FDM Group talks up its resilience in face of pandemic

FDM Group updated the market on its first quarter of trading on Thursday, saying it was in line with the board's expectations, as the period was only marginally impacted by Covid-19 lockdowns in the territories it operates.

The FTSE 250 company said revenues for the quarter totalled £71m, up from £67.2m year-on-year.

It said the number of ‘Mounties’, which is what it calls its IT consultants - placed with clients currently stood at 3,802, down from 3,924.

The group said its balance sheet remained “strong”, with £44.3m of cash and no debt as at 31 March, compared with £37.0m of cash on both 31 December and 31 March 2019.

As it had indicated at the end of March, the “significant majority” of Mounties were working remotely, continuing their client placements with revenue-generating work.

FDM said it was continuing to recruit, although at reduced levels, and the number of applicants to its academies remained encouraging.

Its business continuity plans had reportedly enabled it to move quickly to use its technology so that its recruitment processes and academies in all territories, which were now operating remotely, were performing “efficiently and effectively”.

FDM said that, while Mountie headcount had been “relatively resilient” to date, post-lockdown a number of Mounties had their placements terminated early by clients operating in some of the sectors most badly affected by Covid-19.

It had also been experiencing a reduction in the weekly number of new deals, and some of its clients had needed additional time for the remote on-boarding of Mounties to new placements.

“Whilst we have taken action to mitigate the adverse impacts of the pandemic on our business, at present we have no intention of accessing the UK government furlough scheme or of reducing pay for employees,” the board said in its statement.

The company said that at present, it was not possible to estimate with any degree of precision the extent of the impact of the pandemic on its earnings in 2020.

However, it said it had modelled a number of potential scenarios and possible outcomes, including some which were “significantly more severe” than it currently expected to see, given its experience thus far.

In all of those scenarios, the group said it would maintain a “robust” balance sheet, and would continue to be profitable, although below its earlier expectations, with cash generation continuing.

The board said it believed that its “agile and resilient” business model positioned it well to take advantage of opportunities as more normal conditions returned, giving it confidence in its long-term prospects.

“Our primary responsibility in the face of Covid-19 is the health and well-being of our staff, clients and other stakeholders,” said chief executive officer Rod Flavell.

“While uncertainty over the duration and impact of the coronavirus pandemic makes accurate short-term forecasts difficult, our agile and resilient business model, supported by a robust balance sheet, positions us well to face current conditions and the group's long-term prospects remain strong.”

At 0959 BST, shares in FDM Group were down 0.52% at 4p.