial services sector
The flexible nature of the Group’s
business model enables it to flex
resource availability thereby enabling
it to manage its cost base.
longer term consequences of Brexit
still remaining uncertain. As noted,
macro-economic risks are outside of
the Group’s control, but the Group
will continue to focus on ensuring it
Notwithstanding the impact of risk 2
has effective measures in place to
below, the Group is focused on
identify and react quickly to changes
diversifying its customer base both by
in macro-economic conditions. The
sector and by geography.
Group’s current financial position is
good, with a strong balance sheet
and significant cash balances.
No change
The majority of the Group’s revenue
As above, the Group is focused on
Although the proportion of the
is generated from within the financial
growing its customer base both by
Group’s revenue generated from the
services sector. A crisis in the
sector and by geography as well as
financial services sector has
financial services sector could reduce
diversifying the range of services it
increased very marginally in the year,
revenue significantly and have a
offers to existing and potential
the increase is immaterial and has
negative impact on the majority of
financial services clients.
not resulted in a change to the
the Group’s KPIs.
Risk owner: Chief Commercial
Officer
Alignment to Strategic Objectives:
Mounties, Clients, Markets
overall assessment of this risk. The
Board continues to focus on this risk
and the Group has broadened the
spread of its service offerings within
its financial services clients to cover
operational, compliance and IT
services in addition to increasing its
presence in other sectors.
An inability to meet a rapid
increase in demand due to
The recruitment team maintains
There has been a continued focus
strong links to universities and
by management during the year to
insufficient Mountie resource and
other recruitment channels.
ensure the most efficient utilisation
an inability to recruit in a timely
manner would result in lost
revenue, eroded customer
confidence and an adverse
reputational impact.
An effective social media
recruitment strategy is in place to
maximise applications.
Resource management meetings
occur weekly to ensure supply and
demand issues are identified and
resolved.
The management team is
and deployment of Mounties. A
Mountie utilisation rate of 97% was
achieved in the year.
The Group’s reputation amongst
graduates, together with the
career programmes it offers,
means it is well placed to source
sufficient applicants for its
projected growth for the short to
incentivised to maximise utilisation
medium term. The Group received
and increase flow through of
trainees within the Academies.
The ‘ex-Forces personnel’ and
‘Getting Back to Business’
programmes, whilst relatively
a record number of online
applications in the year.
The Group has the option of using
contractors should a significant
increase in demand occur which
Risk owner: Chief Commercial
small in terms of total headcount,
cannot be fulfilled by Mountie
Officer
are growing and will help spread
resource availability.
the Group’s access to a wider
talent pool.
Alignment to Strategic
Objectives: Mounties
4. Balancing supply and
demand (ii)
No change
An inability to utilise or redeploy
The flexibility of the Group’s
The growth and diversification in
Mounties in the event of a sudden
business model is a key mitigation
the Group’s client base by both
decrease in demand would result
to this risk. The Group is able to flex
number of clients and
in a reduction in margin and would
the number of Mounties it recruits
geographical spread mitigates the
demotivate Mounties.
at short notice, thereby responding
risk of the Group not being able to
quickly to a sudden downturn.
fully utilise its Mountie resource.
Risk owner: Chief Commercial
Officer
Alignment to Strategic
Objectives: Mounties, Clients
Resource management meetings
occur weekly to ensure supply and
demand issues are identified and
resolved in a timely manner.
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Operational risks
Risk and impact
Mitigation
Movement in the year
Risk and impact
Mitigation
Movement in the year
5. Recruitment and development
of highly skilled Mounties
No change
7. Ability of business to
effectively upscale (ii)
No change
Mounties are the Group’s core asset.
The Group continually reviews and
With the need to recruit significant
A failure to deliver high quality
benchmarks the remuneration
numbers of Mounties to fulfil
Mounties into its customer base
packages and incentives it offers to
forecast growth levels, this is
could result in a loss of customers
attract graduates.
perceived to be one of the Group’s
The inability of the business to
The Group’s remuneration policy
The Group’s remuneration
effectively upscale as a result of
states that the overall remuneration
packages remain competitive and
not being able to recruit and retain
package should be sufficiently
for senior employees include
key staff with appropriate skills.
competitive to attract, retain and
long-term share options to
Risk Management
and damage to the Group’s
reputation.
Risk owner: Chief Executive Officer
Alignment to Strategic Objectives:
Mounties, Clients, Markets
6. Ability of business to effectively
upscale (i)
Strong relationships exist with
main risks.
universities and other recruitment
A combination of the following
channels including ex-Forces
factors indicates this risk is being
personnel. The UK’s ‘Getting Back to
managed effectively:
Business’ programme is growing.
–
recruitment levels of Mounties
A tailored development programme is
are continually being monitored
in place for Mounties, covering
training and development
and reviewed by the Board;
–
there is a broader base of talent
opportunities, including opportunities
from which to recruit through
after the bond period.
The Group actively promotes Women
in IT initiatives to attract, develop and
retain Mountie talent.
The Group is focused on promoting
its reputation in the marketplace as a
leading employer.
the ex-Forces and Back to
Business programmes; and
–
challenging recruitment targets
are being met.
In 2017, FDM was recognised in the
Job Crowds ‘Top 100 Companies for
Graduates to work for 2017/18’ for
the 7th consecutive year and was
voted into the Guardian Top 300
Employers in the UK.
No change
The inability of the business to
Research, identification and
The Group has a track record of
effectively upscale as a result of not
assessment of investment
successfully securing and developing
securing the required physical
opportunities are performed on a
sites both in the UK and overseas.
share.
infrastructure (sites) would result
regular basis.
in lost revenue and missed
growth opportunities.
Risk owner: Chief Operating
Officer
The Group has gained considerable
experience from successfully
securing, developing and branding
Academy/ sales locations which can
Alignment to Strategic Objectives:
be replicated for new sites.
Academies
During the previous two years, the
Group successfully opened new
academies in Glasgow, Hong Kong,
Toronto, Reston and Singapore.
motivate executive directors.
encourage retention.
The remuneration packages of all
During 2017, further awards were
employees are reviewed and
made from the Group’s
benchmarked regularly to ensure
Performance Share Plan, which
they remain competitive.
was launched in 2015. The first set
of options issued under the
Performance Share Plan are due to
vest in April 2018.
An annual appraisal system
includes the identification of
training requirements, which are
fulfilled within the following
twelve months.
The Nomination Committee
considers succession matters as a
regular agenda item.
No change
Risk owner: Chief Executive
Officer
Alignment to Strategic
Objectives: Clients, Markets
8. Development of new service
offerings
The inability of the Group to
The Group employs a Chief
The Group is responsive to its
develop new service offerings and
Information Officer (“CIO”), who is
customer needs which it
revenue streams could result in a
responsible for the development
identifies through regular
loss of customers and market
of new service offerings.
contact and feedback from its
clients. The Executive Board
Directors are actively involved in
key client relationships.
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.
The Group has a number of touch
Risk owner: Chief Information
points with customers enabling
Officer
Alignment to Strategic
Objectives: Clients
them to keep up to date with
developments in the marketplace
and to identify customer needs.
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Operational risks (continued)
Compliance risks
Risk and impact
Mitigation
Movement in the year
Risk and impact
Mitigation
Movement in the year
9. Business interruption – caused
by successful cyber-attack or
other disaster
No change
11. International regulatory non-
compliance
No change
Risk Management
Major IT system integrity issues or
A Global Standard for Technology
Operation of the IT environment is
data security issues, either due to
Security was developed and rolled-
continuously monitored and staff are
internal or external factors, could
out in 2016.
regularly made aware of the risks of
result in: actual financial loss of
funds; potential loss of sensitive
data with risk of litigation; loss of
The Group’s IT security policy
complies with ISO 27001.
customer confidence; and damage
Staff are regularly made aware of the
cyber-attacks.
to reputation.
Risk owner: Chief Information
Officer
risk of a cyber-attack and the
appropriate actions necessary to
mitigate the risk of this occurring.
IT policy and security matters are
regular Board and Audit Committee
agenda items.
The Group’s business continuity plan
has continued to be tested during
2017.
A review of the design and
operational effectiveness of key IT
Alignment to Strategic Objectives:
security controls was carried out by
Mounties, Clients, Markets
Internal Audit during 2017.
10. Reputation
No change
Reputation is key to the Group
Robust recruitment and training
The Group continues to invest in staff
maintaining and growing its
procedures are in place which
development, quality systems and
business. Poor quality service or the
reduces the risk of employing persons
standard processes to mitigate the
actions of Mounties, staff or
whose actions could result in a
risk of operational failure.
Failure to comply with
international tax, legal,
The Group has robust recruitment
The Group continues to invest in
procedures, which ensure the
appropriately skilled personnel
employment and other business
employment of appropriately
and will outsource where
regulations could result in
skilled personnel in areas where
appropriate in areas where
significant fines and/ or revocation
compliance with legislation is
compliance and expertise are
of business licences.
required.
The Group seeks appropriate
advice and engages external
required. A review of compliance
issues forms part of the Group’s
Internal Audit scope.
advisors as necessary, particularly
The Group's existing in-house legal
in overseas locations, and actively
and HR functions have been, and
manages those relationships.
continue to be, augmented by new
hires as the Group grows, bringing
in more people with experience
and knowledge of the territories in
which the Group operates.
The Group has invested in a new
enterprise-wide HR solution and
ensures that the relevant staff
undertakes training and
professional studies where
required.
Risk owner: Chief Financial
Officer
Alignment to Strategic
Objectives: n/a
contractors could have an adverse
negative impact on FDM’s reputation.
impact on the Group’s reputation. A
failure to manage any subsequent
crisis through a lack of reactive
procedures could also exacerbate
potential damage. Any impact could
be far-reaching: failure to meet
A dedicated Media Relations
FDM has a zero-tolerance policy with
manager is employed by the Group.
respect to any inappropriate
behaviour by an individual employed
by the Group or acting on behalf of
the Group.
The Board regularly consults with its
PR advisors, Weber Shandwick.
financial targets; litigation; loss of key
The Group focuses on strong
clients; and loss of key staff.
relationship management and
communication with external advisors.
Risk owner: Chief Operating
Officer
Alignment to Strategic Objectives:
Mounties, Clients, Markets
44
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Risk Management
Viability statement
The Directors have assessed the prospects of the Group in accordance with provision
C.2.2 of the Code 2016.
The period selected by the Board for its assessment is three years, and was chosen for
the following reasons: The core of FDM’s business is the Mountie model. The period
identified approximates to the average lifecycle of Mounties’ engagement with FDM
and therefore the viability period represents the Group’s normal investment cycle in
its core asset. Further, the Group’s strategic plan covers a period of three years and
this period is also underpinned by robust financial budgets and forecasts. The current
three-year plan was approved by the Board in October 2017.
In making its assessment, the Board has considered the resilience of the Group, taking
into account its 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 the core of FDM’s business is the
Mountie model, the sensitivity analysis therefore included consideration of the loss of
the Group’s two largest customers.
The Board has 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.
The Group’s financial position is strong with cash balances of £36.8 million at the end
of the year and nil debt.
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.
46
FDM became an early adopter of the
UK’s Gender Pay Gap reporting policy
(the sixth company in the UK to reveal its
figures) with a median pay gap of 0%
FDM Group (Holdings) plcAnnual Report and Accounts 2017 Corporate Social Responsibility
Inclusive by nature
The Directors regularly consider the Group’s impact on its
stakeholders including employees, contractors, trainees,
Gender diversity
FDM became an early adopter of the UK’s Gender Pay Gap
customers, suppliers, investors and the wider community. The
reporting policy (the sixth company in the UK to publish its
Board ensures that the decisions made are responsible and
figures) with a median pay gap of 0% (in comparison to the UK
ethical by taking into consideration the wider society external
national average of 18%).
to the organisation. The Group is committed to contributing
towards creating a sustainable environment and community in
The table below shows the gender split at different levels
which it operates as a business.
within the Group as at 31 December 2017.
Diversity and inclusion
FDM’s Diversity and Inclusion Team supports the Group’s
vision to create and inspire exciting careers that shape our
As at 31 December 2017
On the Board
Within Senior Management
All employees
Number of
males
Number of
females
7
12
2
11
2,979
1,154
digital future. The team brings together initiatives around
The Group hosts various events to encourage women to
diversity and inclusivity, as well as implementing our overall
consider a career in IT and FDM Female Champions act as
Corporate Social Responsibility strategy to promote a diverse
role models to all women in the business. FDM takes part in
workforce that reflects wider society.
judging awards, networking events and speaker panels which
celebrate and promote outstanding women in the industry
FDM brings people and technology together, recognising and
and hosts the annual “FDM Everywoman in Technology
nurturing potential, which is combined with opportunity. FDM
Awards”.
has over 75 nationalities working together as a team and its
diverse workforce includes graduates, ex-Forces personnel
FDM’s COO, Sheila Flavell, has been honoured with a Lifetime
and returners to work. Inclusivity is one of FDM’s corporate
Achievement Award at the Scotland Women in Technology
values and everyone is given the opportunity to fulfill their
Awards, as well as being recognised as Woman of the Year at
potential at FDM, regardless of their background. Embracing
the Computing Women in IT Excellence Awards and featured
the differences that make us unique forms the foundation of
as one of the Most Influential Women in UK IT by Computer
FDM’s culture and helps drive the business forward.
Weekly.
Social mobility
FDM was recognised in the first Social Mobility Index published
On International Girls in ICT Day 2017, FDM hosted creative
coding workshops in London, Frankfurt, New York and Hong
in 2017 as one of the top 50 UK companies taking most action on
Kong. Led by FDM trainers, the young women flexed their
social mobility. FDM is passionate about providing opportunities
creative muscles by using Sonic Pi software to compose music
based on attitude and aptitude and the Group has adopted
with code. Supporting International Girls in ICT Day is part of
strengths-based interview questions to achieve this.
FDM’s commitment to inspire the next generation to pursue
FDM works with local schools to actively support and enable
individuals who may not have role models at home to better
understand the world of work and discover opportunities open
to them.
Advocacy
FDM sponsors numerous events and awards to promote active
participation and encourage a wider section of society to
consider IT as a career pathway. FDM was recognised as
Company of the Year at the TechWomen50 Awards and FDM’s
Chief Operating Officer is periodically called upon to advise UK
government committees on various issues, particularly around
the digital skills gap.
future careers in technology.
Ethnicity and Race
FDM featured in the first Business in the Community Best
Employers for Race Listing in 2017, representing UK
organisations performing above the national average, based
upon the Race at Work Survey. In the UK, 48% of FDM’s
graduate intake in 2017 identify as BAME.
48
48%
of our UK intake
are from a BAME
background
75+
nationalities working
together as a team at FDM
28%
0%
of FDM’s global
workforce are female
UK gender pay gap
UK national average of 18.4%
Social Mobility
86%
32%
of FDM's UK graduate
intake in 2017 attended
a state school
of UK graduate intake in
2017 were the first in their
family to go to university
FDM Group (Holdings) plcAnnual Report and Accounts 2017 Corporate Social Responsibility
Disability
The Group gives full and fair consideration to the employment of disabled people.
At the recruitment and selection stages, we encourage candidates to disclose any
reasonable adjustments they may require so we can ensure all candidates have
the same opportunities. This can include a broad range of adjustments such as
accommodating additional equipment,
adapting our telephone screening process
or adjusting our assessment day interviews
and tests to suit individual needs. 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. To support this, FDM became a
member of the Business Disability Forum (“BDF”) in 2017 so we can understand
how to continually improve in order to be fully accessible to disabled employees
and customers through the BDF community of focussed organisations and
individuals. 5% of the UK graduate intake in 2017 identified themselves as having
a disability.
Schools engagement
Harris Federation Case Study
As part of the Group’s commitment to inspiring the next generation of digital
talent, FDM has partnered with the Harris Federation in the UK to deliver
meaningful experiences in the workplace for students. The work with Harris
Battersea, where 80% of students are eligible for free school meals, has focused
on a combination of professional skills and communication, demonstrating to
students the importance of self-awareness, presentation and personal branding
as well as supporting their technical curriculum learning with Python coding
sessions in the London Academy.
FDM has provided upskilling opportunities for Harris mathematics teachers and
invited digitally-minded A-level students to undertake training in SQL and Excel.
This partnership will continue in 2018 and will include technical workshops for
Harris Beckenham students, as well as an overall monitoring strategy to enable
us to build a five-year plan around how we engage and support students wider
afield through school and university and into the workplace.
TeenTech
FDM sponsored the Digital Skills category at the TeenTech Awards 2017 to help
young people understand the opportunities in the Science, Technology and
Engineering industries, no matter what their background and importantly, to
understand their potential and raise their aspirations. FDM hosted a CIO Business
Breakfast with the 2017 winners. Our in-house development team are helping to
develop their winning app and in 2018 selected staff will be matched with teams
entering the TeenTech Awards as mentors to help guide their ideas.
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FDM has partnered with the Harris
Federation in the UK to deliver meaningful
experiences in the workplace for students
FDM Group (Holdings) plcAnnual Report and Accounts 2017
Corporate Social Responsibility
Ex-Forces Programme
The dedicated Ex-Forces Programme operated by FDM in the UK and USA
demonstrates the Group’s commitment to supporting ex-Forces personnel in their
transition into the civilian workplace. FDM UK was granted the prestigious Ministry of
Defence Employer Recognition Scheme (ERS) Gold Award in 2017, for demonstrating
an outstanding commitment to the armed forces community and best exemplifying
the principles of the Armed Forces Covenant. In the USA, FDM was honoured to be
awarded the Military Times Best for Vets Employer Award and the RecruitMilitary Most
Valuable Employers (MVE) for Military Award.
Getting Back to Business Programme
Our programme for those returning to work is designed specifically to provide
individuals who have taken an extended career break with an opportunity to re-enter
the workforce at a suitable level.
The programme is for professionals, male and female, who have taken an extended
career break for a variety of different reasons. Reasons include raising children, caring
for sick relatives and relocating with their partners in order to keep the family together.
The programme is currently made up of 78% women and 22% men.
Returners to work are a source of talent that fuel businesses with a much-needed
pipeline of experience, ultimately tackling the skills shortage whilst improving gender,
age and cognitive diversity.
Graduate Programme
We recruit from over 400 universities globally and consider all degree backgrounds.
We support our universities on their widening participation agenda and aim to create
exciting careers in technology regardless of educational background or experience. In
2017, the Group launched the careers of over 1,600 individuals and continues to create
and inspire exciting and rewarding careers for a diverse group of graduates around
the world.
52
FDM UK was granted the prestigious
Ministry of Defence Employer Recognition
Scheme (ERS) Gold Award in 2017
FDM Group (Holdings) plcAnnual Report and Accounts 2017 Corporate Social Responsibility
Employee experience
Whether we are connecting with our employees digitally or through human
interaction, understanding how our employees experience FDM from
recruitment right through to post-employment is important to us so we can
continually improve. We gather feedback at critical touchpoints in an employee’s
journey so we can measure various components of the relationship between our
organisation and our people. This also includes feedback about the customer
experience so we can learn more about how we create valuable experiences for
our key stakeholders.
HR and Consultant Support
The HR and Consultant Support teams regularly visit our client sites in order to
help manage our workforce on site. This includes drop-in visits and reviews to
understand what training needs our Mounties might have as well as delivering
feedback so we can increase the quality of service and support our employees.
This ensures Mounties continue to feel connected to FDM, have the support
network they need and means we are able to respond to their needs in a
proactive manner.
Mentoring Programme
The FDM Mentoring Programme brings together individuals with a breadth of
experience and those that need a helping hand during their career journey. This
provides a unique opportunity to further build on the relationships within FDM’s
wider community. The Mentoring Programme supports our trainees, consultants,
internal staff, clients, alumni and internship students, as well as students at
school within the TeenTech community. The programme gives our 300+
participants the opportunity to define and achieve their ambitions with the help
of a mentor, a significant increase on the 200 participating last year.
Consultant Peer Support (“CPS”)
Our Consultant Peer Support network consists of high performing individuals
on-site who provide peer-to-peer support for new starters in their first three
months and help build a sense of community amongst all Mounties at that client
site through events and team-building activities. The Group has a network of CPS
ambassadors across the world including 48 in UK & Ireland, and 10 in North
America. These individuals serve as a critical touch point for Consultants as they
start their careers and act as an important link between FDM and the client.
Ongoing Professional Career Development
Career Moment Workshops take place to discuss trainee career development
during training and how they can explore and utilise the professional tools
available to them at FDM. The session looks at behaviours of a successful
Mountie and encourages career-oriented thinking. FDM also offers PluralSight
eLearning to all employees. This provides access to online training and IT courses,
authorised by industry experts, to aid continued professional and technical skills
development. Intuition Know-How is another useful resource that gives FDM
employees access to over 430 hours of content from a leading provider of
Finance and Banking eLearning throughout their time at FDM.
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FDM is a young, dynamic company that
encourages employees to use social
media professionally and this has helped
the Group raise brand awareness and
engagement around the world
FDM Group (Holdings) plcAnnual Report and Accounts 2017
Corporate Social Responsibility
Alumni Network
FDM has launched the careers of thousands of people globally
Staff communication
FDM communicates with employees regularly via email,
Environmental policy
and in turn, has a diverse network of talented and successful
monthly newsletters and face-to-face meetings in order to
Throughout the Group the responsibility to minimise detrimental impact to the environment is recognised. Although we have no
current employees and alumni. This is a network from which to
ensure they are supported, especially when placed remotely
manufacturing facilities, FDM aims to reduce its environmental impact by monitoring and minimising the consumption of energy
build relationships, share knowledge and benefit from shared
on site. The FDM Connection Newsletter keeps employees up
in its operations and where possible, promote the procurement of environmentally-friendly products. The Group complies with
interests and experience both professionally and personally.
to date with FDM news around the world, which ranges from
all relevant environmental legislation, it aims to reduce waste and, where practicable, re-use and recycle consumables. There are
Alumni are regularly invited back to FDM to share their
business developments right through to personal
recycling facilities in our centres and the Group recycles waste paper and ink cartridges. Computers that are no longer in use are
experience and advice with the newer generation of trainees.
achievements and more. FDM’s Social Media Hub is displayed
donated to charities. Communication via electronic means, including video conferencing, is encouraged.
SuccessFactors
The SuccessFactors global HR platform and mobile app is one
on large TVs across the FDM centres globally and serves as an
excellent tool to keep employees engaged as well as up to date
in real time. FDM is a young, dynamic company that
of the leading technologies in cloud-based HR systems. It
encourages employees to use social media professionally and
allows employees better access to their employment details,
this has helped the Group raise brand awareness and
technical functions such as booking leave, useful information
engagement around the world. #FDMcareers received more
CO2 emissions
The Company complies with the greenhouse gas (“GHG”) emissions reporting requirements of The Companies Act 2006
(Strategic and Directors’ Reports) Regulations 2016. 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
and a means of updating personal information. This self-
than 30 million impressions in 2017.
methodology used to compile this data is in accordance with DEFRA’s “Environmental Reporting Guidelines: Including
service tool automates basic administrative tasks and allows
employees visibility of their data. The initial implementation of
the system is the first stage to take care of basic elements.
Anti-Slavery and Human Trafficking policy
FDM is committed to ensuring that there is no modern slavery
However, the system capabilities mean the digital interaction
or human trafficking in its supply chains or in any part of the
with our employees will further increase as we develop our
business. It has considered the degree of risk that modern
digital presence in this area further to enable a more
slavery could arise within the organisation or in supply chains.
innovative and collaborative working environment.
The nature of FDM’s business and the direct relationship it has
Internships and placements
FDM runs paid summer internships for undergraduate
with applicants to the training programmes means that the risk
of modern slavery in our own organisation is low. FDM has
reviewed supply chains and taken a number of steps to address
students in its London, Leeds, Glasgow, Brighton, New York
the potential risks of modern slavery and human trafficking.
and Virginia centres. These internships enable students to
participate in current business projects and present their ideas
The Group has put in place an Anti-Slavery and Human
to the Board at the end of their placement. Interns will then
Trafficking policy to assist it in mitigating this risk, and is
mandatory greenhouse gas emissions reporting guidance (June 2013)”.
Fuel type
Scope 21
Scope 32
Greenhouse Gas Emissions Intensity ratio:
CO2e tonnes per £ million of revenue
Year ended
31 December 2017
CO2e tonnes
562
1,594
CO2e tonnes
9.2
Year ended
31 December 2016
CO2e tonnes
692
1,564
CO2e tonnes
11.9
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.
have the opportunity to go on to represent FDM as Student
undertaking a process of due diligence on key suppliers. There is
The Group’s Scope 1 CO2 emissions are negligible and are therefore not disclosed.
Brand Ambassadors at their respective universities and remain
a pre-contract due diligence process, used with new suppliers to
connected to the Group throughout their studies. Similarly, FDM
ensure that they confirm their commitment to comply with our
The Strategic Report was approved by the Board on 6 March 2018 and signed on its behalf by:
offers placement roles across the UK, which provides students
policies and values, or that they have in place appropriate
with a twelve-month experience in various departments across
equivalent policies of their own. FDM has also developed a set of
the business where they can make a genuine contribution to
standard contractual clauses for inclusion in supplier contracts
their teams. The Group aims to offer permanent positions to
which reinforces this approach. The Group aims to promote a
internship and placement students, upon graduation.
high level of understanding of the risks of modern slavery and
familiarises all staff with these policies on induction. Additional
Employee recognition
As part of the Group’s policy to recognise and reward the
training may be provided to key staff members where
appropriate. The effectiveness of these steps is monitored.
commitment and hard work of staff, further awards were made
from our Performance Share Plan (‘PSP') during 2017. These
allow participants to share in, and benefit from, the ongoing
growth of the Group. Details of the PSP are set out in note 23 to
the Consolidated Financial Statements.
The FDM Consultant of the Month and FDM Stars initiatives are
designed to reward those that are excelling, as nominated by
customers and other employees within the business. The Group
also recognises and rewards employees who have completed
five and ten years with FDM, in order to thank them for their
commitment and long-standing contribution to the business.
The CEO Award of Excellence is FDM’s most prestigious award,
reserved for outstanding employees who truly go above and
beyond in contributing to the success and growth of the Company.
56
Rod Flavell
Chief Executive Officer
6 March 2018
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Board of Directors
Appointed to the Board in 2006
Committee Membership:
Nomination Committee (Chair)
Ivan became Non-Executive Chairman of Xceptor (formerly known as Web Services
Integration) in August 2016. Xceptor is a London based international software
business backed by CBPE private equity. He has also been Non-Executive Chairman
of Microgen plc since March 2016.
Ivan Martin
Non-Executive Chairman
He was a member of Misys plc’s board and headed its 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 2013,
he was Executive Chairman of Sesame Bankhall Group.
Andrew (Andy) Brown
Chief Commercial Officer
External appointments:
Microgen plc (Non-Executive Chairman)
Wulstan Capital LLP (various) (Member)
Church Topco Limited (trading as Xceptor) (Non-Executive Chairman)
Church Bidco Limited (Chairman)
Committee Membership:
Nomination Committee
Rod is the founder and Chief Executive Officer of FDM Group.
Over the past 26 years, Rod has been instrumental in developing the Group into an
international, award-winning employer with a prestigious client base operating in
multiple industries.
Rod is a firm supporter of improving diversity in technology, with clear results
achieved by the Group through its FDM Women in IT, Returners to Work, Ex-Forces
and veteran career transition initiatives.
With over 26 years of experience in both the public and private IT sectors internationally
Sheila is passionate about enhancing diversity in the workplace and creating exciting
careers for the next generation of digital talent. Sheila played an integral role in the
Group’s flotation on AIM in 2005 and was a key instigator of the management buy-out of
the Group in 2010 and the subsequent listing onto the main FTSE Market in 2014.
Sheila’s experience and knowledge of the sector has been crucial in driving the
Group’s global expansion programme taking FDM into the FTSE 250. Sheila
spearheads FDM’s global women in technology initiative and FDM’s Getting Back to
Business Programme, aimed at providing opportunities for returners to work.
Sheila has been called to advise government committees on various issues around
the digital skills gap.
External appointments:
techUK (Board member) (techUK is the operating name for Information Technology
Telecommunications and Electronics Association)
Roderick (Rod) Flavell
Chief Executive Officer
Sheila Flavell
Chief Operating Officer
Board of Directors
Andy joined FDM in 1994 and has progressed through the Group’s sales team to
become Global Sales Director in 2007.
Andy 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
streams 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.
Qualifications: Fellow of the Institute of Chartered Accountants in England and
Wales.
Prior to joining FDM, 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.
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Michael (Mike) McLaren
Chief Financial Officer
Peter Whiting
Non-Executive Director
Appointed to the Board in June 2014
Committee Membership:
Audit Committee, Nomination Committee, Remuneration Committee (Chair)
Peter is the Senior Independent Director, Chairman of the Remuneration
Committee and member of the Audit Committee and the Nomination
Committee. Peter has over twenty years’ experience as an investment analyst,
specialising in the Software and IT Services sector. Peter joined UBS in 2000 and
led its 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.
External appointments:
Microgen plc (Senior Independent Director and Chair of Remuneration
Committee)
Keystone Law Group plc (Non-Executive Director and Chair of Audit Committee)
TruFin plc (Non-Executive Director and Chair of Remuneration Committee)
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Robin Taylor
Non-Executive Director
Michelle Senecal de Fonseca
Non-Executive Director
Appointed to the Board in June 2014
Committee membership:
Audit Committee (Chair), Nomination Committee, Remuneration Committee
Qualifications: Member of the Institute of Chartered Accountants of Scotland
Robin is currently a Director of Alfa Financial Software Holdings plc and EMIS Group
plc and was formerly Chief Financial Officer of publicly listed companies Intec
Telecom Systems plc, ITNET plc and JBA Holdings plc. Robin has also held a variety of
financial and general management roles in both Europe and North America.
External appointments:
Alfa Financial Software Holdings plc (Non-Executive Director)
EMIS Group plc (Senior independent Director & Chair of Audit Committee)
Appointed to the Board in January 2016
Committee membership:
Audit Committee, Nomination Committee, Remuneration Committee
Michelle has more than 25 years' of experience in international Telecommunications
and Technology. She is currently an area Vice President for Citrix Systems after
having served as the global Director of Cloud & Hosting Services at Vodafone. Prior
to Vodafone, 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.
External appointments:
Citrix Area Vice President North Europe
Women in Telecoms and Technology Limited (Director)
Thunderbird School of Global Management (Director)
MOVE Capital (Investment Board member)
Appointed to the Board in March 2016
Committee membership:
Audit Committee, Nomination Committee, Remuneration Committee
David has over 37 years’ experience of working in IT across multiple industries for
international businesses such as Diageo, GlaxoSmithKline, Boots, Reuters, Royal
Bank of Scotland and National Grid. He also has experience in the Professional
Services sector where he worked for PwC.
David Lister
Non-Executive Director
David is currently a non-executive director of HSBC Bank plc, Nuffield Health,
Cooperative Insurance and Weatherbys Ltd. He is also a trustee of The Tech
Partnership Limited where he focuses on the UK technology sector’s skills and
diversity challenges.
External appointments:
HSBC Bank plc (Non-Executive Director)
Nuffield Health (Non-Executive Director)
The Tech Partnership Limited (Trustee)
Weatherbys Ltd (Non-Executive Director)
Corporate Governance Report
“As a Board we aim to ensure our high
standards of governance remain closely
aligned with our core values.”
Chairman’s introduction
I am pleased to present this year’s Corporate Governance
We continue to allow time to review the content of the Annual
Report, our first as a FTSE 250 company.
Report to ensure it is fair, balanced and understandable.
A review by the Audit Committee is detailed on page 72 and
The Company gained entry to the FTSE 250 in June 2017,
a formal statement from the Directors is on page 97.
three years after the Company publicly listed on the
London Stock Exchange. I am pleased to report that our
The key areas of focus in 2017 by the Board are shown on
corporate governance framework has allowed for a
page 65.
smooth transition, enabling the Company to meet the
relevant governance and reporting requirements
I hope you find the report informative and I will be available
applicable to FTSE 250 companies.
at the 2018 Annual General Meeting (“AGM”) to respond to
shareholder questions.
The Board’s approach to governance remains interwoven
with FDM’s values of ambition, collaboration, energy,
inclusivity, professionalism and growth. These values
provide the framework for effective control and oversight
of the business as a whole.
We adhere to the corporate governance requirements
which are set out in the UK Corporate Governance Code
(the “Code”) issued by the Financial Reporting Council and
published in April 2016, as required by the Financial
Conduct Authority Listing Rules and Disclosure and
Transparency Rules.
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Corporate Governance Report
FDM governance framework (including the Committee Chairs)
A schedule of formal matters reserved for the Board’s decision
performing this role, Peter provides shareholders with someone
Peter Whiting is the Group’s Senior Independent Director. In
UK Corporate Governance Code
Statement of Code compliance
During the financial year 2017, the Company has complied with
the Code.
The main principles of the Code applicable to listed companies
are as set out below, and apply to the Board:
1 Leadership
2 Effectiveness
3 Accountability
4 Remuneration
5 Relations with shareholders
1 Leadership
FDM Group (Holdings) plc Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
Robin Taylor
Ivan Martin
Peter Whiting
The role of the FDM Board
The Board meets regularly to review strategic, operational and
financial matters. When reviewing and monitoring the strategy,
the Board gives regard to the impact that those decisions will
have on the Group’s obligations to various stakeholders, such as
shareholders, employees, customers and the wider community.
The Committees play a key role in supporting the Board, and
information about the membership of each Committee can be
found in each Committee’s report. 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.
It approves the interim, preliminary and annual financial
statements, the annual budget and longer-term forecasts,
significant contracts and capital investment. It also reviews the
effectiveness of the internal control systems and business risks
faced by the Group. Where appropriate, it has delegated certain
responsibilities to the Audit Committee, Remuneration
Committee and Nomination Committee (the “Committees”).
Number of meetings held in 2017
Ivan Martin
Rod Flavell
Sheila Flavell
Mike McLaren
Andy Brown
Peter Whiting
Robin Taylor
Michelle Senecal de Fonseca
David Lister
1 Not applicable, not a member of the Committee and not required to attend.
The Board closely monitors the management and performance
of the Company 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.
Board meetings
attended
Audit
Committee
meetings
attended
Remuneration
Committee
meetings
attended
Nomination
Committee
meetings
attended
10
10
10
10
10
9
10
10
10
9
4
n/a1
n/a1,2
n/a1
n/a1,2
n/a1
4
4
4
4
5
n/a1,3
n/a1,3
n/a1
n/a1
n/a1
5
5
5
5
2
2
2
n/a1
n/a1
n/a1
2
2
2
2
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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
to whom they can turn to if ever they have concerns which they
cannot address through the normal channels, for example with
the Chairman or Executive Directors.
governance matters;
• Approving material contracts;
Whilst there were no requests from Directors or shareholders
for access to the Senior Independent Director during the year,
• Approving material capital expenditure;
the Senior Independent Director serves an important
• Approving Group strategy;
intermediary role in FDM’s governance process. In the fulfilment
• Approving appointments to the Board;
of his role Peter ensures he maintains a thorough understanding
• Determining dividend policy, as well as approving and
of the views of the Company’s shareholders.
recommending dividends, as appropriate;
• Reviewing material litigation;
• Reviewing annually the effectiveness of internal control and
Role of the Non-Executive Directors
The Group’s Non-Executive Directors have a broad and
the nature and extent of significant risks identified by
complementary mix of business skills, knowledge and
management and associated mitigation strategies; and
experience acquired across diverse business sectors and
• Approving the annual budget.
territories. This allows them to provide strong, independent and
external perspectives to Board discussions, which complement
Board decisions are by consensus at Board meetings. However,
the skills and experience of the Executive Directors, facilitating a
should the situation arise, decisions may be taken by a majority
diversity of views aired at Board meetings. This, in turn, enables
of Board members. In the case of an equality of votes, FDM’s
constructive debate and improves the quality of the decision-
Articles of Association provide the Chairman with a casting vote.
making process. At the same time, it also reduces the likelihood
of any one perspective prevailing unduly. A key role performed
Details of the number of meetings of the Board (including
by the Non-Executive Directors is the scrutiny of executive
sub-Committees at which only certain Directors are required to
management in meeting agreed objectives and monitoring the
attend) and Committees and individual attendances by Directors
reporting of performance. They also constructively challenge
are set out in the table on the previous page.
and help develop proposals on strategy and ensure that financial
Chairman, Chief Executive and Senior Independent Director
The roles of the Chairman and Chief Executive are separate, with
controls are rigorous and that the Group is operating within the
governance and risk framework approved by the Board.
a clear division of responsibilities between them; the
Non-Executive Directors are appointed for an initial minimum
responsibility for this separation of duties rests formally with the
period of three years. Their appointments then continue unless
Board.
or until terminated by either the Director or the Company giving
notice to terminate. They are all subject to regular re-election at
As Chairman, Ivan Martin presides over the Board and is
AGMs and their appointments as directors would end if they
responsible for its leadership and overall effectiveness. In doing
were not re-elected by the shareholders. The terms and
so, he aims to maintain an effective working relationship
conditions of appointment of Non-Executive Directors, including
between the Executive and Non-Executive Directors.
the expected time commitment, are available for inspection at
the Company’s registered office.
As Chief Executive, Rod Flavell has responsibility for the
day-to-day management of the Company’s business and the
During the year, the Board considered the independence of each
implementation and delivery of the Board’s strategy.
of the Non-Executive Directors. In doing so, it concluded that
each Non-Executive Director was independent of management
This separation of roles enhances the independent oversight of
and free from any relationship that could interfere with the
executive management by the Board and more closely aligns the
exercise of their independent judgement.
Board with shareholders. It also means that no one individual
within the Group has unfettered powers of decision making. The
The Board regularly reviews the independence of each of the
Directors’ powers are set out in the Company’s Articles of
Non-Executive Directors.
2 Rod Flavell and Mike McLaren attended Audit Committee meetings by invitation, not as Committee members. Rod Flavell and Mike McLaren each attended 4/4 meetings
Association.
during the year.
3 Ivan Martin and Rod Flavell each attended one meeting of the Remuneration Committee during the year at the invitation of the Committee. No Director was present during
any discussion relating to his or her own remuneration.
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2 Effectiveness
Composition of the Board
The Board currently comprises four Executive Directors and five
for which is delegated to the Nomination Committee. Further
details of the work undertaken by the Committee during 2017
Non-Executive Directors including the Non-Executive Chairman.
are contained on page 74.
for the appointment of new directors, the primary responsibility
Their biographies, including information on their prior
experience are set out on pages 58 to 60.
Board commitment
The Board has established a policy permitting its Executive
The Board believes that differences of approach and experience
Directors to hold only one external non-executive directorship,
are important to strengthen the Board and support the Group’s
subject to any possible conflict of interest. This ensures that the
growth plans and strategic objectives.
Executive Directors retain sufficient time for and focus on the
Company’s business, whilst allowing them to gain external board
The Group’s policy is to hire the best candidates for all positions
exposure as part of their leadership development. Executive
at all levels throughout the business, irrespective of gender,
Directors are permitted to retain any fees paid for such services.
including candidates at Board level. The percentage of female
While the Company does not have a similar policy for Non-
Board members is unchanged from 2016 at 22%.
Executive Directors, their key external commitments are
reviewed each year to ensure that they too have sufficient time
Further information and statistics on gender diversity can be
for the fulfilment of their Board responsibilities. Key external
found within the Corporate Social Responsibility report on
commitments of the Board are included within their biographies
page 48. The Board has not set any specific aspirations in respect
on pages 58 to 60.
of gender diversity at Board level but fully supports the Code
principles in respect of diversity. The Board recognises the
The Board considered the commitments of the Chairman and is
benefits of diversity, of which gender is one aspect, and it will
satisfied that he has sufficient time to devote to his Board
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.
Conflict of interests
Procedures are in place for the disclosure by the Directors of any
interest that conflicts, or may possibly conflict, with the
Company’s interests and for the appropriate authorisation to be
sought if a potential conflict arises, in accordance with the
Company’s Articles of Association.
In deciding whether to authorise a conflict or potential conflict of
responsibilities with FDM. The Board will keep his commitment
under review as a matter of good governance.
Details of remuneration received by each of the Executive
Directors for the year ended 31 December 2017 are shown in the
single figure table presented on page 79 of the Remuneration
Report.
Board induction and development
On appointment, each Director takes part in a tailored induction
programme, designed to give him or her an understanding of the
Company’s business, governance and stakeholders.
interest only non-interested Directors (i.e. those that have no
Elements of the programme include:
interest in the matter under consideration) will be able to take
• Briefings from senior management to provide a business
the relevant decision. In taking such a decision the Directors
overview, update on current trading conditions and strategic
must act in a way they consider, in good faith, will be most likely
commercial issues;
to promote the success of the Company and may impose such
• Meetings with the Company’s key advisors and major
limits or conditions as they think fit. The Board has reviewed the
shareholders, where necessary;
procedures in place and considers that they operate effectively.
• Meetings with employees at different FDM Academies and
No actual conflicts of interest arose during the year under review
centres. In addition, the location of Board meetings is
or to the date of this report.
periodically rotated to ensure that Board members have
further opportunity to meet employees at different sites;
Appointments to the Board
The Board recognises its responsibility for succession planning
• Provision of a legal and regulatory memorandum and briefing
on the duties of directors of listed companies;
and regularly considers the balance of skills, experience and
• Details of the Group’s corporate structure, Board and
knowledge of the Board to ensure it remains appropriate to the
Committee structures and arrangements and key policies and
business and that the Board is best placed to achieve the Group’s
procedures; and
strategic objectives. There is a formal and transparent procedure
• The latest statutory financial reports and management accounts.
Corporate Governance Report
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The Chairman, in conjunction with the Company Secretary,
All Board Directors have access to the Company Secretary, who
ensures that Directors are provided with updates on changes in
advises them on Board and Governance matters. The Audit
the legal and regulatory environment in which the Company
Committee received external training covering corporate
operates. These are incorporated into the annual agenda of the
governance and corporate reporting. As well as the support of
Board’s activities along with wider business and industry
the Company Secretary, there is a procedure in place for any
updates; the Chairman also keeps under review the individual
Director to take independent external professional advice at the
training needs of Board members. The Company’s principal
Company’s expense in the furtherance of their duties.
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.
Evaluation of Board and Chairman
The Board carried out an evaluation of its effectiveness during
The Company Secretary presents corporate governance reports
2017. The evaluation was carried out internally and led by the
to the Board as appropriate, together with any relevant technical
Chairman, and involved discussion of a wide range of topics
guidance. In this way, each Director keeps their skills and
which were designed to challenge and appraise various aspects
knowledge current so they remain competent at fulfilling their
of the Board’s structure, governance role, reporting processes,
role, both on the Board and on any Committee of which they are
controls, risk management and dynamics. As in previous years,
a member. Training for Directors is available as required and is
the Chairman has used the results of the evaluation process to
provided by way of external courses.
identify areas in which the Board’s effectiveness can be
enhanced in the coming year.
Information and support
The Board meets regularly throughout the year and agrees a
The effectiveness of the Audit Committee, Remuneration
forward calendar of matters to discuss at each meeting.
Committee and Nomination Committee during the year was also
Standing items, including operational and financial reviews and
assessed internally via discussions which were led by the
Committee updates are considered at each scheduled Board
chairman of each committee. The Audit Committee and
meeting, with unplanned items such as commercial or property-
Remuneration Committee circulated a questionnaire for
related decisions considered as and when required. The
completion by Committee members as a starting point for those
Chairman, in conjunction with the Chief Executive, plans the
discussions.
agenda for each Board meeting and ensures that supporting
papers are clear, accurate, timely and of sufficient quality to
The Board intends in 2018 to engage external advisors to
enable the Board to discharge its duties.
facilitate an independent evaluation of the Board, and its
The key areas of focus by the Board in 2017
Strategy
• Reviewed the Group’s 3 year plan (2018-2020)
Operational
• Reviewed the requirements for centre and
Financial
Academy space; including approval of new
Academy locations
• Review and approval of new treasury policy
• Monthly trading statements
• Business updates from the Group’s senior
management teams
• Full year and half year results
• Group budgets and re-forecasts
Risk
• Review of Risk Register and risk
management process
Committees.
The Non-Executive Directors met without the Chairman to
evaluate the Chairman’s performance.
Re-election of Directors at the 2018 Annual General Meeting
The Company’s Articles of Association require that existing
Directors offer themselves for re-election at intervals of no more
than three years.
At the 2017 AGM the following Directors retired, sought re-
election and were re-elected: Ivan Martin, Andy Brown, Sheila
Flavell and Mike McLaren. At the 2018 AGM, in compliance with
Code provision B.7.1, (and reflecting the Company’s membership
of the FTSE 250) all Directors will retire and offer themselves for
Governance
• Update on Modern Slavery Act compliance
re-election.
• Gender Pay Gap reporting
• Review of the Board’s effectiveness
• Viability statement; assessment and approval
• Going concern review
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.
Investors
• Markets – received market update
presentations from Investec
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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;
• 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 including; authorisation and approvals policies for
financial expenditure; authorisation and approvals policies
for contracts and agreements; signing authorities; IT
application controls; appropriate segregation of duties and
reviews by management. Further, additional procedures exist
to address other risks to the business including a Code of
Conduct and Ethics and Anti-Corruption policy;
• Centralised finance and support functions exist;
• An outsourced Internal Audit function is in place, working and
reporting back to the Audit Committee;
• A formal budgeting process occurs annually. The budgets and
forecasts are reviewed, approved and monitored by the
Board; and
• Regular meetings occur between the Executive Board and
Senior Management team.
During 2017, the Internal Audit team carried out a review of the
Group’s risk management process. The review considered the
following: design and structure of risk management process
against best practice; communication and perception of risk
appetite; identification, assessment and monitoring of risk;
embedding of risk management into day-to-day management
activities; and assurance around risk management activities.
Whilst the review concluded that our risk management process
is operating effectively across the business and is meeting the
requirements expected of a UK listed company, a number of
opportunities were identified to enable us to improve the design
and structure of risk management, and have been 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 68 to 73.
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 Board
has ensured that processes are in place to achieve this and more
information on the processes can be found in the Audit
Committee Report on page 72. A statement of the Directors’
responsibilities in relation to the Annual Report is set out on
page 97.
The Directors consider this Annual Report and Accounts, taken
as a whole, to be fair, balanced and understandable, and
consider that it provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy.
Risk management and internal control
The Board is ultimately responsible for maintaining sound risk
management and internal control systems. These 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 factors such as
unforeseeable events, human fallibility or fraud.
The Board has established a continuous process for identifying
and managing the significant risks faced by the Group (in
accordance with Financial Reporting Council’s ‘Guidance on Risk
Management Internal Control and Related Financial and
Business Reporting’ (September 2014)). The Board’s view of the
Group’s key risks and how the Group seeks to manage those
risks is set out on pages 37 to 45.
The Group has in place appropriate internal control and risk
management systems around financial reporting. The Group
accounting function is centralised and financial information is
held on a central accounting system, from which internal
management reporting, budgeting and external reporting is
collated.
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.
An outsourced internal audit function is in place for the company
and a three-year Internal Audit Plan was approved by the Audit
Committee on behalf of the Board during the year. See page 72
for a more detailed overview of the areas of focus and programme
of work undertaken by the Internal Audit team in the year.
Corporate Governance Report
4 Remuneration
The Company’s policy on remuneration and detail of the
remuneration of each Director is given in the Remuneration
Report on pages 75 to 94.
5 Relations with shareholders
During 2017 the business has worked to improve its
communication with shareholders through the redesign of the
FDM website. The updated site provides a clearer representation
of the work of the Group, including detailed case studies and an
improved investor relations section with the aim of ensuring that
our investment community has a clear understanding of FDM’s
strategy, business model, competitive position, financial
information and strategic progress.
Engagement with stakeholders
In addition to the Company’s shareholders, the Board has
identified the following key stakeholders: employees,
prospective candidates and customers. The whole Board
travelled to FDM’s New York centre for the May Board meeting,
to enable Non-Executive Directors in particular to spend time
with senior managers and other key staff in North America and
to enable them to develop further their understanding of the
North American business. The Executive Directors travel often to
the different FDM centres to meet with all levels of employees.
The Executive Directors attend numerous university career
services, and meet with partnerships that promote the transition
to civilian work environment for Ex-Forces. Together with
members of the sales team the CEO, CFO and CCO discuss on a
regular basis with customers in different countries their
In order to maintain dialogue with institutional shareholders, the
particular needs.
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 Corporate Governance Report was approved by the Board
on 6 March 2018 and signed on its behalf by:
Ivan Martin
Chairman
6 March 2018
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 26 April
2018 at 5 New Street Square, London EC4A 3TW, is enclosed with
this report. In accordance with the Code, 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.
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
its Regulatory News Service and published on FDM’s website.
The Company’s Articles of Association can only be amended if
such amendment is approved by the Company’s shareholders by
way of special resolution.
The Group’s website (www.fdmgroup.com) is the primary
source of information on the Group.
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Audit Committee Report
Role of the Committee
The Committee is appointed by and reports to the Board. The
Meetings
The Committee discharges its responsibilities through a series of
Committee’s principal role is to assist the Board in carrying out
scheduled meetings during the year, the agenda of each being
its responsibilities in relation to monitoring the integrity of
linked to events in the financial calendar of the Group. The
financial reporting, the effectiveness of internal control and risk
Committee met four times during the financial year with all
management and in maintaining an appropriate relationship
members in attendance at all meetings.
with the Group’s auditors. The Committee sets its own agenda in
addition to routine matters and those suggested by the main
During the year, the Chief Executive Officer, Chief Financial
Board.
Officer, Chief Information Officer, Group Financial Controller and
other senior management, attended certain meetings at the
More details on the Committee’s role and responsibilities can be
invitation of the Committee in order to ensure that the
found in the Committee’s terms of reference. These terms were
Committee remained fully informed of events and developments
updated during 2017 as part of an annual review. The full terms
within the business including legal and IT security matters,
of reference are available in the Corporate Governance section
of the Company’s website at www.fdmgroup.com.
reinforcing a strong risk management culture. The Group’s
auditors, PricewaterhouseCoopers LLP (“PwC”), attended three
Composition
The Committee is comprised of Non-Executive Directors Robin
of the four Committee meetings during 2017. The Internal
Auditors attended two Committee meetings during the year to
present the findings from their Internal Audit work. The
Taylor (Chairman), Peter Whiting, Michelle Senecal de Fonseca
Committee met PwC three times during the year privately
and David Lister. The Code requires under provision C.3.1 that at
without Executive Management being present. The Chairman
least one member of the Committee should have recent and
also met with PwC on several occasions outside of the
relevant financial experience. The Chairman of the Committee,
Committee.
who is a chartered accountant with considerable financial
experience in a public company environment, fulfils this
In addition to the meetings of the Committee, the Chairman and
requirement. Peter Whiting, Michelle Senecal de Fonseca and
other members of the Committee met with other members of
David Lister also have experience in financial and reporting
the Finance team and regional operating management
matters through their other business experience. The
throughout the year.
Committee as a whole has significant experience and
competence in the sector within which FDM operates.
There have been no changes in Committee membership during
the year. In compliance with the Corporate Governance Code,
the Committee membership is limited to independent Non-
Executive Directors of the Company.
Members’ experience is documented on pages 58 to 60.
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Audit Committee Report
“The Committee has played a key role in
ensuring appropriate challenge and governance
in matters relating to internal control and risk
management and financial reporting.”
Chairman’s introduction
This year’s Audit Committee Report outlines our activities
and areas of focus during the year. The Committee
provides support to the Board in meeting its statutory
responsibilities as set out in the UK Corporate Governance
Code (issued April 2016). This updated edition of the Code
requires that Audit Committees have competence relevant
to the sector in which the Company operates. I am pleased
to report that the skills and experience of the Audit
Committee members are very much relevant to FDM’s
business, as evidenced by the biographies on pages
58 to 60.
A key focus of the Audit Committee continues to be Internal
Control. A three-year risk based Internal Audit Plan which
covers all key financial, operational and regulatory parts of
the business was approved by the Audit Committee during
the year. Details of the work undertaken by the Internal
Audit team in 2017 are included on page 72. Their work
included an assessment of our risk management processes;
treasury processes; cyber and IT security systems and
procedures; and, in recognition of the approaching deadline
for compliance, an assessment of our readiness for General
Data Protection Regulation (‘GDPR’).
Now a standing item on the Committee agenda, the
Committee also continues to focus on the development of
FDM’s IT systems in order to keep pace with the growth of the
Company, with a particular emphasis on security. FDM’s Chief
Information Officer (”CIO”) provided updates on: the cyber
risks facing the Group and the IT security steps taken and the
Group’s IT support, environment and systems capabilities.
The upgrade of the current IT systems and infrastructure is
progressing well.
As a Committee we continue to challenge management with
regard to the key judgement areas and significant financial
reporting items, and these are disclosed in this report on
page 71.
The Board visited FDM’s New York centre in May 2017.
This gave an opportunity for the Non-Executive Directors
to broaden their understanding of the North American
business and to discuss key operational areas with the
North America management team.
Last year, in addition to the business as usual work, the Committee set itself two key priorities for 2017. We have made good
progress in respect of both priorities, as outlined below:
2017 priorities
Progress
Focus on internal controls and risk management, with a
The three-year Internal Audit Plan was approved by the
particular emphasis on assessing wider operational controls.
Committee and the first projects are underway. The Plan is risk
based and covers all key operational parts of the business.
Review plans to upgrade systems to support the further
The IT strategic plan has been finalised and reviewed by the
expansion of the business internationally.
Audit Committee. A number of IT projects, including an upgrade
of the Group’s Billing and Finance systems, are in progress.
These areas will continue to be a key focus for 2018 as we enter the second year of our three-year Internal Audit Plan and we
continue the roll out of our IT strategic plan.
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Activity
Principal activities during the year
Since the beginning of the financial year, the Committee undertook the following activities:
March 2017
• Reviewed and recommended approval of the Preliminary Announcements and the 2016 Annual Report to the Board. The work
included: ensuring that the report is fair, balanced and understandable; reviewing the significant judgements applied in the
Annual Report; the appropriateness of the ‘going concern’ statement and the viability statement; and providing approval of the
principal risks to the business as set out in the Annual Report
• Received a presentation from PwC on their audit of the financial results for the year ended 31 December 2016, and reviewed the
‘Auditors’ Report to the Audit Committee’
• Received and discussed a draft Internal Audit plan for the three-year period from 2017 to 2019
• Received a report on a review of key client contracts
• Received an update on the project to upgrade FDM’s business and financial systems
• Received an update on proposed activities and areas of focus for the Group Finance team in 2017
• Approved the Committee’s annual agenda for the remainder of 2017
June 2017
• Received a further update on IT strategy and IT systems development projects
• Approved the three-year Internal Audit plan for the period 2017 to 2019
• Received Internal Auditor’s findings from their testing of the Group’s financial controls and the Risk Controls Matrix (“RCM”)
which details all key controls around each of the Group’s key financial processes
• Received a report on a review of HR’s on-boarding and induction processes (including training provided on aspects such as
anti-bribery and data protection)
• Reviewed the Group’s risk register
• Reviewed developments in accounting and reporting requirements applicable to the Group
• Reviewed the Group Finance team three-year plan and objectives for the period 2017 to 2019
• Reviewed the effectiveness of the external auditors
• Reviewed the Audit Committee’s Terms of Reference
Prior to the main meeting the Committee received a training session from PwC on key developments in areas relevant to the
Committee’s business in 2017 and 2018.
July 2017
• Reviewed PwC’s report to the Committee (interim review for the six months to 30 June 2017)
• Reviewed the Interim Report and recommended its approval to the Board
• Reviewed the fees paid to the external auditors for non-audit work
• Reviewed and updated FDM’s policy relating to non-audit work
December 2017
• Reviewed PwC’s year-end audit plan and fees for audit of the 2017 financial results
• Carried out an effectiveness review of the Audit Committee
• Reviewed and updated the Group’s risk register
• Received updated plans for the development of future systems
• Reviewed non-audit fees policy
• Received updates on corporate reporting and ensured compliance with latest corporate governance
• Undertook annual review of whistle blowing and anti-bribery policies and procedures
• Reviewed the Internal Audit Findings Report
Audit Committee Report
Significant financial reporting items
The 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 regular 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 on page 114, having
received drafts of the Annual Report and financial statements in sufficient time ahead of signing to facilitate their thorough review,
and allow for the opportunity to challenge and discuss the Report’s content.
The main areas of focus during the year are unchanged from 2016 and are set out below:
Area of focus
Steps taken to address each area
Revenue
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
For a third year, the Company granted awards under the FDM
Performance Share Plan (the “PSP”). Associated with accounting
for the awards are judgements relating to the number of shares
which will vest.
Going concern and viability
The Committee has considered the “Going Concern” basis
assumed within the financial statements and viability period.
The underlying assumptions, the reasonableness of those
assumptions and the headroom/funding facilities available were
considered as part of the Committee’s review. The review also
considered the impact of a range of sensitivities on the key
assumptions.
Impact of new accounting standards
The Committee has considered the impact of new accounting
standards including IFRS 9 ‘Financial Instruments’, IFRS15
‘Revenue from contracts with customers’, and IFRS 16 ‘Leases’.
We do not anticipate a material impact on the Group’s results
from the application of the new standard IFRS 15, ‘Revenue from
contracts with customers’ (effective for accounting periods
beginning 1 January 2018).
The Committee received and reviewed a paper containing the
key assumptions and judgements applied in calculating the
share-based payment charge. The Committee is satisfied that the
assumptions and judgements applied are appropriate.
The Committee received and reviewed a paper prepared by the
Finance team supporting the adoption of the going concern basis
and the appropriateness of the viability period. The Committee
is satisfied with the judgements in these areas and that sufficient
work was performed to enable the 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 46.
The Committee has reviewed papers prepared by the Finance
team, outlining the impact of new accounting standards as
applied to FDM and is satisfied that the impact has been
appropriately assessed.
The impact of IFRS 9, IFRS 15 and IFRS 16 is set out in note 5 to
the Consolidated Financial Statements.
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Audit Committee Report
Fair, balanced and understandable
As requested by the Board, the Committee has considered
Internal Audit
Established in 2016, the Group’s Internal Audit function is wholly
Auditor independence and objectivity
Both the Committee and the Board keep the external auditors’
Whistleblowing
A whistleblowing policy enables employees to report concerns
whether, in its opinion, the Annual Report and Accounts 2017 is
outsourced. The decision to outsource the Internal Audit
independence under review. From July 2016, the Committee has
on matters affecting the Group or their employment, without
fair, balanced and understandable and provides the information
function was twofold: first, it is considered that outsourcing
been monitoring the fees paid to the external auditor for
fear of recrimination.
necessary for shareholders to assess the Group’s position and
ensures the process is independent and second, it guarantees
non-audit work at each Committee meeting. Approval of
performance, business model and strategy. In forming its
specialist input when required, taking into account international
non-audit fees of up to £5,000, the de minimis level which was
The Committee reviewed the Group’s whistleblowing policy and
opinion the Committee considered the information it had
boundaries and the need for technical specialism, particularly
set by the Committee, has been delegated to the Chief Financial
procedures in December 2017 and is satisfied that they are
received and the discussions that have taken place with senior
when reviewing non-financial areas of the business.
Officer. Any single fee exceeding this threshold requires the
appropriate to the size and scale of the Group.
managers in the business.
A three-year Internal Audit Plan, covering 2017-2019 was
approval of the Chair of the Audit Committee. The Group
receives a formal statement of independence and objectivity
All members of the Committee received a full draft of the Annual
approved by the Audit Committee during the year. The Plan is
from PwC each year and obtains quotes in a competitive tender
Report and Accounts two weeks prior to the meeting at which it
risk based and covers all key financial, operational and
for non-audit work performed.
was required to provide its final opinion. The Committee
regulatory parts of the business. Specifically, in 2017, the
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
reviewed the report to ensure that; it was balanced and
following areas were reviewed: risk management processes;
Fees for non-audit work carried out by PwC as a percentage of
policy in December 2017 and concluded that it was sufficient for
reflective of the Group’s performance; that the presentation of
Treasury; Cyber and IT security; and GDPR.
audit fees for the year ended 31 December 2017 were 23%
managing the anti-bribery and corruption risks faced by the
adjusting items was relevant and understandable; that all
(2016: 47%). Further disclosure of the non-audit fees paid during
Group.
material matters were considered; and there was internal
The findings from the 2017 reviews were presented to the Audit
the year ended 31 December 2017 can be found in note 7 to the
consistency and good linkage throughout, including the
Committee in December and are supported by related action
Consolidated Financial Statements.
presentation of the risks and significant judgements.
plans where relevant. No serious weaknesses were identified by
Audit Committee effectiveness
The Committee considered its own effectiveness in discharging
The Committee concluded that in its opinion the Annual Report
the Internal Audit review.
The Group continues to engage other independent accounting
its duties during 2017. The effectiveness review was carried out
firms to perform internal audit work, tax consulting and other
using a questionnaire which was completed by each member of
and Accounts 2017, taken as a whole, is fair, balanced, and
As the Internal Audit Plan is risk-based, the Audit Committee
assignments to further ensure that the independence and
the Committee together with a comparison against the
understandable and considers that it provides the information
considers that the internal audit process is an effective tool in
objectivity of the external auditor is not compromised.
Committee’s new terms of reference and the Financial Reporting
necessary for shareholders to assess the Group’s position and
the overall context of the Group’s risk management systems.
Council’s Guidance for Audit Committees. The Committee is
performance, business model and strategy. The Directors’
External audit partners are rotated every five years. The current
satisfied that it continues to be effective in discharging its duties.
statement of responsibilities on a fair, balanced and
In addition to preparing the three-year plan outlined above, the
external audit partner is Jaskamal Sarai, who has been in place
understandable annual report is given on page 97.
Internal Audit team also completed its review of the Group’s key
for three years.
Internal control and risk management
The Committee is responsible for monitoring and reviewing the
effectiveness of the Group’s internal control and risk
controls covering significant financial processes which are
documented in the Risk Controls Matrix (“RCM”). Management
have updated the RCM as appropriate.
management systems. Through monitoring the effectiveness of
The Chair of the Audit Committee also met with the Internal
its internal controls and risk management, the Committee is able
Audit team without management present.
to maintain a sound understanding of the Group’s trading
performance, key judgemental areas and management’s
decision-making processes.
Effectiveness of external auditor
During the year, the Committee reviewed the effectiveness and
independence of the external auditor, using a feedback
questionnaire which was completed by key members of the
Finance team, each member of the Committee and the Chief
Robin Taylor
Chairman of the Audit Committee
Financial Officer. The questionnaire asked individuals to rate the
6 March 2018
External auditor
PwC is the Group’s current external auditor, having been
performance of PwC in the following areas: knowledge and
expertise of audit team; independence and objectivity of audit
appointed in 2013. The Group is not required under current EU
team; effectiveness of planning process; ability to firmly
The key elements of the Group’s internal control framework and
legislation to conduct a tender before the year ending
procedures are set out on page 66.
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.
challenge management; and quality of audit deliverables. 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.
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Nomination Committee Report
Remuneration Report
Statement from the Chairman of the Remuneration Committee
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 structure, size and composition of the Board and
its Committees including its balance of skills, knowledge,
experience and diversity, and make recommendations to the
Board with regard to any changes;
• Lead the process for identifying candidates to fill Board
vacancies as and when they arise, and recommend new
appointments to the Board for approval; and
• Consider succession planning for Directors and other senior
executives taking into account the challenges and
opportunities facing the Company, and the skills and
experience needed on the Board in the future.
Committee activities during the year
During the year, the Committee met twice, with all members
present and undertook the following activities:
• Planning for the 2017 Board evaluation;
• Review of the Group’s succession planning requirements and
long-term managerial talent development;
• Carried out the annual effectiveness review of the
Committee; and
• Carried out a review of the skills and experience of each of the
Directors and the independence of each of the independent
Non-Executive Directors and made initial recommendations
for re-election of the Directors at the 2018 AGM.
Looking ahead
The Committee has established an in-depth review of long-term
succession planning and talent management which will be
externally facilitated during 2018 with a view to ensuring that a
detailed succession plan, talent management strategy and
people development programme are developed which is aligned
to the Group’s strategy and supports the future growth of the
Group.
Ivan Martin
Chairman of the Nomination Committee
6 March 2018
Chairman’s introduction
I am pleased to present the report of the Nomination
Committee for the year ended 31 December 2017.
The role of the Nomination Committee is to review the
composition of the Board and to plan for its refreshment
as appropriate with regard to composition, balance and
structure.
The Committee undertook a review of its effectiveness
during 2017 and concluded that the Committee continues
to operate effectively.
Information on the activities of the Committee during the
year is set out in this report.
Committee composition
The Committee is appointed by, and reports to, the Board, and
comprises the Chairman, the Chief Executive and all four of the
independent Non-Executive Directors. The following members
served on the Committee during the year:
Ivan Martin (Chairman)
Rod Flavell
Robin Taylor
Peter Whiting
Michelle Senecal de Fonseca
David Lister
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On behalf of the Board, I am pleased to present our Remuneration Report for the year ended 31 December 2017.
Our Directors’ Remuneration Policy was approved by shareholders at the 2015 AGM and, as required by the applicable legislation, we
are seeking approval from shareholders for a new policy at our AGM in 2018. In considering our approach to the new policy, the
Remuneration Committee has been guided by the following principles:
• Changes in best practice as regards executive remuneration, reflected in the introduction of bonus deferral, post-vesting holding
periods on the PSP and a strengthening of the shareholding guidelines, as discussed below.
• A desire to remain consistent with the culture of the Company that has been instrumental in the delivery of strong growth and very
good returns to shareholders in the period since flotation.
• The considerable growth and evolution of the Company in the period since the original policy was approved, evidenced by the
increase in the Company’s market capitalisation from approximately £309 million at flotation to approximately £1,000 million at
31 December 2017 and our elevation to the FTSE 250 in 2017, reflecting sustained growth across both new and existing markets
including an increase in the number of Mounties on site from 1,500 at the end of 2014 to 3,170 at the end of 2017.
• Recognition of the possibility of new Executive Directors joining the Board during the life of the new policy and the resulting need
for the policy to support succession planning.
We have summarised below how the new policy compares to the original policy, and how we intend to apply the new policy in 2018.
Remuneration element Original policy
Salary
Increases normally in line with the
wider workforce. Higher increases
may be awarded in appropriate
circumstances.
New policy
No change.
Implementation of new policy in 2018
The Committee is reviewing
Executive Directors’ salaries in
light of the growth in the
Company since IPO and the
increased scale and complexity of
the roles of the Directors.
The average salary increase of the
Executive Directors since the IPO
has been less than that of the
wider workforce over the same
period and no Executive Director
received a salary increase in 2017.
Our intention is that any increase
awarded for the Executive
Directors in 2018 would not
exceed the increase for the UK
workforce (excluding Mounties) in
2017 and 2018 combined.
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Remuneration Report
Statement from the Chairman of the Remuneration Committee (continued)
The Remuneration Committee
The role of the Committee is to:
Remuneration element Original policy
Benefits and
retirement benefits
Benefits are positioned by
reference to market levels.
Defined contribution pension
contributions for existing
Executive Directors are capped at
3% of salary.
Annual Bonus
Up to 100% of salary. Paid in cash
following year end.
Information in relation to the
bonuses earned in respect of
2017 is given on page 77.
PSP
Ordinarily up to 100% of salary,
with discretion to award up to
200% of salary.
In practice, awards have always
been granted below the level of
100% of salary.
Awards vest and are released
following the end of a three-year
performance period.
Shareholding
guidelines
100% of salary
New policy
No change.
Up to 150% of salary. Up to 33%
of any bonus earned is deferred
for two years where the
opportunity is more than 100%
of salary. Deferred bonuses can
include a right to “dividend
equivalents”.
The ordinary limit will be
increased to 150% of salary, but
there will be no increase to the
overall maximum. The purpose
of the increase is to provide
flexibility over the life of the
policy, and the Committee has no
intention of applying this
increased quantum at the
current time.
Awards will ordinarily be subject
to an additional holding period of
two years following vesting.
Existing Executive Directors will
only be subject to the holding
period in respect of awards with
a value in excess of 100% of
salary.
200% of salary. 50% of the shares
acquired under the PSP and any
deferred bonus award (after
sales to cover tax) must be
retained until the guideline is
achieved.
Implementation of new policy in 2018
• Determine the Company’s remuneration policy for all Directors and the Chairman;
No change. The low level of
pension provision is consistent
with that provided to the wider
workforce.
The Executive Directors’ bonus
opportunity for 2018 will remain
at 100% of salary. Further
information is given on page 83.
Any increase in the bonus
opportunity for future years
would only be implemented with
a review of the performance
targets to ensure that the level of
stretch reflects the increased
opportunity.
It is intended that awards for 2018
will be up to a maximum of 100%
of salary. Further information is
given on page 83.
Our Executive Directors all have
significant shareholdings, directly
aligning their interests with those
of shareholders. As shown on
page 81, each of our Executive
Directors holds shares with a
value significantly in excess of the
formal shareholding guidelines
under both the original and new
policies.
• 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 of issues affecting all aspects of executive remuneration.
Details of the attendance at Committee meetings are set out in the Corporate Governance Report on page 62. The full Remuneration
Committee terms of reference can be found on the Company’s website. Details of the advisors to the Committee are set out on page 85.
Remuneration in 2017
The original remuneration policy approved at the 2015 AGM applied during 2017. The table below summarises the principal decisions
in respect of 2017 in accordance with that policy.
Salary
Bonus
As noted in the 2016 Directors’ Remuneration Report, Executive Directors’ salaries were not increased for 2017.
As with 2016, the Executive Directors’ bonus opportunity for 2017 was subject to stretching targets based on
Group pre-tax profit (governing 80% of the opportunity) and Mountie revenue (governing 20% of the
opportunity), directly aligned to our KPIs.
Bonuses earned by the Executive Directors in respect of 2017 were 80% of salary, reflecting the strong
performance by the Group during 2017 as set out in the Strategic Report, as demonstrated below.
Adjusted profit before
tax (80% weighting)
Mountie revenue
(20% weighting)
40
42
44
46
48
205
210
215
220
225
Target of £42.7m
gives 50% of
maximum
payable
Stretch target
of £46.9m gives
100% of
maximum
payable
Actual Performance of £47.2m exceeds
stretch target and therefore gives 100% of
maximum payable
Target of
£211.7m
gives 50% of
maximum
payable
Stretch target
of £221.7m
gives 100% of
maximum
payable
Actual Performance of £207.3m is below
target and therefore there is no pay-out
Further details of the annual bonus outturn are included in the Annual Report on Remuneration on page 80.
Our first PSP awards were granted in April 2015. The awards vested at 100%, reflecting the exceptionally strong
performance of the Company over the three-year performance period, as summarised below, and further
information is given on page 80.
PSP vesting by
reference to
performance
in 2017
Compound annual growth in EPS
Vesting
Performance outcome
(compound annual growth
in adjusted1 EPS)
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%
23%
17% p.a. or greater
100%
1 The Committee has at its discretion assessed performance outcome based upon adjusted EPS as defined in Note 12 in the Consolidated Financial
Statements.
Other minor amendments have been made to the policy to aid its operation and to reflect the changes referred to above.
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Remuneration Report
Statement from the Chairman of the Remuneration Committee (continued)
PSP vesting by
reference to
performance
in 2017
(continued)
In the single figure of remuneration table on page 79, the full value of the awards is shown. The award was
earned over the three-year period 2015 – 2017 and the value earned reflects the significant increase in the share
price over that period. We have illustrated below the proportion of the value which is attributable to the starting
value of the award and the proportion attributable to the growth in the share price.
Annual Report on Remuneration
Audited Section
The Audited Section of this report comprises only the following sections:
• Single figure table;
• Annual bonus for 2017;
• Long term incentives vesting in respect of 2017;
• Directors’ shareholding and share interests;
• Performance Share Plan awards granted in 2017.
£165,500 (37%)
£278,000 (63%)
£443,500
Single figure table
The table below details the total remuneration receivable by each Director for the financial years ended 31 December 2017 and
31 December 2016. 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 2017 annual bonus and the long term incentives vesting in respect of 2017.
0
50
100
150
200
250
300
350
400
450
500
Value attributable to starting share price
Value attributable to growth in value
PSP awards
granted in
2017
We granted each Executive Director a further PSP award in 2017, details of which are set out on page 82.
Although the policy permits awards at the level of up to 100% of salary, we again scaled back the awards to
enable the Company to make additional awards below Board level. Each Executive Director received an award
over 20,000 shares, representing an award over the following percentages of salary:
Rod Flavell: 39%
Mike McLaren: 55%
Sheila Flavell: 53%
Andy Brown: 53%
Remuneration in 2018
Our approach to the implementation of the proposed policy for Executive Directors in 2018 is summarised above. Further information
is given in the Annual Report on Remuneration.
The Non-Executive Directors’ fees are being reviewed in light of the growth in the Company since IPO and the increased scale and
complexity of the roles of the Non-Executive Directors.
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.
Executive Directors
Rod Flavell
Sheila Flavell
Mike McLaren
Andy Brown
Non-Executive Directors
Ivan Martin
Peter Whiting
Robin Taylor
Michelle Senecal de Fonseca1
David Lister2
Salary and
fees
£000
Benefits
£000
Annual
bonus
£000
Long term
incentives
£000
Pension
£000
Total
remuneration
£000
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
367.5
367.5
273.0
273.0
262.5
262.5
273.0
273.0
131.0
131.0
52.0
52.0
47.0
47.0
42.0
40.3
42.0
34.2
19.6
19.6
13.0
9.5
13.8
13.5
13.3
12.6
–
–
–
–
–
–
–
–
–
–
294.0
367.5
218.4
273.0
210.0
262.5
218.4
273.0
–
–
–
–
–
–
–
–
–
–
443.5
–
443.5
–
443.5
–
443.5
–
–
–
–
–
–
–
–
–
–
–
9.5
9.9
7.1
7.3
6.8
7.0
8.2
8.2
–
–
–
–
–
–
–
–
–
–
1,134.1
764.5
955.0
562.8
936.6
545.5
956.4
566.8
131.0
131.0
52.0
52.0
47.0
47.0
42.0
40.3
42.0
34.2
Peter Whiting
Chairman of the Remuneration Committee
6 March 2018
1 Michelle Senecal de Fonseca was appointed as a Director on 16 January 2016. Her fee for 2016 reflects her fee from that date until the end of the year. On an annualised basis
her fee would equate to £42,000.
2 David Lister was appointed as a Director on 9 March 2016. His fee for 2016 reflects his fee from that date until the end of the year. On an annualised basis his fee would
equate to £42,000.
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Annual Report on Remuneration (continued)
The figures in the single figure table on the previous page are derived from the following:
Salary and fees
The total salaries and fees paid in respect of the year.
Benefits
Value of benefits received in the year, comprising private medical insurance and car allowance.
Annual bonus
The cash value of the bonuses earned in respect of the year.
Long term
incentives
Pension
The value of the Executive Directors’ long term incentives vesting by reference to performance in 2017,
calculated as set out below.
The cash value of Company pension contributions paid on behalf of the Executive Directors as part of the
Company’s defined contribution scheme.
Annual bonus for 2017
Each Executive Director’s annual bonus opportunity for 2017 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.
While the remuneration policy permits a threshold payment of 20% of maximum payable, the Committee decided not to set such a
target concerning adjusted profit before tax and Mountie revenue.
Adjusted profit before tax
Mountie revenue
Threshold (20%
of maximum
payable)
Target (50%
of maximum
payable)
Stretch (100%
of maximum
payable)
Actual
performance
n/a
n/a
£42.7m
£46.9m
£47.2m
£211.7m
£221.7m
£207.3m
Weighting
80%
20%
Bonus earned
(percentage
of maximum
payable)
100%
0%
Accordingly, each Executive Director earned a bonus equal to 80% of their salary in respect of 2017.
Long term incentive awards vesting in respect of 2017
Each Executive Director was granted an award under the Company’s Performance Share Plan on 20 April 2015 over 50,000 shares1.
Each award was subject to a performance condition based on the compound annual growth in the Company’s Earnings Per Share over
the performance period 2015 – 2017 in accordance with the following table.
Compound annual growth
Percentage of the award
Performance outcome
Vesting outcome
in EPS
10% p.a.
that will vest
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%
(compound annual growth
in adjusted1 EPS)
23%
100%
Remuneration Report
The extent to which the awards vested was subject to the Committee’s assessment of the overall financial performance of the
Company during the performance period. Taking into account the strong growth in EPS and the overall financial performance of the
Company over the three-year period, the Committee confirmed that the vesting by reference to the principal EPS performance
condition was appropriate.
In the single figure table on page 79, the value for the LTIPs is calculated by multiplying the number of shares in respect of which each
award vested (50,0002) by £8.87 (being the closing share price of £8.88 on 6 March 2018, the vesting date, less the exercise price of
£0.01 per share).
2 Each award granted in 2015 was granted as an “Approved PSP” award to take account of potential tax advantages for the participant and Company. Each award consisted of a
PSP award over 40,937 shares, a tax qualifying option over 9,063 shares with an exercise price of £3.31 per share and a “Linked Award” 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 9,063 shares. As the Linked Award is principally to fund the exercise price of the tax qualifying option, in practice, the award is
equivalent to a PSP award over 50,000 shares.
Former Directors
During the year, no payments were made to any former Director of the Company or in respect of loss of office.
Directors’ shareholding and share interests
The Committee has previously adopted a formal shareholding guideline of 100% of salary. In the new directors’ remuneration policy
to be proposed to shareholders at the 2018 AGM, the Committee has included its new shareholding guideline of 200% of salary. 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 interests as at 31 December 2017 were as follows:
Ordinary shares as at
31 December 2017
Number
Ordinary shares value as at
31 December 2017
£0001
Value
(x base salary2)
Executive Directors
Rod Flavell
Sheila Flavell
Mike McLaren
Andy Brown
Non-Executive Directors
Ivan Martin
Robin Taylor
Peter Whiting
Michelle Senecal de Fonseca
David Lister
8,201,255
8,201,254
499,295
4,540,801
8,000
5,226
10,453
5,221
–
76,559
76,559
4,661
42,388
75
49
98
49
–
208.3
280.4
17.8
155.3
0.6
1.0
1.9
1.2
–
1 Calculated based on the closing share price of 933.5 pence on 31 December 2017.
2 Calculated on base salary and fees at 31 December 2017.
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1 The Committee has at its discretion assessed performance outcome based upon adjusted EPS as defined in Note 12 in the Consolidated Financial Statements.
There have been no changes in the Directors’ holdings in the share capital of the Company between 31 December 2017 and the date
the financial statements were approved.
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Granted
in 2017
Lapsed
in 2017
Exercised
in 2017
Number at
31 December
2017
Annual Report on Remuneration (continued)
Each Executive Director also holds awards under the Company’s PSP, as follows:
Director
Rod Flavell
Date of award
20 April 20151
19 April 2016
19 April 2017
Sheila Flavell
20 April 20151
19 April 2016
19 April 2017
Mike McLaren
20 April 20151
Andy Brown
19 April 2016
19 April 2017
20 April 20151
19 April 2016
19 April 2017
Number at
1 January
2017
50,000
40,000
–
–
–
20,000
50,000
40,000
–
–
–
20,000
50,000
40,000
–
–
–
20,000
50,000
40,000
–
–
–
20,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
50,000
40,000
20,000
50,000
40,000
20,000
50,000
40,000
20,000
50,000
40,000
Remuneration Report
Approach to Directors’ remuneration for 2018
Base salary and fees
Executive Directors
The Committee is reviewing Executive Directors’ salaries in light of the growth in the Company since IPO and the increased scale and
complexity of the roles of the Directors. The average salary increase of the Executive Directors since the IPO has been less than that of
the wider workforce over the same period and no Executive Director received a salary increase in 2017. Our intention is that any
increase awarded for the Executive Directors in 2018 would not exceed the increase for the UK workforce (excluding Mounties) in 2017
and 2018 combined.
Non-Executive Directors
The Non-Executive Directors’ fees are being reviewed in light of the growth in the Company since IPO and the increased scale and
complexity of the roles of the Non-Executive Directors.
Annual bonus for 2018
The maximum annual bonus opportunity for all Executive Directors for 2018 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 2018 targets are commercially sensitive and they are not disclosed in this report, however the 2018 targets will be
Status
Vested2
Unvested
Unvested
Vested2
Unvested
Unvested
Vested2
Unvested
Unvested
Vested2
Unvested
20,000
Unvested
disclosed in next year’s report.
1 Each award granted in 2015 was granted as an “Approved PSP” award to take account of potential tax advantages for the participant and Company. Each award consisted of a
PSP award over 40,937 shares, a tax qualifying option over 9,063 shares with an exercise price of £3.31 per share and a “Linked Award” 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
Long Term Incentives for 2018
The Committee proposes to grant awards under the PSP in respect of 2018. In accordance with the Directors’ remuneration policy for
which approval is sought at the 2018 AGM, 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
Award may be exercised in respect of 9,063 shares. As the Linked Award is principally to fund the exercise price of the tax qualifying option, in practice, the award is
per share over the three-year performance period as follows:
equivalent to a PSP award over 50,000 shares.
2 The awards granted in 2015 vested on 6 March 2018, as described on pages 80 and 81.
Performance Share Plan awards granted in 2017
Each Executive Director was granted an award under the Company’s PSP on 19 April 2017 as set out below.
Award
PSP award
Number of shares
Exercise price per
share
Face value of award
20,000
£0.01
£144,800
The face value of the award is calculated by multiplying the number of shares subject to the PSP award (20,000) by £7.24 being the
average share price over the three business days preceding the date of grant.
The awards will vest based on compound annual EPS growth in line with the following schedule:
Compound annual growth in adjusted1 EPS
Percentage of the award that will vest
10% p.a.
25%
Greater than 10% p.a. but less than 15% p.a.
Determined on a straight-line basis between 25% and 100%
15% p.a. or greater
100%
1 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 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 the calculated levels
do not reflect the performance of the Company.
Compound annual growth in adjusted1 EPS
Percentage of the award that will vest
10% p.a.
25%
Greater than 10% p.a. but less than 15% p.a
Determined on a straight-line basis between 25% and 100%
15% p.a. or greater
100%
1 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 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 the calculated levels
do not reflect the performance of the Company.
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Annual Report on Remuneration (continued)
Spend on pay
The following table sets out the percentage change in dividends paid and the overall expenditure on pay (as a whole across the
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 and FTSE 250 index, these have been chosen as the Company was a constituent of each index during the year, having
organisation).
been promoted to the FTSE 250 index in June 2017.
FDM
FTSE Small Cap
FTSE 250
)
0
0
1
o
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e
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R
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350
300
250
200
150
100
50
Jun 14
Sep 14
Dec 14
Mar 15
Jun 15
Sep 15
Dec 15
Mar 16
Jun 16
Sep 16
Dec 16
Mar 17
Jun 17
Sep 17
Dec 17
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 seven years. Note that for 2014 this is the remuneration received for the whole of 2014 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
2015
2016
2017
Ordinary dividends
Special dividend
Total dividends
Overall expenditure on pay
Year ended
31 December
2016
£000
Year ended
31 December
2017
£000
Percentage
change
19,138
5,376
24,514
23,976
+25%
–
23,976
n/a
-2%
113,053
142,840
+26%
Shareholder approval of our Directors’ Remuneration Report
At the AGM held on 30 April 2015, the Directors’ Remuneration Policy received strong support from shareholders, which was reflected
in the approval of the Directors’ Remuneration Report at the 2017 AGM. The results of the votes are set out below:
Resolution
Votes for
% of
votes for
Votes against
% votes
against
Votes
withheld
2015 AGM: Approve the Directors’ Remuneration Policy
87,035,109
98.46%
1,359,484
1.54%
2017 AGM: Approve the Directors’ Remuneration Report
91,753,254
98.54%
1,363,501
1.46%
0
0
Advisors
During the financial year, the Committee received independent advice from Deloitte LLP, which was appointed by the Committee, in
relation to the Committee’s consideration of matters relating to Directors’ Remuneration. Deloitte LLP was appointed in 2014
following a formal tender process. Fees for advice provided to the Remuneration Committee during the year were £16,000. Fees were
charged on a time and disbursements basis.
Total remuneration (£000)
455.2
639.2
686.2
547.7
658.5
668.1
764.5
1,134.1
Deloitte LLP is a member of the Remuneration Consultants Group and voluntarily operates under its code of conduct in its dealing
Annual bonus as a % of maximum opportunity
100%
100%
100%
68%
55%
82%
100%
80%
Long Term Incentives as a % of maximum
opportunity
n/a
n/a
n/a
n/a
n/a
n/a
n/a
100%
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
2016 and 2017. 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. The annual bonus calculation excludes the stretch element of the annual
bonus as set out on page 80.
Percentage change
Salary
Taxable benefits
Annual bonus
Wider
workforce
6%
0%
12%
CEO
0%
0%
0%
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.
The Chairman, Chief Executive Officer and other members of the executive management attend the Committee by invitation to
provide input, but no Executive Director or other member of management is present when his or her own remuneration is discussed.
Details of individual attendances by Directors at the Remuneration Committee meetings during 2017 are set out on page 62.
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Purpose and link
to strategy
Benefits
To provide benefits
as part of a broadly
market competitive
total remuneration
package.
Operation
Maximum opportunity
Performance measures
Not applicable.
Executive Directors receive benefits set at an
appropriate level taking into account total
remuneration, market practice, the benefits
provided to other employees in the Group and
individual circumstances. Benefits provided
currently include car allowances and private
health insurance.
Other benefits may be provided based on
individual circumstances. These may include,
for example, relocation expenses and
expatriate allowances.
Whilst the Committee has not set an
absolute maximum on the level of
benefits Executive Directors may
receive, the value of benefits is set at
a level which the Committee
considers to be appropriately
positioned taking into account
relevant market levels based on the
nature and location of the role, the
level of benefits provided for other
employees in the Group and
individual circumstances.
Directors’ Remuneration Policy
This part of the Report sets out the Company’s Company Directors’ Remuneration Policy, which, subject to shareholder approval at
the 2018 Annual General Meeting, shall take binding effect from the close of that meeting.
The Company’s Directors’ Remuneration Policy was first approved at the 2015 Annual General Meeting and has applied since the date
of that meeting. The new Directors’ Remuneration Policy does not make significant changes to the overall structure of the
remuneration package, and continues to reflect our reward strategy of providing competitive remuneration packages that promote
the long term success of the Company. The changes to the remuneration policy approved at the 2015 Annual General Meeting are
described in the Statement from the Chairman of the Remuneration Committee on pages 75 to 76.
Executive Directors
Purpose and link
to strategy
Base salary
Core element of
fixed remuneration
to reflect the
individual’s role
and experience as
part of a broadly
market competitive
total remuneration
package, to enable
the Group to
recruit and
maintain the
required skills and
expertise to enable
it to achieve its
strategy.
Operation
Maximum opportunity
Performance measures
Retirement benefits
Salary levels are determined taking into
account a range of factors, which may include
(but are not limited to):
• Underlying Group performance;
• The size and scope of the Executive
Director’s role and responsibilities;
• The Executive Director’s skill, experience
and performance;
• Salary levels for equivalent roles at other
listed companies of a similar size and/ or
complexity to the Group; and
• Pay and conditions elsewhere in the Group.
Not applicable.
Whilst there is no maximum salary
level, salary increases will normally
be within the range of increases
awarded to the wider workforce in
percentage of salary terms.
Salary increases above this level may
be awarded in appropriate
circumstances including but not
limited to:
• Where an Executive Director has
been promoted or has had a
change in scope or responsibility;
• To reflect an individual’s
development or performance in
role (e.g. a newly appointed
Executive Director being moved
to align with the market over
time); 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.
To provide an
appropriate level of
retirement benefit
(or cash allowance
equivalent) as part
of a broadly market
competitive total
remuneration
package.
Annual bonus
Rewards Executive
Directors for
achieving financial,
strategic and/ or
individual targets
in the relevant year,
to provide an
incentive for the
Group’s employees
to achieve goals
aligned with the
Group’s strategy.
Executive Directors are eligible to participate in
the Company’s defined contribution scheme.
In appropriate circumstances, such as where
contributions exceed the annual or lifetime
allowance, Executive Directors may take a
taxable cash supplement instead of
contributions to a pension plan.
Maximum company pension
contribution (or cash allowance
equivalent) for existing Executive
Directors of 3% of salary.
However, the Committee may permit
a higher company pension
contribution (or cash allowance
equivalent) for any new Executive
Director, of up to 15% of salary.
Not applicable.
Maximum bonus opportunity for
Executive Directors is 150% of base
salary, although for 2018 the
opportunity will be limited to 100%
of base salary.
Performance measures and
targets are set annually 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.
Performance measures and targets are
reviewed annually and pay-out levels are
determined by the Committee after the year
end based on performance against the targets.
The Committee has discretion to amend the
pay-out should any formulaic outcome not
reflect the Committee’s assessment of overall
business performance.
Where a bonus opportunity is offered in excess
of 100% of salary, up to 33% of the bonus
earned will be deferred into an award of
shares, which shall be released following the
end of a two year deferral period. No bonus will
be deferred where the deferred amount would
otherwise be below £10,000.
Deferred bonus awards may take the form of a
nil or nominal cost option to acquire the
relevant shares following release, or as a
requirement to invest the after tax portion of
the bonus into shares which must be retained
until release.
The Committee may award dividend
equivalents on deferred amounts to reflect
dividends that would have been paid on the
deferred award shares over the period to their
release; these dividend equivalents may be
paid in cash or shares and may assume the
reinvestment of dividends into Company
shares on such basis as the Committee
determines.
Recovery
Recovery provisions apply as summarised
below the table.
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Directors’ Remuneration Policy (continued)
Information supporting the policy table
Purpose and link
to strategy
Operation
Performance Share Plan (“PSP”)
Maximum opportunity
Performance measures
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 usual maximum award level
under the PSP in respect of any
financial year for Executive Directors
is awards over shares with a value of
150% of salary, although for 2018 it is
intended that the opportunity will be
up to a maximum of 100% of base
salary.
The Committee has discretion to
grant awards under the PSP in
respect of any financial year for
Executive Directors up to a
maximum of 200% of salary.
The Committee may at its discretion
structure awards as Approved
Performance Share Plan (“APSP”)
awards as described in the
“Operation” column. Reflecting the
interaction between the tax-
favoured option and the PSP award,
the shares subject to the tax-
favoured option are not taken into
account when assessing these limits
in order to avoid double counting.
Performance will be assessed
against challenging performance
targets.
Performance will be based typically
on financial measures including,
but not limited to, EPS growth.
Awards (other than, in accordance
with the requirements of the
applicable tax legislation, any
tax-favoured option granted as
part of an APSP award) will also be
subject to a financial underpin such
that PSP awards will only vest if the
Committee is satisfied with the
overall performance of the
Company.
Performance measures (and their
weighting where there is more
than one measure) are reviewed
annually to maintain
appropriateness and relevance.
For threshold performance up to
25% of the award will vest, rising to
100% of the award vesting for
maximum performance, typically
with straight-line vesting in
between. Below threshold
performance, the award will not
vest.
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.
To incentivise
Executive Directors
over the longer
term, and to deliver
performance-
related pay, with a
clear line of sight
for Executives and
direct alignment
with shareholders’
interests.
Awards under the PSP will typically be granted
as a conditional award or the grant of a nil or
nominal cost option, in either case vesting subject
to the achievement of specified performance
conditions, over a period of at least three years.
Awards will vest following assessment of the
performance conditions. Other than as noted
below in relation to the existing Executive
Directors, awards will be granted subject to a
holding period of two years beginning on the
vesting date either on the basis that they will not
ordinarily be released (so that the participant is
entitled to acquire the shares) until the end of
that period or on the basis that the participant
is entitled to acquire shares following the
assessment of the applicable performance
condition but that (other than as regards sales
to cover tax liabilities) the award is not released
(so that the participant is able to dispose of
those shares) until the end of the holding period.
The holding period will apply to existing
Executive Directors only in respect of any
award with a value at grant (ignoring any CSOP
option granted as part of an APSP award as
discussed below) in excess of 100% of salary.
Awards under the PSP may be granted on the
basis that the number of shares shall be
increased to reflect dividends paid over the
vesting period and/or any holding period; these
dividend equivalents may be paid in cash or
shares and may assume the reinvestment of
dividends into Company shares on such basis
as the Committee determines.
The Committee may at its discretion structure
awards as APSP awards comprising both an
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 either: (1)
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; or (2) a tax favoured
option, PSP award over a reduced number of
shares and separate PSP award which is to fund
the exercise price 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
Recovery provisions apply as summarised
on the next page.
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 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 Company’s share plans
The PSP and any deferred bonus plan will be operated by the Committee in accordance with their 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.
At the discretion of the Committee, awards under the PSP and any deferred bonus plan may be settled in cash (or granted as a cash
award over a notional number of shares).
Shareholding guidelines
To align the interests of Executive Directors with those of shareholders, the Committee has adopted shareholding guidelines.
Executive Directors are required to retain half of any shares acquired under the PSP and any deferred bonus award (after sales to
cover tax) until such time as their holding has a value equal to 200% of salary.
Shares subject to PSP awards which have vested but not been released, shares subject to released PSP awards which have not been
exercised, and shares subject to deferred bonus awards count towards the guideline on a net of assumed tax basis.
Recovery
Annual bonus
For up to three years following the payment of the non deferred part of an annual bonus award, the Committee may require the
repayment of some or the entire cash award paid (or may cancel or reduce any deferred share award or require the forfeiture of shares
acquired pursuant to a deferred share award) in the event of fraud or dishonesty leading to a material misstatement of financial results.
PSP
At the discretion of the Committee, unvested awards may 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 (which may be effected by the
cancellation or forfeiture of a vested but unreleased award) of some or the entire award in the event of fraud or dishonesty leading to
a material misstatement of financial results.
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Directors’ Remuneration Policy (continued)
Early vesting of awards
PSP
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.
Deferred bonus plan
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), deferred bonus awards will vest in full.
Cessation of employment
The treatment of PSP awards and deferred bonus awards on cessation of employment is described on page 93.
Rod Flavell
)
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0
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1,000
800
600
400
200
0
£398k
100%
£674k
14%
27%
59%
£1,133k
32%
32%
36%
Sheila Flavell
)
0
0
0
£
(
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800
700
600
500
400
300
200
100
0
£294k
100%
£499k
14%
27%
59%
£840k
32%
32%
36%
Minimum
performance
Performance
in line with
expectations
Maximum
performance
Minimum
performance
Performance
in line with
expectations
Maximum
performance
Fixed Pay
Bonus
PSP
Fixed Pay
Bonus
PSP
Non-Executive Directors
Mike McLaren
Andy Brown
Purpose and link to strategy
Operation
Other items
To enable the Company to attract
and retain Non-Executive
Directors of the required calibre
by offering market competitive
rates.
The Chairman is paid a basic Chairman fee and
additional fees for chairmanship of any Board
committees.
Non-Executive Directors receive a basic fee and
additional fees for chairmanship of any Board
committees.
Non-Executive Directors may be eligible to be
reimbursed travel and subsistence costs incurred in
the performance of their duties and to receive other
benefits relevant to the performance of their roles.
The Non-Executive Directors do not participate in the
Company’s annual bonus, share plans or pension
schemes or other benefit in kind arrangements.
The Chairman’s fee is determined by the
Remuneration Committee and the fees of the other
Non-Executive Directors are determined by the Board.
Fees are based on the time commitment and
contribution expected for the role and the level of
fees 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 set by the Company’s Articles
of Association from time to time.
)
0
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0
£
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a
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900
800
700
600
500
400
300
200
100
0
£284k
100%
£481k
14%
27%
59%
£809k
32%
32%
36%
Minimum
performance
Performance
in line with
expectations
Maximum
performance
Fixed Pay
Bonus
PSP
900
800
700
600
500
400
300
200
100
0
£294k
100%
£499k
14%
27%
59%
£840k
32%
32%
36%
Minimum
performance
Performance
in line with
expectations
Maximum
performance
Fixed Pay
Bonus
PSP
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.
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Illustration of the application of remuneration policy
The charts on the next page set out for each Executive Director an illustration of the application for 2018 of the remuneration policy
set out above. The charts show the split of remuneration between fixed pay (base salary, taxable benefits and pension), annual bonus
Approach to recruitment remuneration
When hiring a new Executive Director, the Committee will seek to align the remuneration package with the above policy.
and PSP on the basis of minimum remuneration, remuneration receivable for performance in line with the Company’s expectations
When determining appropriate remuneration arrangements, the Committee may include other elements of pay which it considers are
and maximum remuneration (not allowing for any share price appreciation).
appropriate and necessary to recruit and retain the individual. However, this discretion is capped and is subject to the limits referred
In illustrating the potential reward, the following assumptions have been made:
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
Minimum performance
Performance below plan
approved by the Board.
Performance in line with
expectations
Performance in line with plan
approved by the Board.
Maximum performance
Performance meets stretch target
approved by the Board.
Fixed pay
Fixed elements of remuneration
only:
• Base salary as disclosed in the
single figure table on page 79;
• Taxable benefits as disclosed
in the single figure table on
page 79 for the year ended
31 December 2017; and
• Pension assuming an
employer contribution of 3%
of salary.
Annual bonus
No bonus.
PSP
No PSP vesting.
performance, where it is considered appropriate;
• Benefits will only be provided in line with the above policy;
50% of maximum awarded
(equivalent to 50% of salary).
25% of maximum award vesting
(equivalent to 25% of salary).
100% of maximum awarded
(equivalent to 100% of salary).
100% of maximum award vesting
(equivalent to 100% of salary).
• 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;
• 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;
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Directors’ Remuneration Policy (continued)
Approach to recruitment remuneration (continued)
– If an Executive Director is recruited at a time in the year when 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, vesting period and holding period of the annual
bonus or PSP and the proportion of any annual bonus that must be deferred, 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 350% of
salary, in line with the Policy table set out on pages 86 to 88.
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 twelve 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.
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 pension and benefits only for the notice period (or the balance of the notice period if
relevant) together with any accrued but untaken holiday pay entitlement. Alternatively, benefits may continue to be provided for the
duration of the notice period that would otherwise have applied.
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). Where bonus deferral would otherwise apply, the Committee may permit the payment of the whole bonus for the
year of departure and previous year in cash.
Deferred bonus awards will continue (other than in the case of summary dismissal, or resignation to join or establish a competing
business in which case they will lapse / be forfeited) and will typically be released at the ordinary release date, although the Committee
retains discretion to release the award at cessation or at some other date prior to the ordinary release date; release would be of the
full award, unless the Committee decided to apply a time based reduction to reflect the proportion of the deferral period served.
PSP
The extent to which any unvested award will vest and be released 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 and be released at cessation or at the normal release date
Where a position is filled internally, any ongoing remuneration obligations or outstanding variable pay elements shall be allowed to
(or at some other time between those dates). In either case, the extent of vesting will be determined by the Committee taking into
continue in accordance with their terms.
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 as a proportion of the vesting period. Awards may then be exercised
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.
during such period as the Committee determines.
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
twelve months’ notice. This notice period was reviewed and considered appropriate to the Company at the time of Admission. 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.
If an award has vested but not been released (i.e. if it is in a holding period), that award will:
•
lapse/be forfeited if cessation is due to summary dismissal; and
• be released at the ordinary release date if cessation is for any other reason.
The Committee retains discretion to release the award at cessation or at some other date prior to the ordinary release date. Awards
will be released to the extent they vested by reference to the performance conditions.
If an award has vested and, where relevant, been released prior to an individual’s cessation of employment, the Committee may, in its
Details of the Directors’ service contracts (or letter of appointment in the case of a Non-Executive Director), notice periods and, where
absolute discretion, allow the award to be exercised for such period as the Committee determines.
applicable, expiry dates, are set out below:
Name
Rod Flavell
Sheila Flavell
Mike McLaren
Andy Brown
Ivan Martin
Peter Whiting
Robin Taylor
Michelle Senecal de Fonseca
David Lister
92
Commencement
Expiry
Notice period
20 June 2014
20 June 2014
20 June 2014
20 June 2014
20 June 2014
20 June 2014
20 June 2014
15 January 2016
9 March 2016
–
–
–
–
–
–
–
–
–
12 months
12 months
12 months
12 months
3 months
3 months
3 months
3 months
3 months
Other payments
In appropriate circumstances, payments may also be made in respect of outplacement and legal/ other professional advisor 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.
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Remuneration Report
Directors’ Report
Directors’ Remuneration Policy (continued)
Existing contractual arrangements
The Committee retains discretion to make any remuneration payment or payment for loss of office outside the policy in this report:
The Directors present the Directors’ Report and audited
Consolidated Financial Statements of FDM Group (Holdings)
plc for the year ended 31 December 2017.
Director share interests
Details of the interests of Directors in the shares of the
Company are provided on page 81 of this report.
• Where the terms of the payment were agreed before the policy came into effect, provided that, in the case of a payment agreed
Principal activities, business review and future
after 30 April 2015 it is consistent with the Directors’ Remuneration Policy approved on that date;
• 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 consulted with the Company’s largest shareholders in respect of the development of this Policy.
Approval
This Report was approved by the Board on 6 March 2018 and signed on its behalf by:
Peter Whiting
Chairman of the Remuneration Committee
6 March 2018
developments
The principal activity of the Group is the provision of
professional services focusing principally on Information
Technology. The Strategic Report on pages 1 to 57 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
£32.0 million (2016: £26.2 million). Results for the year are set
out in the Consolidated Income Statement on page 105.
The Directors propose a final dividend of 14.0 pence per share.
Subject to shareholder approval, this dividend will be paid
on 15 June 2018 to shareholders of record on 25 May 2018.
An interim dividend of 12.0 pence per share was declared by
the Directors on 28 July 2017 and was paid on 22 September
2017 to holders of record on 25 August 2017.
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
Chief Commercial Officer
Non-Executive Director
Non-Executive Director
Michelle Senecal de Fonseca
Non-Executive Director
David Lister
Non-Executive Director
The biographies of the currently serving Directors are
provided on pages 58 to 60 of this report.
Ivan Martin, FDM’s Non-Executive Chairman, has informed the
Board that he intends to step down later in the current year
and has asked the Board to start the process to find a new
Chairman to succeed him. The current intention is that he will
step down once that search has been successfully completed.
Director long term incentive 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 75. 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.
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 25 to the
Consolidated Financial Statements. The principal risks that
the Group faces are set out on pages 37 to 45 of the Strategic
Report.
Corporate Governance
For details of the Corporate Governance report see pages 61
to 67. The Corporate Social Responsibility report, on pages 48
to 57, includes information about the Group’s employment
policies and greenhouse gas emissions. The Corporate
Social Responsibility report also includes information on the
steps taken by the Group to ensure that slavery and human
trafficking are not taking place within the Group’s business, in
line with the Modern Slavery Act 2015.
Branches outside the UK
The Group operates branches in France, Denmark and Spain.
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Substantial shareholders
As at 31 December 2017 and as at 22 February 2018, 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
As at 31 December 2017
As at 22 February 2018
Direct/
indirect
interest
Number of
shares
% of issued
share
capital
Number of
shares
% of issued
share
capital
Aberdeen Standard Investments (Standard Life)
Indirect
8,405,980
7.8% 8,381,077
Roderick Flavell
Sheila Flavell
Columbia Threadneedle Investments
Investec Asset Management
Kames Capital
Majedie Asset Management
Andrew Brown
Old Mutual Global Investors
JP Morgan Asset Management
AXA Investment Management
Hargreave Hale
Direct
8,201,255
7.6% 8,201,255
Direct
8,201,254
7.6% 8,201,254
Indirect
7,315,185
6.8% 7,281,883
Indirect
5,096,309
4.7% 5,113,989
Direct
4,822,211
4.5% 5,664,236
Indirect
4,615,839
4.3% 4,442,761
Direct
4,540,801
4.2% 4,540,801
Indirect
4,219,440
3.9% 4,219,440
Indirect
4,104,805
3.8% 4,121,248
Indirect
3,552,213
3.3% 3,516,523
Indirect
3,202,954
3.0% 3,330,410
7.8%
7.6%
7.6%
6.8%
4.8%
5.3%
4.1%
4.2%
3.9%
3.8%
3.3%
3.1%
Political donations
The Group made no political donations in the year (2016: £nil).
Employee information
Information on the Group’s employee policies is included on
pages 48 to 56 in the Corporate Social Responsibility report.
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, enable 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 57 in the
Corporate Social Responsibility report.
Capital structure
The Group’s capital structure is detailed in note 20 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.
Post balance sheet events
There have been no significant events to report since the date
of the balance sheet.
Directors’ Report
Related party transactions
The Group’s related party transactions are detailed in note 24
to the Consolidated Financial Statements.
Independent auditor
In accordance with Section 487 of the Companies
Act 2006, a resolution for the re-appointment of
PricewaterhouseCoopers LLP as auditor of the Company is to
be proposed at the forthcoming Annual General Meeting.
Statement of Directors’ responsibilities in respect of the
financial statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the Group and Company financial
statements in accordance with International Financial
Reporting Standards (“IFRSs”) 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 and Company for that period. In preparing the financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• state whether applicable IFRSs as adopted by the EU have
been followed for the Group Financial Statements and IFRSs
as adopted by the EU have been followed for the Company
Financial Statements, subject to any material departures
disclosed and explained in the financial statements;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and
Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group and Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
Group and Company 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.
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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
the Group and Company’s performance, business model and
strategy.
Each of the Directors, whose names and functions are listed
in the Directors’ Report confirm that, to the best of their
knowledge:
•
the Company 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 Company;
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.
In the case of each Director in office at the date the Directors’
Report is approved:
• so far as the Director is aware, there is no relevant audit
information of which the Group and Company’s auditors are
unaware; and
•
they have taken all the steps that they ought to have taken as
a Director in order to make themselves aware of any relevant
audit information and to establish that the Group and
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 6 March 2018 and
signed on its behalf by:
The Directors are also responsible for safeguarding the assets
of the Group and Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
Rod Flavell
Chief Executive Officer
Mike McLaren
Chief Financial Officer
6 March 2018
6 March 2018
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Independent auditors’ report to the
members of FDM Group (Holdings) plc
Report on the audit of the financial statements
Opinion
In our opinion, FDM Group (Holdings) plc’s group financial statements and parent company financial statements
(the “financial statements”):
• give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2017 and of the group’s
profit and the group’s and the parent company’s cash flows for the year then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union and, as regards the parent company’s
financial statements, 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 and, as regards the group financial
statements, Article 4 of the IAS Regulation.
We have audited the financial statements, included within the Annual Report and Accounts 2017 (the “Annual Report”), which
comprise: the consolidated and parent company statements of financial position as at 31 December 2017; the consolidated income
statement and consolidated statement of comprehensive income, the consolidated and parent company statements of cash flows,
and the consolidated and parent company statements of changes in equity for the year then ended; and the notes to the financial
statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section
of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not
provided to the group or the parent company.
Other than those disclosed in note 7 to the financial statements, we have provided no non-audit services to the group or the parent
company in the period from 1 January 2017 to 31 December 2017.
Our audit approach
Overview
• Overall group materiality: £2,180,000 (2016: £1,760,000), based on 5% of profit before
tax.
• Overall parent company materiality: £490,000 (2016: £352,000), based on 1% of total
Materiality
assets.
Audit scope
• The group financial statements are a consolidation of 15 reporting units.
• We performed full scope audits of the UK and USA reporting units.
• We audited the revenue, trade and other receivables and cash and cash equivalent
balances of the Canada, Hong Kong and Singapore reporting units.
• We also performed full scope audits of the centralised functions in the UK, comprising
the parent and intermediate holding companies.
Areas of
focus
• Our full scope audits covered 78% of revenue (with a further 15% coverage obtained
through our work on the Canada, Hong Kong and Singapore reporting units) and 86%
of profit before tax.
• Revenue recognition in respect of uninvoiced amounts (Group).
• Share option plan expenses (Group and parent).
Independent auditors’ report to the members of FDM Group (Holdings) plc
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The scope of our audit
As part of designing our audit, we determined materiality and assessed 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.
We gained an understanding of the legal and regulatory framework applicable to the group and the industry in which it operates, and
considered the risk of acts by the group which were contrary to applicable laws and regulations, including fraud. We designed audit
procedures at group and significant component level to respond to the risk, recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional misrepresentations, or through collusion. We focused on laws and regulations
that could give rise to a material misstatement in the group and parent company financial statements, including, but not limited to,
the Companies Act 2006, the Listing Rules and UK tax legislation. Our tests included, but were not limited to, review of the financial
statement disclosures to underlying supporting documentation, review of reports from legal advisors, enquiries of management and
review of internal audit reports in so far as they related to the financial statements. There are inherent limitations in the audit
procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely we would become aware of it.
We did not identify any key audit matters relating to irregularities, including fraud. As in all of our audits we also addressed the risk
of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the
directors that represented a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources
in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our
procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Revenue recognition in respect of uninvoiced amounts (Group)
Refer to note 3.3 (b) to the Consolidated Financial Statements
for the directors’ disclosures of the related accounting policies
and page 71 (‘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 that management need 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.
We gained an understanding from management of the key
assumptions underpinning the year-end estimates of unbilled sales
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 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.
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Key audit matter
How our audit addressed the key audit matter
Share option plan expenses (Group and parent)
Refer to notes 3.3 (m), 4 and 23 to the Consolidated Financial
Statements for the directors’ disclosures of the related
accounting policies, judgements and estimates, and page 71
(‘Significant financial reporting items’) within the Audit
Committee Report.
During 2015, the Group 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 82 (‘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.
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 23 to the
Consolidated Financial Statements and determined that they are
consistent with the requirements of accounting standards.
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 structure of the group and the parent company, the accounting processes and controls, and the
industry in which they operate.
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 15 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, we met with some Mounties 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 Canada, Hong Kong and Singapore, which we performed
from the group’s head office in the UK, where the accounting is administered. To support these procedures we also visited the group’s
offices in Toronto, where we met with local management, we met with some Mounties and inspected original copies of
certain documents.
Independent auditors’ report to the members of FDM Group (Holdings) plc
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As a result, full scope audit procedures were conducted on reporting units representing 86% of the group’s profit before tax and
78% of revenue, with a further 15% coverage of revenue obtained through our work on the Canada, Hong Kong and Singapore
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 in aggregate 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 materiality
£2,180,000 (2016: £1,760,000).
£490,000 (2016: £352,000).
Group financial statements
Parent company financial statements
How we determined it
Rationale for benchmark applied
5% of profit before tax (2016: 5% of profit
before tax).
Based on the benchmarks used in the
annual report, profit before tax is the
primary measure used by the shareholders
in assessing the performance of the group,
and is a generally accepted auditing
benchmark.
1% of total assets (2016: 1% of total assets).
We believe that total assets is the primary
measure used by the shareholders in
assessing the performance of the entity, and
is a generally accepted auditing benchmark.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The
range of materiality allocated across components was between £490,000 and £2,071,000. Certain components were audited to a local
statutory audit materiality that was also less than our overall group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £109,000 (group
audit) (2016: £85,000) and £24,500 (parent company audit) (2016: £17,600) as well as misstatements below those amounts that, in our
view, warranted reporting for qualitative reasons.
Going concern
In accordance with ISAs (UK) we report as follows:
Reporting obligation
Outcome
We are required to report if we have anything material to add
or draw attention to in respect of the directors’ statement in
the financial statements about whether the directors
considered it appropriate to adopt the going concern basis
of accounting in preparing the financial statements and the
directors’ identification of any material uncertainties to the
group’s and the parent company’s ability to continue as a
going concern over a period of at least twelve months from
the date of approval of the financial statements.
We are required to report if the directors’ statement relating
to Going Concern in accordance with Listing Rule 9.8.6R(3)
is materially inconsistent with our knowledge obtained
in the audit.
We have nothing material to add or to draw attention to. However,
because not all future events or conditions can be predicted, this
statement is not a guarantee as to the group’s and parent
company’s ability to continue as a going concern.
We have nothing to report.
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Independent auditors’ report to the members of FDM Group (Holdings) plc
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the
other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this
report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit,
or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are
required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic Report, Directors’ Report and Corporate Governance Statement, we also considered whether the
disclosures required by the UK Companies Act 2006 have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006, (CA06),
ISAs (UK) and the Listing Rules of the Financial Conduct Authority (FCA) require us also to report certain opinions and matters
as described below (required by ISAs (UK) unless otherwise stated).
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’
Report for the year ended 31 December 2017 is consistent with the financial statements and has been prepared in accordance with
applicable legal requirements. (CA06)
• The directors’ explanation on page 46 of the Annual Report 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 to report having performed a review of the directors’ statement that they have carried out a robust assessment of
the principal risks facing the group and 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 UK Corporate Governance Code (the
“Code”); and considering whether the statements are consistent with the knowledge and understanding of the group and parent
company and their environment obtained in the course of the audit. (Listing Rules)
Other Code Provisions
We have nothing to report in respect of our responsibility to report when:
• The statement given by the directors, on page 66, that they consider the Annual Report taken as a whole to be fair, balanced and
understandable, and provides the information necessary for the members to assess the group’s and parent company’s position and
performance, business model and strategy is materially inconsistent with our knowledge of the group and parent company obtained in
the course of performing our audit.
• The section of the Annual Report on page 71 describing the work of the Audit Committee does not appropriately address
matters communicated by us to the Audit Committee.
• The directors’ statement relating to the parent company’s compliance with the Code does not properly disclose a departure from a
relevant provision of the Code specified, under the Listing Rules, for review by the auditors.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006. (CA06)
In light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the
audit, we did not identify any material misstatements in this information. (CA06)
Responsibilities for the financial statements and the audit
Corporate Governance Statement
In our opinion, based on the work undertaken in the course of the audit, the information given in the Corporate Governance
Statement (on pages 61 to 67) about internal controls and risk management systems in relation to financial reporting processes and
about share capital structures in compliance with rules 7.2.5 and 7.2.6 of the Disclosure Guidance and Transparency Rules
sourcebook of the FCA (“DTR”) is consistent with the financial statements and has been prepared in accordance with applicable legal
requirements. (CA06)
In light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the
audit, we did not identify any material misstatements in this information. (CA06)
In our opinion, based on the work undertaken in the course of the audit, the information given in the Corporate Governance
Statement (on pages 61 to 67) with respect to the parent company’s corporate governance code and practices and about its
administrative, management and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the DTR.
(CA06)
We have nothing to report arising from our responsibility to report if a corporate governance statement has not been prepared by
the parent company. (CA06)
The directors’ assessment of the prospects of the group and of the principal risks that would threaten the
solvency or liquidity of the group
We have nothing material to add or draw attention to regarding:
• The directors’ confirmation on pages 37 to 45 of the Annual Report 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.
• The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities set out on page 97, the directors are responsible for the
preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and
fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to
continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic
alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
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.
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Independent auditors’ report to the members of FDM Group (Holdings) plc
Consolidated Income Statement
for the year ended 31 December 2017
Other required reporting
Companies Act 2006 exception reporting
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
• certain disclosures of directors’ remuneration specified by law are not made; or
•
the parent company 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.
Appointment
Following the recommendation of the audit committee, we were appointed by the directors on 25 July 2013 to audit the financial
statements for the year ended 31 December 2013 and subsequent financial periods. The period of total uninterrupted engagement
is 5 years, covering the years ended 31 December 2013 to 31 December 2017.
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Finance income
Finance expense
Net finance expense
Profit before income tax
Taxation
Profit for the year
Earnings per ordinary share
Basic
Diluted
The results for the year shown above arise from continuing operations.
The notes on pages 110 to 129 are an integral part of these Consolidated Financial Statements.
Jaskamal Sarai (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
6 March 2018
Note
2017
£000
2016
£000
6
233,575
189,403
(129,323)
(103,291)
104,252
86,112
(60,496)
(50,691)
43,756
35,421
29
(130)
(101)
28
(128)
(100)
7
10
10
43,655
35,321
11
(11,643)
(9,139)
32,012
26,182
2017
pence
29.8
29.4
2016
pence
24.4
24.2
12
12
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Consolidated Statement of
Comprehensive Income
for the year ended 31 December 2017
Profit for the year
Other comprehensive income
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
Total comprehensive income for the year
The notes on pages 110 to 129 are an integral part of these Consolidated Financial Statements.
2017
£000
2016
£000
32,012
26,182
(673)
(673)
1,388
1,388
31,339
27,570
Consolidated Statement of
Financial Position
as at 31 December 2017
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
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
Translation reserve
Other reserves
Retained earnings
Total equity
Note
2017
£000
2016
£000
13
14
16
17
18
4,926
5,011
19,471
19,533
2,275
772
26,672
25,316
30,716
29,164
36,846
27,844
67,562
57,008
94,234
82,324
19
26,616
24,628
3,239
4,358
29,855
28,986
29,855
28,986
64,379
53,338
20
1,075
7,873
52
791
6,148
1,075
7,873
52
1,464
2,470
48,440
40,404
64,379
53,338
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The notes on pages 110 to 129 are an integral part of these Consolidated Financial Statements.
The financial statements on pages 105 to 129 were approved by the Board of Directors on 6 March 2018 and were signed on its behalf by:
Rod Flavell
Chief Executive Officer
6 March 2018
Mike McLaren
Chief Financial Officer
6 March 2018
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Consolidated Statement of Cash Flows
for the year ended 31 December 2017
Cash flows from operating activities
Group profit before tax for the year
Adjustments for:
Depreciation and amortisation
Loss on disposal of non-current assets
Finance income
Finance expense
Share-based payment charge (including associated social security costs)
Increase in trade and other receivables
Increase in trade and other payables
Cash flows generated from operations
Interest received
Income tax paid
Net cash flow from operating activities
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
Finance costs paid
Dividends paid
Net cash used in financing activities
Exchange (losses)/gains on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The notes on pages 110 to 129 are an integral part of these Consolidated Financial Statements.
Note
2017
£000
2016
£000
43,655
35,321
7
1,408
1,180
10
10
4
(29)
130
–
(28)
128
3,576
2,217
(1,552)
(4,571)
1,088
5,126
48,280
39,373
29
28
(13,263)
(8,751)
35,046
30,650
(1,350)
(1,735)
(18)
(60)
(1,368)
(1,795)
(130)
(128)
21
(23,976)
(24,514)
(24,106)
(24,642)
(570)
9,002
1,271
5,484
27,844
22,360
18
36,846
27,844
Consolidated Statement of
Changes in Equity
for the year ended 31 December 2017
Balance at 1 January 2017
Profit for the year
Other comprehensive expense for the year
Total comprehensive (expense)/income for the year
Share-based payments (note 23)
Dividends (note 21)
Total transactions with owners, recognised directly
in equity
Balance at 31 December 2017
Balance at 1 January 2016
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Share-based payments (note 23)
Dividends (note 21)
Total transactions with owners, recognised directly
in equity
Balance at 31 December 2016
Share
capital
£000
Share
premium
£000
Capital
redemption
reserve
£000
Translation
reserve
£000
Other
reserves
£000
Retained
earnings
£000
Total
equity
£000
1,075
7,873
52
1,464
2,470
40,404
53,338
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(673)
(673)
–
–
–
–
–
–
32,012
32,012
–
(673)
32,012
31,339
3,678
–
3,678
–
(23,976)
(23,976)
3,678
(23,976)
(20,298)
1,075
7,873
52
791
6,148
48,440
64,379
Share
capital
£000
Share
premium
£000
Capital
redemption
reserve
£000
1,075
7,873
52
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Translation
reserve
£000
Other
reserves
£000
Retained
earnings
£000
Total
equity
£000
76
–
1,388
1,388
–
–
–
589
38,736
48,401
–
–
–
26,182
26,182
–
1,388
26,182
27,570
1,881
-
1,881
–
(24,514)
(24,514)
1,881
(24,514)
(22,633)
1,075
7,873
52
1,464
2,470
40,404
53,338
The notes on pages 110 to 129 are an integral part of these Consolidated Financial Statements.
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial
Statements
1 General information
The Group is a global professional services provider with a focus on Information Technology (“IT”), specialising in the recruitment,
training and placing of its own permanent IT consultants.
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
The Company is a public limited company incorporated and domiciled in the UK with a Premium Listing on the London Stock
interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent
Exchange. The Company’s registered office is 3rd Floor, Cottons Centre, Cottons Lane, London, SE1 2QG and its registered number is
consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination
07078823.
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
The Consolidated Financial Statements consolidate those of the Company and its subsidiaries. Subsidiaries and their countries of
amounts of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred.
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 2017. The Consolidated Financial
goodwill acquired in a business combination is, from the acquisition date, allocated to the Group’s cash-generating unit that is
Statements were approved by Rod Flavell and Mike McLaren on behalf of the Board of Directors on 6 March 2018.
expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to that unit.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing,
2 Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are
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
summarised in the Strategic Report. The principal risks and uncertainties and risk management processes are also described in the
the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and
Strategic Report.
the portion of the cash-generating unit retained.
The Group’s continued and forecast global growth, positive operating cash flow and liquidity position, together with its distinctive
business model and infrastructure, enable 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
b) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and excluding sales taxes.
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
Rendering of services
signing this Annual Report.
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.
The Directors therefore have a reasonable expectation that the Company and the Group will have adequate resources to continue in
Revenue is based on timesheets from its IT consultants which are authorised by the Group’s customers detailing the hours and
operational existence for the foreseeable future. Accordingly the Directors continue to adopt the going concern basis for preparing
service provided;
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.
• Revenue in respect of non-receipted timesheets is accrued at the estimated contract value; and
• 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
The Consolidated Financial Statements have been prepared on a historical cost basis. The Consolidated Financial Statements are
position of each entity are expressed in Pounds Sterling (£), which is the functional currency of the Parent Company and the
presented in Pounds Sterling and all values are rounded to the nearest thousand (£000), except where otherwise indicated.
presentation currency for the Consolidated Financial Statements.
The Group’s accounting policies have been applied consistently.
3.2 Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2017.
Subsidiaries
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
Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be
rates at the date when the fair value was determined.
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
For the purpose of presenting Consolidated Financial Statements, the assets and liabilities of the Group’s foreign operations are
and losses resulting from intra-group transactions and dividends are eliminated in full.
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
Details of the subsidiaries owned by the Group are presented in note 3 to the Parent Company Financial Statements. There are no
other comprehensive income and transferred to the Group’s translation reserve.
minority interests in the subsidiaries of the Company.
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Notes to the Consolidated Financial Statements
3.3 Summary of significant accounting policies (continued)
d) Taxes
Current income tax
g) Intangible assets (continued)
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
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to
unit is less than the carrying value of the cash-generating unit to which the goodwill has been allocated, an impairment loss is
the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted
recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
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.
h) Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less provision for impairment. A
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations
provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect
are subject to interpretation and establishes provisions where appropriate.
Deferred tax
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
Deferred tax is provided in full, using the liability method, on temporary differences between the carrying amounts of assets and
of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through
liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are
the use of an allowance account, and the amount of the loss is recognised in the income statement within administrative expenses.
not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting
When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of
nor taxable profit; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the
amounts previously written off are credited against administrative expenses in the income statement.
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.
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 instruments
Non-derivative financial instruments
The Group’s non-derivative financial instruments comprise trade receivables, trade payables, cash and cash equivalents and a
revolving credit facility.
The Group does not have any borrowings but borrowing costs paid on the establishment of credit facilities are recognised as an
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of
expense in the income statement over the expected usage period of the facility.
property, plant and equipment. The estimated useful lives are as follows:
Plant and equipment
Fixtures and fittings
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
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.
l) 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.
Other 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.
m) Share-based payments
The Group holds acquired software and software licences as intangible assets. Acquired software and software licences are
Employees (including senior executives) of the Group receive remuneration in the form of share-based payments, whereby
capitalised on the basis of cost and amortised over the estimated useful lives of the software which is estimated to be four years or
employees render services as consideration for equity instruments (equity-settled transactions).
the licence term if shorter. The estimated useful life and amortisation method are reviewed at the end of each annual reporting
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period and adjusted if appropriate.
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.
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Notes to the Consolidated Financial Statements
3.3 Summary of significant accounting policies (continued)
Equity-settled transactions
5 New standards and interpretations
The International Accounting Standards Board (“IASB”) and IFRS IC have issued the following new standards and amendments which
The cost of equity-settled transactions is recognised, together with a corresponding increase in other reserves in equity, over the
were effective during the year and were adopted by the Group in preparing the financial statements. The adoption of these
period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for equity-settled
amendments has not had a material impact on the Group’s financial statements in the year:
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
Effective in 2017
Amendments
Effective for accounting
periods beginning on or after
Endorsed
by the EU
Amendments to IAS 7, ‘Statement of cash flows’
Amendments to IAS 12, 'Income taxes' on recognition of deferred tax assets for unrealised losses
1 January 2017
1 January 2017
Yes
Yes
upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting
The IASB and IFRS IC have issued the following standards and amendments with an effective date of implementation for accounting
condition is satisfied, provided that all other performance and/or service conditions are satisfied.
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
When the terms of an equity-settled transaction award are modified, the minimum expense recognised is the expense as if the terms
on the Group’s financial statements in the period of initial application. The Group does not intend to adopt these standards before
had not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that
their effective date.
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.
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.
n) 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.
o) 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 23.
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 15.
114
Effective after 31 December 2017
New standards
IFRS 9, ‘Financial instruments’
IFRS 15, ‘Revenue from contracts with customers’
IFRS 16, ‘Leases’
Amendments
Amendment to IFRS 2, ‘Share based payments’
Amendment to IAS 40, ‘Investment property’
Amendments to IFRS 4 Amendments regarding implementation of IFRS 9
The Directors have carried out a preliminary assessment of the likely impact of IFRS 16 ‘Leases’:
Effective for accounting
periods beginning on or after
Endorsed
by the EU
1 January 2018
1 January 2018
1 January 2019
1 January 2018
1 January 2018
1 January 2018
Yes
Yes
Yes
No
No
Yes
Nature of change
IFRS 16 was issued in January 2016. It will result in all leases being recognised on the statement of financial position, as the distinction
between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial
liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.
Impact
The standard will affect the accounting for the Group’s operating leases, as the Group currently does not have any finance leases. As
at the reporting date, the Group has non-cancellable operating lease commitments of £22.1 million, see note 22. The Group has
carried out an assessment of the impact of IFRS 16 on its lease portfolio as at 31 December 2017. Application of the new standard will
result in a material increase in assets and liabilities on the Consolidated Statement of Financial Position, however the impact on net
assets and the income statement will not be material.
Mandatory application date/date of adoption by the Group
IFRS 16 is mandatory for financial years commencing on or after 1 January 2019. At this stage, the Group does not intend to adopt the
standard before its effective date.
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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 a global
Revenue from customer A
Revenue from customer B
Revenue from customer C
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 2017, the Board of Directors consider that the Group is organised on a worldwide basis into four core geographical
operating segments:
(1) UK and Ireland;
(2) North America;
(3) Rest of Europe, Middle East and Africa, excluding UK and Ireland (“EMEA”); and
(4) Asia Pacific (“APAC”).
professional services provider with a focus on IT.
For the year ended 31 December 2017
Revenue
Depreciation and amortisation
Segment operating profit/(loss)
Finance income
Finance costs
Profit/(loss) before income tax
Total assets
Total liabilities
UK and
Ireland
£000
North
America
£000
EMEA
£000
APAC
£000
Total
£000
131,479
75,069
13,077
13,950
233,575
(792)
(447)
28,694
14,700
24
(110)
3
(5)
28,608
14,698
(57)
765
1
(10)
756
(112)
(1,408)
(403)
43,756
1
(5)
29
(130)
(407)
43,655
66,565
17,601
4,563
5,505
94,234
(16,426)
(6,253)
(1,534)
(5,642)
(29,855)
Included in total assets above are non-current assets (excluding deferred tax) as follows:
31 December 2017
For the year ended 31 December 2016
Revenue
Depreciation and amortisation
Segment operating profit/(loss)
Finance income
Finance costs
Profit/(loss) before income tax
Total assets
Total liabilities
UK and
Ireland
£000
North
America
£000
22,431
1,322
EMEA
£000
384
APAC
£000
Total
£000
260
24,397
UK and
Ireland
£000
North
America
£000
EMEA
£000
APAC
£000
Total
£000
112,912
56,782
12,082
7,627
189,403
(762)
26,058
20
(106)
(334)
8,909
–
(4)
25,972
8,905
60,232
14,265
(18)
1,199
7
(14)
1,192
4,974
(66)
(1,180)
(745)
35,421
1
(4)
28
(128)
(748)
35,321
2,853
82,324
(17,791)
(6,686)
(1,862)
(2,647)
(28,986)
Notes to the Consolidated Financial Statements
Included in total assets on prior page are non-current assets (excluding deferred tax) as follows:
31 December 2016
UK and
Ireland
£000
North
America
£000
EMEA
£000
APAC
£000
Total
£000
22,755
1,551
26
212
24,544
Information about major customers
Customers A and B each represent 10% or more of the Group’s 2017 revenues from all four operating segments and are presented
below. Customers A and C each represent 10% or more of the Group’s 2016 revenues.
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
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 auditors for other services:
– The audit of the Group’s subsidiaries
– Audit-related assurance services
– Other
2017
£000
67
2016
£000
65
93
36
–
87
38
34
196
224
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
Administration
The aggregate payroll costs of these persons were as follows:
2017
Number
2016
Number
3,408
447
3,855
2,799
371
3,170
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£000
40,328
23,718
2016
£000
26,126
15,761
8,861
19,647
2017
£000
3,946
(153)
1,408
2016
£000
3,515
3
1,180
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
8 Staff numbers and costs (continued)
Wages and salaries
Social security costs
Other pension costs
Share-based payments
2017
£000
2016
£000
126,056
100,203
11,676
2,431
2,677
9,443
1,526
1,881
142,840
113,053
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 2017 were £312,000 (2016: £218,000). There
were no prepaid contributions at the end of the financial year (2016: £nil).
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 2017 is set out below:
Short term employee benefits
Post-employment benefits
Share-based payments
2017
£000
2016
£000
2,490
2,712
32
566
32
241
3,088
2,985
For further information on Directors’ remuneration, see the audited sections of the Remuneration Report as defined on page 79.
10 Finance income and expense
Bank interest
Finance income
Non utilisation fees on revolving credit facility
Finance fees and charges
Finance expense
11 Taxation
The major components of income tax expense for the years ended 31 December 2017 and 2016 are:
Current income tax:
Current income tax charge
Adjustments in respect of prior periods
Total current tax
Deferred tax:
Relating to origination and reversal of temporary differences
Total deferred tax
2017
£000
29
29
2017
£000
(80)
(50)
2016
£000
28
28
2016
£000
(80)
(48)
(130)
(128)
2017
£000
2016
£000
12,619
9,956
(474)
64
12,145
10,020
(502)
(502)
(881)
(881)
Notes to the Consolidated Financial Statements
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Total tax expense reported in the income statement
11,643
9,139
The standard rate of corporation tax in the UK is 19%. The rate changed from 20% to 19% with effect from 1 April 2017. Accordingly,
the profits for the respective accounting periods are taxed at an effective rate of 19.25% (2016: 20%). The tax charge for the year is
higher (2016: higher) than the standard rate of corporation tax in the UK. The differences are set out below:
Profit before income tax
Profit multiplied by UK standard rate of corporation tax of 19.25% (2016: 20%)
Effect of different tax rates on overseas earnings
Expenses not deductible for tax purposes
Adjustments in respect of prior periods
Total tax charge
2017
£000
2016
£000
43,655
35,321
8,404
3,267
446
(474)
7,064
1,893
118
64
11,643
9,139
Factors affecting future tax charges
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 17% with effect from
1 April 2020. At 31 December 2017 and 31 December 2016, deferred tax assets and liabilities have been calculated based upon the
rate at which the temporary difference is expected to reverse. During the year it was announced that the US Federal tax charge will
drop from 35% to 21% effective 1 January 2018. These reductions may also reduce the Group’s future current tax charges accordingly.
12 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.
Profit for the year
Average number of ordinary shares in issue (thousands)
Basic earnings per share
2017
2016
£000
32,012
26,182
107,518
107,518
Pence
29.8
24.4
Adjusted basic earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the Parent Company,
excluding Performance Share Plan expense (including social security costs and associated deferred tax), by the weighted average
number of ordinary shares in issue during the year.
Profit for the year (basic earnings)
Share-based payment expense (including social security costs) (note 23)
Tax effect of share-based payment expense
Adjusted profit for the year
Average number of ordinary shares in issue (thousands)
Adjusted basic earnings per share
2017
2016
£000
32,012
26,182
£000
£000
£000
3,576
(483)
2,217
(672)
35,105
27,727
107,518
107,518
Pence
32.6
25.8
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
12 Earnings per ordinary share (continued)
Diluted earnings per share
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The Company has one type of dilutive potential ordinary shares in the form of
share options; the number of shares in issue has been adjusted to include the number of shares that would have been issued
assuming the exercise of the share options.
Profit for the year (basic earnings)
Average number of ordinary shares in issue (thousands)
Adjustment for share options (thousands)
Diluted number of ordinary shares in issue (thousands)
Diluted earnings per share
13 Property, plant and equipment
2017
Cost
At 1 January 2017
Additions
Disposals
Effect of movements in foreign exchange
At 31 December 2017
Accumulated depreciation
At 1 January 2017
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
At 31 December 2017
Net book value at 31 December 2017
2017
2016
£000
32,012
26,182
107,518
107,518
1,465
585
108,983
108,103
Pence
29.4
24.2
Leasehold
improvements
£000
Fixtures
and fittings
£000
Plant and
equipment
£000
4,737
1,277
2,362
660
(33)
(91)
102
(50)
(36)
588
(221)
(50)
5,273
1,293
2,679
1,529
429
(218)
(27)
1,102
655
(33)
(25)
1,699
3,574
734
247
(50)
(24)
907
386
1,713
4,319
966
4,926
Total
£000
8,376
1,350
(304)
(177)
9,245
3,365
1,331
(301)
(76)
Notes to the Consolidated Financial Statements
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Leasehold
improvements
£000
Fixtures
and fittings
£000
Plant and
equipment
£000
3,657
1,034
(42)
88
1,009
1,900
271
(61)
58
430
(73)
105
Total
£000
6,566
1,735
(176)
251
4,737
1,277
2,362
8,376
589
523
(42)
32
1,102
3,635
517
231
(61)
47
734
543
1,196
340
(73)
66
1,529
833
2,302
1,094
(176)
145
3,365
5,011
Software
and
software
licences
£000
512
18
(27)
(5)
498
301
77
(27)
(2)
349
149
Goodwill
£000
Total
£000
19,322
19,834
–
–
–
18
(27)
(5)
19,322
19,820
–
–
–
–
–
301
77
(27)
(2)
349
19,322
19,471
2016
Cost
At 1 January 2016
Additions
Disposals
Effect of movements in foreign exchange
At 31 December 2016
Accumulated depreciation
At 1 January 2016
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
At 31 December 2016
Net book value at 31 December 2016
14 Intangible assets
2017
Cost
At 1 January 2017
Additions
Disposals
Effect of movements in foreign exchange
At 31 December 2017
Accumulated amortisation
At 1 January 2017
Amortisation for the year
Disposals
Effect of movements in foreign exchange
At 31 December 2017
Net book value at 31 December 2017
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14 Intangible assets (continued)
2016
Cost
At 1 January 2016
Additions
Disposals
Effect of movements in foreign exchange
At 31 December 2016
Accumulated amortisation
At 1 January 2016
Amortisation for the year
Disposals
Effect of movements in foreign exchange
At 31 December 2016
Net book value at 31 December 2016
Software
and software
licences £000
Goodwill
£000
Total
£000
592
60
(157)
17
512
364
86
(156)
7
301
211
19,322
19,914
-
-
-
60
(157)
17
19,322
19,834
-
-
-
-
-
364
86
(156)
7
301
19,322
19,533
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 2017 and 2016
UK and
Ireland £000
North
America
£000
EMEA
£000
APAC
£000
Total
£000
14,843
3,082
1,397
–
19,322
15 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.
The pre-tax discount rates used in the calculations were as follows:
UK and Ireland
North America
EMEA
2017
%
10.33
14.04
10.82
2016
%
11.40
15.42
10.56
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.
122
Notes to the Consolidated Financial Statements
16 Deferred income tax assets
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances (after offset) for
financial reporting purposes:
Non-current:
Non-current temporary differences
Deferred tax asset
2017
£000
2,275
2,275
2016
£000
772
772
The Directors consider the deferred tax asset is recoverable within two to five years. Deferred tax assets have been recognised in
respect of timing differences associated with share-based payment expenses where it is considered probable that these assets will be
recovered.
Movement in deferred tax during 2017:
Share-based payments
Property, plant and equipment
Other
Movement in deferred tax during 2016:
Share-based payments
Property, plant and equipment
Other
17 Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
1 January
2017
£000
Recognised
in income
statement
£000
Recognised
in other
reserves
£000
31 December
2017
£000
846
(474)
400
772
483
148
(129)
502
1,001
–
–
1,001
2,330
(326)
271
2,275
1 January 2016
£000
Recognised
in income
statement
£000
31 December
2016
£000
173
(282)
–
(109)
673
(192)
400
881
846
(474)
400
772
2017
£000
2016
£000
23,138
24,152
717
6,861
500
4,512
30,716
29,164
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Notes to the Consolidated Financial Statements
17 Trade and other receivables (continued)
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
An analysis of the provision for impairment by the aged receivable category it relates to is set out below:
2017
£000
2016
£000
15,298
17,350
7,696
327
93
11
6,811
120
47
-
(287)
(176)
23,138
24,152
Provision for
impairment
2017
£000
Provision for
impairment
2016
£000
18 Cash and cash equivalents
Cash at bank and in hand
2017
£000
2016
£000
36,846
27,844
Cash and cash equivalents denominated in currencies other than Pounds Sterling amount to £7,827,000 (2016: £7,505,000),
denominated in US Dollar, Canadian Dollar, Euro, Swiss Franc, Hong Kong Dollar, Singapore Dollar, Chinese Renminbi, South African
Rand, Danish Krone and Australian Dollar.
The Group has issued guarantees in favour of 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.
The Group had undrawn facilities at 31 December 2017 of £20,000,000 (2016: £20,000,000).
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:
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
The movement in the provision for impairment is as below:
At 1 January
At 31 December
Charge for the year
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
Australian Dollar
–
90
126
60
11
287
2017
£000
176
111
287
–
83
47
46
-
176
2016
£000
134
42
176
2017
£000
2016
£000
12,018
14,036
5,255
1,517
2,173
60
811
872
229
60
143
5,086
1,601
1,576
554
592
389
317
1
–
23,138
24,152
Cash at bank by credit rating
AA
A
Revolving credit facility
2017
£000
2016
£000
35,645
25,676
1,201
2,168
36,846
27,844
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 1.0% over LIBOR per annum. The charge on non-utilised funds is 0.4% per annum.
19 Trade and other payables
Trade payables
Other payables
Other taxes and social security
Accruals and deferred income
2017
£000
1,450
760
6,382
2016
£000
1,621
884
5,995
18,024
16,128
26,616
24,628
Trade and other payables denominated in currencies other than Pounds Sterling amount to £8,434,000 (2016: £7,351,000),
denominated in US Dollar, Canadian Dollar, Euro, Swiss Franc, Hong Kong Dollar, Singapore Dollar, Chinese Renminbi, South African
Rand and Australian Dollar.
20 Share capital
Authorised, called up, allotted and fully paid share capital
Ordinary shares of £0.01 each
2017
Number of
shares
2017
£000
2016
Number of
shares
2016
£000
107,517,506
1,075
107,517,506
1,075
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Notes to the Consolidated Financial Statements
20 Share capital (continued)
Ordinary shares
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.
21 Dividends
Dividends paid
Paid to shareholders
2017
2017
£000
2016
£000
23,976
24,514
An interim dividend of 12.0 pence per ordinary share was declared by the Directors on 28 July 2017 and was paid on 22 September
2017 to holders of record on 25 August 2017.
23 Share-based payments
Expenses arising from equity settled share-based payment transaction
Deferred tax recognised in other reserves arising from equity settled share-based payment transaction
2017
£000
2,677
1,001
3,678
2016
£000
1,881
–
1,881
As disclosed in the Directors’ Remuneration Report, the Company granted awards on 19 April 2017, in the form of nominal cost
options over ordinary shares in the Company under the FDM 2014 Performance Share Plan (“PSP”). As with the awards made in 2015
and 2016, 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.
The Board is proposing a final dividend of 14.0 pence per share in respect of the year to 31 December 2017, for approval by
PSP and CSOP options are exercisable no later than the tenth anniversary of the date of grant.
shareholders at the AGM on 26 April 2018.
The table below summarises the outstanding share options:
Subject to shareholder approval the dividend will be paid on 15 June 2018 to shareholders of record on 25 May 2018.
This brings the Company’s total dividend for the year to 26.0 pence per share (2016: 19.6 pence per share). The total ordinary
dividends of 26.0 pence per share will be covered 1.15 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.
2016
An interim dividend of 9.3 pence per ordinary share was declared by the Directors on 26 July 2016 and was paid on 23 September 2016
to holders of record on 26 August 2016. The final dividend of 10.3 pence per share in respect of the year to 31 December 2016 was
approved by shareholders at the AGM on 27 April 2017, the dividend was paid on 16 June 2017 to shareholders of record on 26 May 2017.
22 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
2017
£000
2016
£000
4,768
3,413
13,812
14,036
3,538
4,811
22,118
22,260
There are no contingent rents, purchase options, escalation clauses or significant restrictions on any of the Group’s operating leases.
Outstanding at 1 January
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at 31 December
Exercisable at the end of the year
Weighted average remaining contractual life (years)
2017
2017
2016
2016
Weighted
average
exercise
price
Number of
shares
Number of
shares
2,192,690
101p 1,097,572
664,897
189,772
135p 1,281,266
166p
186,148
–
–
–
–
–
–
Weighted
average
exercise
price
103p
112p
155p
–
–
2,667,815
104p 2,192,690
101p
–
1.0
–
n/a
–
1.5
–
n/a
The fair values of the PSP and CSOP options made were determined using the Black-Scholes valuation model. The significant inputs to
the model were as follows:
2017
Share price at date of grant
Exercise price
Dividend yield
Expected volatility
Risk free interest rate
Expected life
Fair value at date of grant
PSP
724p
1p
3%
28%
CSOP
724p
724p
3%
28%
0.25%
0.25%
4 years
4 years
641p
115p
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23 Share-based payments (continued)
2016
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 19 April 2016
Fair value at date of grant – issue on 5 September 2016
2015
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
561p
1p
3%
33%
0.8%
CSOP
561p
561p
3%
33%
0.8%
4 years
4 years
497p
557p
PSP
331p
1p
4%
31%
1.2%
113p
127p
CSOP
331p
331p
4%
31%
1.2%
4 years
4 years
281p
388p
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.
24 Related parties
During the year the Group paid rental of £36,000 (2016: £36,000) to Rod Flavell, Chief Executive Officer and Sheila Flavell, Chief
Operating Officer, for rent of a London apartment used for short-term employee accommodation. The rent payable was at market rate,
no balances were outstanding at year end (2016: £nil). At no time during 2017 or 2016 was the apartment used by any of the Directors.
During the year the Group paid £16,000 (2016: £75,000) 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 provided to a client of the Group and
were charged at market rate, no balances were outstanding at year end (2016: £nil).
A number of the Directors’ family members are employed by the Group. The employment relationships are at market rate and are
carried out on an arm’s length basis.
The full registered addresses of all subsidiaries of the Parent Company are disclosed on page 134.
25 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.
128
Notes to the Consolidated Financial Statements
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 Consolidated Statement of Financial Position is net
of an allowance of £287,000 (2016: £176,000) 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. No customers defaulted on debt during the current or prior year, £305,000 of trade receivables at
31 December 2017 is owed from new customers (less than 6 months) (2016: £629,000 owed from new 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 1.0% 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 due to the Group’s cash balances and undrawn facilities.
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.
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 and Euro. The Group has both cash inflows and
outflows in these currencies that create a natural hedge.
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. Assets are held as “loans and receivables” and that
there are no assets or liabilities measured at fair value through profit and loss, no derivatives used for hedging, available-for-sale or
other financial liabilities at amortised cost.
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Parent Company Statement of
Financial Position
Parent Company Statement of
Cash Flows
as at 31 December 2017
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 reserves
Retained earnings
Total equity
Note
2017
£000
2016
£000
3
4
5
6
7
5,147
5,147
2,470
2,470
44,474
38,698
24
25
44,498
38,723
49,645
41,193
74
74
63
63
49,571
41,130
1,075
7,873
52
1,075
7,873
52
5,147
2,470
35,424
29,660
49,571
41,130
for the year ended 31 December 2017
Cash flows from operating activities
Company profit before tax for the year
Adjustments for:
Dividends received
Increase in trade and other receivables
Increase/(decrease) in trade and other payables
Cash flows generated from operations
Cash flows from investing activities
Dividends received
Net cash generated from investing activities
Cash flows from financing activities
Dividends paid
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The notes on pages 133 to 136 are an integral part of the Parent Company Financial Statements.
The Parent Company made a profit for the year of £29,740,000 (2016: profit of £28,727,000). 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 133 to 136 are an integral part of the Parent Company Financial Statements (Registered Company 07078823).
These financial statements on pages 130 to 136 were approved by the Board of Directors on 6 March 2018 and were signed on its
behalf by:
Rod Flavell
Chief Executive Officer
6 March 2018
Mike McLaren
Chief Financial Officer
6 March 2018
Note
2017
£000
2016
£000
29,740
28,727
(30,000)
(29,000)
(5,775)
(4,096)
10
(102)
(6,025)
(4,471)
10
30,000
29,000
30,000
29,000
10
(23,976)
(24,514)
(23,976)
(24,514)
(1)
25
24
15
10
25
5
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131
FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Parent Company Statement of
Changes in Equity
for the year ended 31 December 2017
Balance at 1 January 2017
Profit for the year
Total comprehensive income for the year
Dividends paid
Share-based payments (note 3)
Total transaction with owners, recognised directly in equity
Share
capital
£000
1,075
–
–
–
–
–
Share
premium
£000
Capital
redemption
reserve
£000
Other
reserves
£000
Retained
earnings
£000
Total
equity
£000
7,873
52
2,470
29,660
41,130
–
–
–
–
–
–
–
–
–
–
–
–
–
29,740
29,740
29,740
29,740
(23,976)
(23,976)
2,677
–
2,677
2,677
(23,976)
(21,299)
Balance at 31 December 2017
1,075
7,873
52
5,147
35,424
49,571
Balance at 1 January 2016
Profit for the year
Total comprehensive income for the year
Dividends paid
Share-based payments (note 3)
Total transaction with owners, recognised directly in equity
Share
capital
£000
1,075
Share
premium
£000
7,873
–
–
–
–
–
–
–
–
–
–
Capital
redemption
reserve
£000
Other
reserves
£000
Retained
earnings
£000
Total
equity
£000
52
589
25,447
35,036
–
–
–
–
–
–
–
–
28,727
28,727
28,727
28,727
(24,514)
(24,514)
1,881
–
1,881
1,881
(24,514)
(22,633)
Balance at 31 December 2016
1,075
7,873
52
2,470
29,660
41,130
The notes on pages 133 to 136 are an integral part of the Parent Company Financial Statements.
Notes to the Parent Company Financial Statements
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 applicable to companies using IFRS and in accordance with IFRS IC 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 £29,740,000 (2016: profit of £28,727,000).
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 114.
3 Investments
At 1 January
Additions
At 31 December
2017
£000
2,470
2,677
5,147
2016
£000
589
1,881
2,470
The addition to investments represents the accounting in respect of the costs associated with the PSP, as the awards relate to
employees of its subsidiary undertakings. For further details of the PSP see note 23 to the Consolidated Financial Statements.
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
FDM Group Australia Pty Ltd
FDM Group Austria GmbH
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
Australia
Austria
Ordinary
Direct
Ordinary
Indirect
Ordinary
Indirect
Ordinary
Indirect
Ordinary
Indirect
Ordinary
Indirect
Ordinary
Indirect
Ordinary
Indirect
Ordinary
Indirect
Ordinary
Indirect
Ordinary
Indirect
Ordinary
Indirect
Ordinary
Indirect
Ordinary
Indirect
Ordinary
Indirect
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Notes to the Parent Company Financial Statements
3 Investments (continued)
The total cost of investments in subsidiaries, is £2 (2016: £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.
The registered address for each subsidiary of the Company as at 31 December 2017 is listed below.
Company
Astra 5.0 Limited
FDM Group Limited
Registered address
3rd Floor, Cottons Centre, Cottons Lane, London SE1 2QG, UK
3rd Floor, Cottons Centre, Cottons Lane, London SE1 2QG, UK
7 Share capital
Ordinary shares of £0.01 each
2017
Number of
shares
2017
£000
2016
Number of
shares
107,517,506
1,075
107,517,506
2016
£000
1,075
Ordinary shares
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,
FDM Astra Ireland Limited
25-28 North Wall Quay, Dublin 1, Ireland
on a poll, to one vote per share.
FDM Group Inc.
FDM Group Canada Inc.
FDM Group NV
FDM Group GmbH
14 Wall Street, New York, NY 10005, USA
1 Place Ville Marie, 37th Floor, Montreal, QC H3B 3P4, Canada
Rue Medori 99, B-1020 Brussels, Belgium
MainzerLandstrasse 41, 60329 Frankfurt am Main, Germany
FDM Switzerland GmbH
Lavaterstrasse 40, Zurich, CH 8002, Switzerland
FDM Group SA
13 Boulevard Grande-Duchesse Charlotte, L01331 Luxembourg
FDM South Africa (PTY) Limited
9 Kinross Street, Germiston South, 1401 South Africa
FDM Singapore Consulting PTE Limited
77 Robinson Road, #13-00 Robinson 77, 068896 Singapore
FDM Technology (Shanghai) Co. Limited
Room 314, No.437 Zhi Zaoju Road, Huangpu District, Shanghai, China
FDM Group HK Limited
Suites 406 – 409 Pacific Place, 1 Queen’s Road East, Hong Kong
FDM Group Australia Pty Ltd
Rialto South Tower, Level 29, 525 Collins Street, Melbourne, VIC 3000, Australia
FDM Group Austria GmbH
Handelskai 92/Gate 2/7A, 1200 Wien, Austria
4 Trade and other receivables
Amounts owed by subsidiary undertakings
Prepayments and accrued income
2017
£000
2016
£000
44,463
38,688
11
10
44,474
38,698
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.
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 and dividends which are listed below:
Astra 5.0 Limited
FDM Group Limited
Dividends from
related parties
2017
£000
Amounts owed
by related
parties
2017
£000
Dividends from
related parties
2016
£000
Amounts owed by
related parties
2016
£000
30,000
–
30,000
4,340
40,123
44,463
29,000
–
29,000
4,340
34,348
38,688
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 128 and 129.
10 Dividends
Dividends received
Received from subsidiaries
Dividends paid
Paid to shareholders
2017
£000
2016
£000
30,000
29,000
23,976
24,514
5 Cash and cash equivalents
Cash at bank and in hand
2017
£000
24
2016
£000
25
An interim dividend of 12.0 pence per ordinary share was declared by the Directors on 28 July 2017 and was paid on 22 September 2017
to holders of record on 25 August 2017.
The Board is proposing a final dividend of 14.0 pence per share in respect of the year to 31 December 2017, for approval by
shareholders at the AGM on 26 April 2018.
The Company’s cash is held with a financial institution with a credit rating of AA at the date of signing the financial statements.
Subject to shareholder approval the dividend will be paid on 15 June 2018 to shareholders of record on 25 May 2018.
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6 Trade and other payables
Trade payables
Accruals and deferred income
2017
£000
12
62
74
2016
£000
6
57
63
134
135
FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Notes to the Parent Company Financial Statements
Shareholder Information
10 Dividends (continued)
This brings the Company’s total dividend for the year to 26.0 pence per share (2016: 19.6 pence per share). The total ordinary
Directors
dividends will be covered 1.15 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.
2016
An interim dividend of 9.3 pence per ordinary share was declared by the Directors on 26 July 2016 and was paid on 23 September 2016
to holders of record on 26 August 2016. The final dividend of 10.3 pence per share in respect of the year to 31 December 2016 was
approved by shareholders at the AGM on 27 April 2017, the dividend was paid on 16 June 2017 to shareholders of record on 26 May 2017.
Ivan Martin
Roderick Flavell
Sheila Flavell
Michael McLaren
Andrew Brown
Peter Whiting
Robin Taylor
Michelle Senecal de Fonseca
David Lister
Non-Executive Chairman
Chief Executive Officer
Chief Operating Officer
Chief Financial Officer
Chief Commercial Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Company Secretary
Jonathan Mark Heather
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 118.
Registered office
12 Auditors’ remuneration
Auditors’ remuneration of £7,000 was charged in relation to 2017 (2016: £7,000), the fees were paid by FDM Group Limited in both the
current and prior year and no recharge was made to the Company.
13 Employees
The Company had no employees during the current or prior year.
3rd Floor
Cottons Centre
Cottons Lane
London
SE1 2QG
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EC3A 7BB
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136
137
FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017
Notes
Notes
138
139
FDM Group (Holdings) plcAnnual Report and Accounts 2017FDM Group (Holdings) plcAnnual Report and Accounts 2017 Notes
140
FDM Group (Holdings) plc
Annual Report and Accounts 2017
141
FDM Group (Holdings) plcAnnual Report and Accounts 2017 UK
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FDM Group
3rd Floor, Cottons Centre,
Cottons Lane, London SE1 2QG
Tel:
Fax:
Email: enquiries@fdmgroup.com
+44 (0) 20 3056 8240
+44 (0) 870 757 7634
© FDM Group 2018