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FDM profits wobble

The consultancy business dipped in the first half
July 29, 2020

FDM’s (FDM) adjusted operating profit dropped by almost a quarter in the first half, as coronavirus resulted in a fall in new deals and the early termination of placements by clients that belong to vulnerable sectors. 

IC TIP: Buy at 944p

The UK and Ireland market was hit the hardest, with consultant (‘Mountie’) assignments down by almost a fifth compared to the same period last year. The IT firm noted that all of its other territories have shown headcount growth. 

But the overall number of Mounties assigned to clients dipped 5 per cent compared to the first half of 2019 - although the utilisation rate held relatively steady at 95 per cent. New business wins slowed, as the group added 28 new clients compared to 40 in the same period last year. 

According to FDM, there are early signs of improvement in the majority of sectors that it serves, and in all of the geographies in which the company operates. The company is sitting on £35.8m in cash (including lease liabilities) as at the end of June, supported by savings from the suspension of its final dividend from the 2019 financial year. 

The group also settled an employment-related legal claim in North America for £3.3m, which management maintains lacked merit. 

The consensus forecast EPS for the full year is 30.85p, rising to 34.57p in 2021. 

FDM (FDM)    
ORD PRICE:944pMARKET VALUE:£ 1.01bn
TOUCH:920-944p12-MONTH HIGH:1,100pLOW: 485p
DIVIDEND YIELD:1.6%PE RATIO:27
NET ASSET VALUE:84p*NET CASH:£35.8m**
Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201913424.917.616.0
202014121.214.818.5
% change+5-15-16+16
Ex-div:06 Aug   
Payment:04 Sep   
*Includes intangible assets of £20.2m or 18p a share **Includes lease liabilities of £22.5m