FDM Group profits increase despite Brexit uncertainty

FDM Group edged lower on Wednesday as it warned that the effects of Brexit on the business were difficult to predict, though the company reported annual profit and revenue growth.

A statement from the recruitment and employee training provider said that risks and uncertainty remained despite its global footprint and its geographically diversified business, though it stressed that no material negative impact on trading has been noted to date.

For the year ended 31 December, the FTSE 250 traded company achieved profit before tax of £48.3m, an increase of 11% on the previous year, as revenue jumped by 5% to £244.9m and cost of sales declined 3% to £125.9m.

The company's revenue increase was driven by a 15% jump in revenue from 'Mounties', the specially trained IT consultants the company deploys to clients, to £239m after growth in North America, Asia Pacific and Europe, Middle East and Africa (excluding UK and Ireland).

Meanwhile, administrative expenses increased by 17% to £70.7m, after FDM increased its average headcount in its management, support, recruitment, sales and training teams to 561 from 447, reflecting investment.

Cash and cash equivalents at 31 December stood at £33.9m, down from £36.8m at the same point the year before, while its dividend increased by 15% to 30.0p per share.

Rod Flavell, chief executive of FDM, said: "Throughout 2018 the group invested in its people, training facilities and technology to sustain the future growth of the business. The board is confident that the continuing strong levels of demand for FDM's services across all of our territories and the momentum with which we have commenced the new year will enable the group to deliver further good operational and financial progress in 2019."

A note from analysts at Shore Capital said that they provisionally expect to maintain above-consensus estimates and see scope for estimate upgrades, particularly around earnings and EPS, as the business moves through 2019.

"Demand for IT skills across both the public and private sectors remains strong, in our view, as does the number of graduates seeking a career in IT, and FDM looks well placed to continue to benefit through its established Blue-Chip client base, continued growth in graduate applications and further disciplined expansion of its training academies," said the note.

FDM Group's shares were down 0.82% at 844.00p at 1056 GMT.