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FDM Group

  • BY: Andrew Hore |
  • POSTED: 09/03/2009 |

IT staffing provider FDM Group continues to grow its revenues and profits.

An increasing proportion of revenues continue to come from FDM’s own staff, called Mounties. There are still outside contractors being used but Mounties are much higher margin. The number of Mounties increased from 208 to 293 over the year. A further 175 Mounties are expected to graduate in 2009. The net increase in Mounties is likely to be lower, though.

Revenues rose 5% to £52.2m and pre-share based payments profits improved from £4.4m to £5.29m in 2008.

FDM is winning new business from financial services and non-financial services companies. Overseas revenues are also becoming more significant.

At 93.5p a share, FDM is valued at £21.7m. Net cash is £10.1m and the business remains cash generative.

House broker Brewin Dolphin forecasts a small improvement in 2009 profits to £5.4m. This is a cautious forecast due to the fact that it is difficult to know how trading will be after the first half.

The shares are trading on six times forecast 2009 earnings.

FDM is considering using its cash to make acquisitions. FDM is building up newer operations, such as testing, and acquisitions could help to grow them faster. FDM has a relatively unusual strategy among IT staffing businesses, which tend to predominantly use outside contractors. If FDM can transfer some of that business to its own Mounties it could improve the margins of an acquired business. 

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