Bringing people
and technology
together
Annual Report and
Accounts 2022
FDM Group (Holdings) plc
and its subsidiaries form a
global professional services
provider with a focus on
IT. Our mission is to bring
people and technology
together, creating and
inspiring exciting careers
that shape our digital future.
For more information
See page 4
Strategic Report
02
Highlights
04
We are FDM
06
Statement from the Chair of the Board
08
Chief Executive’s Review
14
Business Model
16
Our Markets
20
Key Performance Indicators
22
Financial Review
24
Risk Management
32
Corporate Responsibility
Governance
59
Board of Directors
62
Corporate Governance Report
74
Audit Committee Report
84
Nomination Committee Report
87
Remuneration Report
108
Directors’ Report
Financial Statements
113
Independent auditors’ report to the members of FDM
Group (Holdings) plc
121
Consolidated Income Statement
122
Consolidated Statement of Comprehensive Income
123
Consolidated Statement of Financial Position
124
Consolidated Statement of Cash Flows
125
Consolidated Statement of Changes in Equity
126
Notes to the Consolidated Financial Statements
152
Parent Company Statement of Financial Position
153
Parent Company Statement of Changes in Equity
154
Notes to the Parent Company Financial Statements
159
Shareholder Information
01
FDM Group (Holdings) plc
Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
02
Highlights
Financial
Revenue
£330.0m
+23%
2021: £267.4m
Adjusted operating profit
1
£52.2m
+10%
2021: £47.3m
Profit before tax
£45.7m
+10%
2021: £41.4m
Adjusted profit before tax
1
£52.0m
+11%
2021: £46.7m
Adjusted basic earnings
per share
1
37.3
pence
+12%
2021: 33.2 pence
Basic earnings
per share
32.0
pence
+10%
2021: 29.1 pence
Cash flow generated from
operations
£49.7m
-5%
2021: £52.1m
Adjusted cash conversion
1
95.1%
-14%
2021: 110.3%
Cash position at period end
£45.5m
-14%
2021: £53.1m
Dividend per share
3
36.0
pence
+9%
2021: 33.0 pence
Cash conversion
2
108.3%
-13%
2021: 124.1%
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.
Governance
Financial Statements
03
FDM Group (Holdings) plc
Annual Report and Accounts 2022
Strategic Report
Operational
1
Adjusted operating profit and adjusted profit before tax are calculated before Performance Share Plan expenses (including social security costs) of £6,356,000 (2021:
£5,261,000). Adjusted basic earnings per share are calculated before the impact of Performance Share Plan expenses (including social security costs and associated
deferred tax). The adjusted cash conversion is calculated by dividing cash flow generated from operations by adjusted operating profit. See page 19 for further details
of adjusted items.
2
Cash conversion is calculated by dividing cash flow generated from operations by operating profit.
3
A recommended final dividend of 19.0 pence per share, following an interim dividend of 17.0 pence per share declared in July 2022, giving a total dividend for the year
of 36.0 pence per share (2021: 33.0 pence per share).
4
This is a mix of physical and virtual events attended.
5
Week 52 in 2022 commenced on 19 December 2022 (2021: week 52 commenced on 20 December 2021).
6
Utilisation is calculated as the ratio of cost of utilised Consultants to the total Consultant payroll cost.
780
University events
attended
4
in 2022
(2021: 825)
4,905
Consultants assigned
to clients at week 52
5
(2021: 4,033)
0.48
tCO
2
e
Scope 1, 2 and 3
greenhouse gas emissions per employee
(2021: 0.49 tCO
2
e)
97.5
%
Consultant utilisation
6
rate of 97.5%
(2021: 97.3%)
116,431
Completed applications
received via our website
(2021: 59,705)
-4.0
%
UK mean gender
pay gap of -4.0%
(2021: 0.5%)
3,179
Training completions
in 2022
(2021: 2,410)
74
New clients globally
(2021: 78)
FDM Group (Holdings) plc
Annual Report and Accounts 2022
04
We are FDM
FDM Group (Holdings) plc
(“the Company” or “FDM”)
and its subsidiaries (together
“the Group” or “FDM”)
form a global professional
services provider with a
focus on IT. Our mission is to
bring people and technology
together, creating and
inspiring exciting careers
that shape our digital future.
Our Values
Together we are stronger
FDM has always been people
focussed. We celebrate diversity and
encourage inclusivity. We thrive on
teamwork and collaboration with
our colleagues, clients and partners.
We are a collective made up from a
multitude of backgrounds, cultures,
languages, nationalities and skills.
This diversity makes us stronger and
is a key contributor to our success.
We strive for success
We are entrepreneurial, ambitious,
creative and brave. We thrive on
pushing the boundaries to exceed
clients’ expectations. We seek
to create an inspiring place for
colleagues to work and develop their
careers. We encourage our colleagues
to challenge themselves and help
each other maximise their potential
so we can continue to deliver a
unique and unparalleled service
to our clients and stakeholders.
Committed to our clients
We all work towards a shared goal,
helping our clients succeed. We are
attentive, focussed and in-tune with
their wants and needs. We work
hard to nurture our relationships,
to become our clients’ partner and
to create solutions to fulfil their
business ambitions. Their success
is our success.
We say it how it is
We believe in professional
integrity. We are reliable, open
and trustworthy, and undivided
in this behaviour. This approach
has earned us the respect of our
colleagues, clients, partners and
investors and has made us the
business we are today.
We make it happen
We are pioneers and innovators
– a team of adaptable, agile and
passionate people. We have a ‘can-do’
attitude, approaching every day with
energy and enthusiasm. We seize
every opportunity to provide solutions
for our clients, careers for our people
and to drive our business forward.
The Group’s principal business
activities involve recruiting, training
and deploying its own permanent IT
and business Consultants to clients,
either on site or remotely. FDM
specialises in a range of technical
and business disciplines including
Development, Testing, IT Service
Management, Project Management
Office, Data Engineering, Cloud
Computing, Risk, Regulation and
Compliance, Business Analysis,
Business Intelligence, Cybersecurity,
AI (Artificial Intelligence), Machine
Learning and Robotic Process
Automation.
The FDM Careers Programme
bridges the gap for graduates,
ex-Forces, returners to work and
apprentices, providing the training
and experience required to make a
success of launching or relaunching
their careers. We have dedicated
training centres and/ or sales
operations located in London, Leeds,
Glasgow, Limerick, New York NY,
Arlington VA, Charlotte NC, Austin
TX, Tampa FL, Toronto, Montreal,
Frankfurt, Kraków, Singapore,
Hong Kong, Shanghai, Sydney
and Melbourne. We also operate
in Luxembourg, the Netherlands,
Switzerland, Austria, Spain, South
Africa, and New Zealand.
The physical and mental wellbeing
of our people and stakeholders is
central to who we are and what
we do. As such, our outreach
programmes for our Consultants
and in-house staff have grown and
broadened during 2022, becoming
key to our support and care for all
of our people globally.
FDM is a collective of around 7,000
people, with a multitude of differing
backgrounds, life experiences and
cultures. We are a strong advocate
of diversity, equity and inclusion
in the workplace and the strength
of our brand arises from the talent
within.
Together, we are FDM.
Strategic Report
Governance
Financial Statements
05
FDM Group (Holdings) plc
Annual Report and Accounts 2022
Our purpose
Bringing people and technology together,
creating and inspiring exciting careers
that shape our digital future.
Delivering customer-led, sustainable, profitable growth on a
consistent basis, through our well-established Consultant model:
•
Identify and recruit talented
individuals
– we recruit high-
calibre candidates from a wide
social background and develop
them into skilled Consultants. We
currently have four pathways:
Graduate, Ex-Forces, Returners
and Apprentices.
•
Train individuals remotely and
at our Academies
– we provide
Consultants with first-class training
and ongoing development and
support, giving them the best
possible platform to launch
exciting and successful careers in
IT. We invest in our trainers and
training capabilities to create
leading-edge training content
and delivery.
•
Grow our customer presence
profitably
– we look to create new
opportunities to deploy our
Consultants amongst our existing
client base and into other markets
and territories.
•
Identify and fill our clients’ skills
gaps
– we focus on understanding
and anticipating requirements and
market trends, to provide
opportunities to our Consultants
and other employees, delivering
sustainable profitable growth for
our shareholders.
•
Create a long-term sustainable
global business
– we aim to have
a beneficial impact on the
communities in which we operate.
We are aware of our responsibility
towards our clients and our
suppliers, and are working to
minimise our impact on the
physical environment.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
06
Statement from the Chair of the Board
Performance
FDM made sound progress in 2022,
delivering a good performance in
line with the Board’s expectations.
The Group continued its investment
in programmes to support future
growth and trained a record number
of Consultants for our clients.
The Group delivered an adjusted
profit before tax
1
of £52.0 million
(2021: £46.7 million). The balance
sheet remains robust with closing cash
balances of £45.5 million (2021: £53.1
million) and no debt. The Group made
dividend payments during the year of
£38.2 million (2021: £46.8 million).
Governance
The aim of this report is to present
a clear and balanced picture of the
progress we have made during 2022,
providing high levels of disclosure to
enable all our stakeholders, including
current and prospective shareholders,
to understand our business and its
prospects for growth. We are driven
by a strong purpose, which leads us
to look for profitable opportunities
to help our clients fill their skills gaps,
thereby launching more careers for
our Consultants.
The Board considers robust corporate
governance and a sound approach to
risk management to be fundamental
to the sustainability of the Group and
its operations. We are guided by the
2018 UK Corporate Governance Code
(“2018 Code”). Engagement with our
employees and other stakeholders
has always been an important part
of our approach and we continue our
efforts to ensure employee voices are
heard by the Board. There is further
information on page 56 about how
I am pleased to
present FDM’s
Annual Report
for the financial
year ended 31
December 2022.
the Directors have carried out their
duties under Section 172 of the
Companies Act 2006 to promote the
long-term success of the Company
for the benefit of its shareholders
as a whole, while having regard to
the interests of all stakeholders. I
report on corporate governance
in more detail on page 62 and our
framework of risk management
and governance will further evolve
during the coming year in line with
shareholder expectations and best
practice requirements.
We maintain focus on reducing our
impact on the environment whilst
further developing the Group’s
response to climate-related risks
and opportunities. Our Carbon
Reduction Plan outlines our
commitment to reduce our absolute
Scope 1 and 2 greenhouse gas
emissions by 50% by 2030 from a
2020 base year, and to reduce Scope
3 emissions by 62% per employee
within the same timeframe. In
line with best practice and our
shareholders’ expectations, we
submitted our carbon reduction
targets to the Science Based Targets
initiative (“SBTi”) for validation, and
I am pleased to report that in June
2022 SBTi validated our targets as
being in conformance with their
criteria and recommendations,
and in line with a trajectory to
limit global temperature increases
to no more than 1.5°C. We have
further developed our governance
of climate change matters,
integrating them into our overall risk
management. We have focussed on
our strategy in managing climate-
related issues and opportunities,
and the metrics used to measure
progress against our Carbon
Reduction Plan. As a result, this year
we have been able to present our
climate-related financial disclosures
in a way that is consistent with all
of the recommendations of the
Task Force on Climate-related
Financial Disclosures (“TCFD”).
Further information can be found
on page 45.
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
07
Culture and values
FDM’s business is supported by a
strong cultural identity that helps
to ensure our goals are understood
and shared by our people. I am
particularly proud of the work we
do to promote social mobility and
to make FDM a diverse and inclusive
place to work. It was rewarding to
improve our ranking in the Social
Mobility Employer Index 2022,
operated by the Social Mobility
Foundation, in recognition of the
steps we take to enable those from
lower socio-economic backgrounds
to succeed. You can find more
information on our work in this
area on page 36.
Towards the end of the year, we
asked our staff for their feedback
on a number of areas in our regular
employee survey; the survey is an
important part of our programme of
employee engagement and enables
us to understand their views on
matters relevant to their day-to-day
experience at FDM. There is more
information about our engagement
with our people on page 33.
Dividend
The Board continues to operate a
progressive dividend policy, aimed
at aligning the Group dividend
growth broadly with growth in the
Group’s earnings per share, whilst
taking into account the Board’s
desire to maintain an appropriate
cash buffer at a Group level, to fund
organic growth across the business
and to maintain the distributable
reserves available to the Group. The
Board will be recommending a final
dividend of 19.0 pence per ordinary
share in respect of the year to 31
December 2022 (2021: final dividend
of 18.0 pence per ordinary share)
for approval by shareholders at our
AGM, which is scheduled to be held
on 16 May 2023, taking the total
ordinary dividend to 36.0 pence per
share (2021: 33.0 pence per share).
The Board and its
Committees
There have been no changes to the
Board or any of its Committees since
the publication of our last Annual
Report.
Outlook
The early months of 2023 have
seen continued macro-economic
uncertainty in many of the regions
in which we operate. Against this
background, I am pleased that we
continue to see encouraging levels
of client engagement and that we
continue our client-led expansion
with the recent openings of offices
in Tampa, Florida and Melbourne,
Australia.
In all of the geographies in which we
operate there remain structural and
systemic skills-shortages, which we
are well placed to assist our clients
in overcoming.
Our scalable and flexible business
model and diversified portfolio
of clients, sectors and operating
regions mean that we are
appropriately positioned to weather
current global uncertainties and to
continue to deliver long-term growth
for all of our stakeholders.
David Lister
Chair of the Board
14 March 2023
1
The adjusted operating profit is calculated before
Performance Share Plan expenses (including
social security costs).
FDM Group (Holdings) plc
Annual Report and Accounts 2022
08
Chief Executive’s Review
Overview
2022 was a year of continued good
progress for FDM. We ended the
year with 4,905 Consultants placed
with clients (2021: 4,033), recorded
revenue of £330.0 million (2021:
£267.4 million) and delivered
an adjusted operating profit
1
of
£52.2 million (2021: £47.3 million).
During the year we continued
with our plan of accelerating and
enhancing investment in recruitment
of both Consultants and internal
staff, and in our complementary
development programmes. These
initiatives reflect the high level of
client demand during the year and
will underpin the future growth of
our business. 3,179 Consultants
were trained during the year (2021:
2,410 training completions), the
highest in the Group’s history.
We maintain a strong focus on cash
management and collection, ending
the year with £45.5 million of cash
(2021: £53.1 million) and no debt.
Our strategy
FDM’s strategy is straightforward:
to deliver customer-led, sustainable
and profitable growth on a
consistent basis through our well-
established and proven business
model. This model has enabled us
to deliver a strong performance
in the year by working to fulfil our
four key strategic objectives: attract,
train, and develop high-calibre
Consultants; invest in leading-edge
training capabilities; grow and
diversify our client base; and expand
and consolidate our geographic
presence through sustainable and
efficient means.
Our strategy requires that all
activities and investments produce
the appropriate level of return
on investment, that they deliver
sustained and measurable
improvements for all our
stakeholders including customers,
staff and shareholders, and that they
further our objective of launching
the careers of talented people
worldwide, which remains core to
everything we do.
The Group performed well in 2022,
with strong levels of trading from all
our principal regions and high levels
of client demand. North America in
particular delivered good growth,
with pleasing contributions from
both the US and Canada. We made
good progress in APAC, where we are
now gaining the critical mass to take
advantage of our upfront investment
over recent years.
1
The adjusted operating profit is calculated before
Performance Share Plan expenses (including
social security costs).
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
09
Bringing people
and technology
together
R
e
c
r
u
i
t
T
r
a
i
n
D
e
p
l
o
y
Invest in
leading-edge
training
capabilities
Expand and
consolidate our
geographic
presence through
sustainable and
efficient means
Attract, train
and develop
high-calibre
Consultants
Grow and
diversify our
client base
FDM Group (Holdings) plc
Annual Report and Accounts 2022
10
Chief Executive’s Review
continued
Strategic objectives
Attract, train and develop high-
calibre Consultants
Recruitment was a key area of focus
during the year as we responded
to high levels of client demand
across all our regions. The overall
number of recruitment events
decreased as we changed the mix
of events to attend more face-to-
face and fewer virtual events in
2022. Face-to-face events are more
personal to potential candidates
and more impactful. We generated
a marked increase in the number of
applications across all our operating
locations, most notably in the UK,
with applicants seeking the benefits
of FDM’s market-leading, flexible
training. We believe our training and
deployment offering differentiates
us from our competitors and is more
attractive than ever to candidates.
We use recruitment and assessment
processes which are designed to
spot a candidate’s full potential.
This helps us to build an inclusive
workforce and to increase social
mobility by opening doors to careers
in tech with our blue-chip clients for
those who may not otherwise find it
easy to access them.
Our new global applicant tracking
system, Eploy, was rolled out in 2022,
enabling us to process applications
more efficiently while offering an
improved user experience.
We delivered a record year of
training completions. In total, there
were 3,179 training completions
in 2022, an increase of 32% on the
previous year (2021: 2,410).
Our Group-wide spend on paid
training this year exceeded £20
million (2021: £12.5 million), an
investment that will help underpin
our ambitious targets for 2023 and
beyond. In response to the higher
inflationary operating conditions,
we increased salary packages for
Consultants across all regions.
We continue to invest in our Ex-
Forces and Returners programmes,
which remain an important source
of talent for the business, and
increased our investment in our
apprenticeships programme, to
further diversify our talent pipeline.
Invest in leading-edge training
capabilities
During the year we continued
to advance our Academy
Transformation Programme, as
detailed in our Annual Report 2021,
and enhanced our hybrid training
model as we work to identify the
best training delivery solution for the
post pandemic world of work.
We are focussed on optimising
both the appeal of our training
programmes to candidates and
of our Consultants to clients. For
example, through our partnership
with TechSkills, we have now
achieved Tech Industry Gold
standard accreditation for eight
programmes, through which a
total of 548 trainees attained their
certification in 2022. Accreditation
provides to candidates and clients
external validation of FDM’s
programme content, delivery,
approach and assessment.
During the year some of our trainers
enhanced their qualifications by
gaining industry certifications such
as AWS Cloud Practitioner, Agile
Scrum Master, SAFe Scrum, and
certifications in Google Cloud. We
also have trainer certifications
with CompTIA CTT+ Certified
Technical Trainer, Scrum.org PSM,
IIBA ECBA&CBAP, and ITIL These
certifications demonstrate that we
can offer high quality training in
the technologies which are of key
importance to our clients.
Grow and diversify our client
base
We continue to deliver the highest
level of service to our clients and
have worked closely with them
to meet their requirements. We
secured 74 new clients in the year
(2021: 78), of which 38 were in the
UK, 14 in North America, 14 in APAC
and 8 in EMEA. Of these new clients,
59% were secured from outside the
financial services sector, as we made
good progress in the energy and
utilities, insurance and commercial
and professional services sectors.
The number of new clients does
not include those clients which
re-engaged with us during 2022.
Expand and consolidate our
geographic presence through
sustainable and efficient means
Our North America operations
increased headcount by 48% to
1,618 (2021: 1,095) with excellent
growth delivered in both the US
and Canada. The UK increased
headcount by 8% to 1,958
(2021: 1,806) with a very strong
performance in the first half of 2022
followed by a slower second half,
reflecting political and economic
uncertainties. APAC Consultant
headcount increased to 1,011
compared to 880 in 2021, an
increase of 15%. EMEA closed with
318 Consultants deployed, up 26%
compared to 252 in 2021 with strong
activity levels in our newest location,
Poland.
We will continue to grow our
international footprint in 2023 and
to consolidate our operations in our
existing territories.
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
11
Our service offerings
We continually enhance our service
offerings in response to our clients’
current and future requirements,
developing a partner-led consultancy
that provides clients with scalable
and sustainable support. Extensive
collaboration with clients has led to
the co-creation of programmes to
provide better solutions to complex
challenges, such as a multi-year
global internal audit programme
for a banking client and a specialist
test team supporting the rollout
of a complex global platform for
a media client. We have seen the
first deployment of both “Robotic
Process Automation As A Service”
and “Business Analysis As A Service”
specialist Data and Business Analysis
teams to public sector customers
undertaking significant transformation
programmes. Each Consulting project
is now underpinned by experienced
Delivery Consultants who provide
a management capability to reduce
the burden on our clients. Having
successfully deployed significant
numbers of Consultants to work on
KYC (Know Your Customer) projects
with our clients in the banking sector,
we have built on our experience to
begin working with clients with similar
requirements in the charity, insurance
and consultancy sectors.
In 2022 we began strengthening our strategic
alliances with some of the world’s most innovative
organisations to fuel the growth of our client
services and ensure that we are at the forefront of
technological advancements. This further adds to
the support we now provide to clients, particularly
with technologies that are increasingly in demand
and with hard-to-source-skillsets.
Our strategic alliances ecosystem includes:
•
Microsoft
– Workforce Development & Learn
Career Connected Partner
•
Salesforce
– Workforce Development &
Trailhead Academy Authorised Learning
Partner
•
ServiceNow
– Placement & Authorised
Training Partner
•
AWS
– AWS Approved Training Partner & AWS
reStart Collaboration
•
Appian
– Education Partner
•
nCino
– Workforce Development Partner
1
The adjusted operating profit is calculated before
Performance Share Plan expenses (including
social security costs).
FDM Group (Holdings) plc
Annual Report and Accounts 2022
12
Our people – talented, ambitious,
enthusiastic, diverse
FDM is a people business, and
I am very proud of the passion
and commitment demonstrated
by our people across all of our
operating regions. Our results reflect
their dedication, hard work and
commitment.
Our people strategy has been
designed to enable FDM to maintain
its position as a high-performing
and impactful global organisation
with a clear orientation towards
sustainability, scalability, commercial
efficiency and flexibility. Our people
strategy aims to ensure we deliver
the following measures: successful
deployments; an inclusive culture; a
proactive business whereby we are
constantly reviewing the needs of
our people and clients; quality and
clarity of purpose, ensuring all our
employees embody and promote our
values; and recognised leadership.
We remain committed to embracing
diversity, equity and inclusion in the
workplace. I am pleased to report
that in 2022 we established a new
Consultant Experience team whose
purpose is to deliver a desirable,
inclusive and engaging experience
to all our Consultants whilst
focussing on career enhancement.
This initiative will help ensure our
Consultants continue to progress,
develop and have a positive
experience throughout their time at
FDM.
The safety and well-being of all our
people remains a key priority for the
Board. The People Team continues
to engage with staff to ensure that
their wellbeing is monitored and
safeguarded.
I would like to extend the Board’s
thanks to every FDM employee for
the quality of their work during 2022
which has enabled us to continue to
deliver for all our stakeholders.
Chief Executive’s Review
continued
Looking forward
We delivered a good performance
in 2022, with strong growth in
Consultant numbers and accelerated
investment in recruitment, training
and other programmes that will
help to underpin the future of the
Group. While we are mindful of
the continuing macro-economic
uncertainties, FDM is well positioned
to make further progress in the
current year and beyond.
Rod Flavell
Chief Executive Officer
14 March 2023
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
13
Awards
GradConnection’s
Top100 (Hong Kong)
Australian HR
Awards Finalist
Defence Employer
Recognition Scheme –
Gold Award
Vets Indexes
Recognized Employer
(USA)
Military Times: Best for
Vets Employers 2022
(USA)
Awards received during the year included:
Social Mobility
Employer Index –
The Top 75
West Yorkshire Apprenticeship
Awards: Diversity & Inclusion Award
Winner 2022
Nottingham Trent University: Industry
Placement Provider of the Year
Winner 2021/ 22
Australia’s Top 100
Graduate Employer
UK Social Mobility
Awards: Recruitment
Programme of the
Year 2022
(Finalist/ Silver award)
GradConnection’s
Top100 (Australia)
FDM Group (Holdings) plc
Annual Report and Accounts 2022
14
Business Model
Our purpose
To bring people and
technology together,
creating and inspiring
exciting careers that
shape our digital
future.
About us
We recruit and train graduates,
ex-Forces personnel, returners
to work and apprentices,
transforming them into IT and
business professionals before
deploying them to work with
our clients.
We work in partnership with
our clients to fill their skills
gaps, building a diverse
pipeline for the future.
What sets us apart
Our people
•
Ongoing training and support
provided to Consultants, who are
employees from their first day in our
Academy, to equip them with the skills
most in demand from our clients
Global coverage
•
International presence with localised
support in all our operating territories
•
Experienced trainers with remote and
in-house delivery capability
Track record of success
•
Robust credentials with over 30 years
of operational success
•
Cost-effective, value-added business
model
Bespoke approach for our clients
•
Low-risk solution as FDM retains the
employer/ employee relationship
with Consultants
•
Scalable capacity with no minimum
requirement
•
Ability to tailor recruitment and training
•
Option to transfer Consultants from
FDM to a permanent role with the
client after initial period
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
15
How our business works
The value we create
We recruit
High quality:
– Graduates
– Ex-Forces
– Returners to work
– Apprentices
We train
We offer extensive and award-winning
training to successful candidates
We deploy
We place Consultants with a diverse range
of clients, in a wide range of disciplines
and territories
Career development
Following completion of the initial
commitment period, Consultants
may transition permanently to the
client if the client so requires, remain
as is or embark on a new placement
with FDM
For our clients
We provide our clients with a first-class,
flexible resource at a competitive cost
4,905
Consultants assigned to clients at year end
For our shareholders
We consistently deliver returns for our
shareholders and adopt a progressive
dividend policy
36.0
pence
full year dividend for 2022
Recommended final dividend of 19.0 pence per
share, following an interim dividend of 17.0 pence
per share
For our employees
We provide ongoing professional
development and support to our
employees throughout their career at FDM
7,000+
FDM employees globally
For our trainees
Our award-winning training enables our
trainees to transition into professional IT
and business Consultants, with relevant
technical skills, commercial experience and
other accreditations and qualifications
3,179
Training completions in 2022
For the environment
We are committed to reducing our
greenhouse gas emissions in line with our
targets, relevant to our 2020 baseline:
Scope 1 and 2 by
50%
by 2030
95+
Nationalities
Scope 3 per employee by
62%
by 2030
FDM Group (Holdings) plc
Annual Report and Accounts 2022
16
35%
of FDM’s
global revenue
(2021: 30%)
6%
of FDM’s
global revenue
(2021: 9%)
Our Markets
1
The adjusted operating profit is calculated before Performance Share Plan expenses (including social security costs).
North America
2022
2021
Revenue
£116.9m
£81.4m
Adjusted operating profit
1
£15.4m
£13.1m
Consultants deployed
1,618
1,095
Training completions
1,319
661
EMEA
2022
2021
Revenue
£19.7m
£25.0m
Adjusted operating profit
1
£2.3m
£3.4m
Consultants deployed
318
252
Training completions
223
197
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
17
42%
of FDM’s
global revenue
(2021: 46%)
16%
of FDM’s
global revenue
(2021: 15%)
UK
2022
2021
Revenue
£139.6m
£121.8m
Adjusted operating profit
1
£30.3m
£28.4m
Consultants deployed
1,958
1,806
Training completions
1,063
1,035
APAC
2022
2021
Revenue
£53.8m
£39.2m
Adjusted operating profit
1
£4.2m
£2.4m
Consultants deployed
1,011
880
Training completions
574
517
FDM Group (Holdings) plc
Annual Report and Accounts 2022
18
Our Markets
continued
UK
UK Consultant headcount at week
52 of 2022 was 1,958, an increase
of 152 (8%) on the prior year (2021:
1,806). Revenue increased by 15% to
£139.6 million (2021: £121.8 million);
this increase was higher than the 8%
increase in Consultant headcount
at week 52 due to the phasing
of headcount, more challenging
market conditions later in the
year following uncertainty arising
from September’s mini-budget
and the subsequent changes in UK
government, which impacted certain
customers’ decision-making. During
the year we added 38 new clients
compared with the 33 that we added
in 2021.
The tenure profile of our
Consultants has now rebalanced
to more normal levels, with the
proportion of Consultants who have
completed their first two years with
FDM having been unusually high
through the pandemic. We ended
the year with 46% (2021: 49%)
within their first year, 36% (2021:
19%) within their second year and
18% (2021: 33%, 2020: 41%) having
completed more than two years.
Adjusted operating profit increased
7% to £30.3 million (2021: £28.4
million). Training completions were
broadly in line with the prior year as
we trained 1,063 Consultants (2021:
1,035). In July 2021 we introduced
paid training, paying trainees from
their first day in training, in line with
our operations elsewhere in the
world. The full year cost of trainee
wages pre-deployment was £7.2
million in 2022 (2021: £3.8 million).
North America
North America experienced strong
growth in Consultant headcount
closing the year on 1,618, an
increase of 523 (48%) on the
prior year (2021: 1,095). Revenue
increased by 44% to £116.9 million
(2021: £81.4 million). We saw strong
Consultant growth in both Canada
and the US, with the initiatives we
introduced to help us meet growing
demand proving successful.
Adjusted operating profit increased
by 18% to £15.4 million (2021: £13.1
million), less than the increase
in headcount and revenue, a
reflection of our upfront investment
in training and salaries to deliver
the Consultant headcount growth.
During the year we trained a record
1,319 Consultants, almost double
the number we trained in 2021 (661).
EMEA
EMEA Consultant headcount at week
52 of 2022 was 318, an increase of
66 (26%) on the prior year (2021:
252). Revenue decreased by 21% to
£19.7 million (2021: £25.0 million)
and adjusted operating profit
1
decreased by 32% to £2.3 million
(2021: £3.4 million). The reduction
in revenue and operating profit
reflects the phasing of Consultant
headcount and the regional mix of
Consultant placements. In 2021,
headcount decreased towards the
end of the year, whereas in 2022
headcount increased towards the
end of the year. The mix of locations
has changed; in 2022, we saw strong
growth in Poland and South Africa,
two markets with lower sell-rates;
whilst in 2021 we completed a large
project delivery in Luxembourg.
Training completions were 223, an
increase of 26 (13%) on prior year
(2021: 197).
APAC
APAC Consultant headcount
exceeded 1,000, closing the year on
1,011, an increase of 131 (15%) on
the prior year (2021: 880). Revenue
increased by 37% to £53.8 million
(2021: £39.2 million) and adjusted
operating profit
1
increased by 75%
to £4.2 million (2021: £2.4 million)
as the region benefited from strong
headcount growth. During the year
we hit milestones in two of the
regions, with Australia surpassing
400 Consultants and Singapore
surpassing 300 Consultants. Across
the region, we continued to grow
our client base, adding 14 new
clients in the year (2021: 17). During
the year we trained 574 Consultants,
an increase of 57 (11%) on the prior
year (2021: 517).
1
The adjusted operating profit is calculated before Performance Share Plan expenses (including social security costs).
Strategic Report
Governance
Financial Statements
19
FDM Group (Holdings) plc
Annual Report and Accounts 2022
20
Key Performance Indicators
We monitor a range of Key Performance Indicators
(“KPIs”) to identify trends in our operating and trading
performance. The Group aims to deliver an appropriate
level of profitability, maintain a robust balance sheet and
undertake strategic investment programmes.
The adjusted numbers in the KPI analysis remove the
impact of costs associated with the Performance Share
Plan, to provide a clear understanding of the underlying
trading performance.
Each KPI is linked to different aspects of FDM’s Business
Model, as illustrated below. The three components of
FDM’s Business Model are recruit, train and deploy.
The Business Model is shown on pages 14 to 15.
Financial KPIs
Revenue (£m)
+23%
Link to Business Model
Cash conversion (%)
-13%
Link to Business Model
Adjusted operating profit
1
(£m)
+10%
Link to Business Model
Adjusted basic earnings per share
1
(pence)
+12%
Link to Business Model
Cash flow generated from operations (£m)
-5%
Link to Business Model
Description
Revenue grew year-on-year by 23%
to £330m, in line with the growth in
headcount.
Description
Cash conversion was 108%, within
our normal parameters (in excess
of 90%). The decrease from the
prior year reflects changes in the
year-end working capital position.
Description
Adjusted operating profit increased
by 10%, reflecting the growth in
Consultant headcount and revenue
whilst absorbing increased costs
associated with record levels of
paid training, and investment in
our Academy, Recruitment and
Sales teams during the year.
Description
Adjusted basic earnings per share
increased by 12% to 37.3 pence,
reflecting the Group’s higher
adjusted operating profit for the year.
Description
Cash flow generated from
operations has decreased by 5%
reflecting a higher level of working
capital at the year-end.
Performance
330.0
267.4
267.7
2022
2021
2020
Performance
108.3
124.1
158.4
2022
2021
2020
Performance
52.2
47.3
42.7
2022
2021
2020
Performance
37.3
33.2
28.8
2022
2021
2020
Performance
49.7
52.1
66.1
2022
2021
2020
Deploy
Recruit
Train
Deploy
Recruit
Train
Deploy
Recruit
Train
Deploy
Recruit
Train
Deploy
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
21
Non-financial KPIs
1
The adjusted operating profit is calculated before Performance Share Plan expenses (including social security costs). Adjusted basic earnings per share are calculated
before the impact of Performance Share Plan expenses (including social security costs and associated deferred tax).
Consultants assigned to clients (week 52)
+22%
Link to Business Model
Consultant utilisation rate (%)
97.5%
Link to Business Model
Training completions
+32%
Link to Business Model
Scope 1, 2 and 3 greenhouse gas emissions per employee (tCO
2
e)
-2%
Link to Business Model
Description
The number of Consultants
assigned to clients increased by
22%, reflecting the significant
growth in client demand across
all our regions.
Description
Consultant utilisation rate of 97.5%,
in line with the prior year (97.3%)
and expectations, reflected a
return to our typical pre-pandemic
utilisation rate.
Description
3,179 Consultants completed
training in the year, the highest in
FDM’s history reflecting the ramp up
in recruitment to meet significant
client demand.
Description
The Group is growing through
sustainable and efficient means.
We are engaging with our suppliers
and where possible we are
switching to sourcing our Scope
2 electricity to be supplied from
renewable sources (see page 53).
Performance
4,905
4,033
3,580
2022
2021
2020
Performance
97.5
97.3
94.8
2022
2021
2020
Performance
3,179
2,410
1,341
2022
2021
2020
Performance
0.48
0.49
0.69
2022
2021
2020
Deploy
Deploy
Recruit
Train
Recruit
Train
Deploy
FDM Group (Holdings) plc
Annual Report and Accounts 2022
22
Financial Review
The Group
delivered a good
performance in
2022.
Revenue increased to £330.0 million, up 23% (2021: £267.4 million), adjusted
operating profit
1
increased by 10% to £52.2 million (2021: £47.3 million), with
adjusted basic earnings per share
1
up 12%, to 37.3 pence (2021: 33.2 pence).
We ended the year with a robust balance sheet, including cash balances of
£45.5 million (2021: £53.1 million), having converted 108% of our operating
profit into operating cash flow. We remain well positioned for future growth
with a proven and agile business model that allows us to respond rapidly and
effectively to market fluctuations.
Summary income statement
Year ending
31 December
2022
Year ending
31 December
2021
% change
Revenue
£330.0m
£267.4m
+23%
Adjusted operating profit
1
£52.2m
£47.3m
+10%
Operating profit
£45.8m
£42.0m
+9%
Adjusted profit before tax
1
£52.0m
£46.7m
+11%
Profit before tax
£45.7m
£41.4m
+10%
Adjusted basic EPS
1
37.3p
33.2p
+12%
Basic EPS
32.0p
29.1p
+10%
Overview
Revenue increased by £62.6 million to £330.0 million (2021: £267.4 million). On
a constant-currency basis
2
revenue increased by 19%, or £52.3 million, with £7.7
million of the £10.3 million exchange differences relating to the North American
operations. Consultants assigned to clients at week 52 of 2022 increased by
22%, totalling 4,905 (week 52 of 2021: 4,033). At week 52 of 2022 our Ex-Forces
Programme accounted for 211 Consultants deployed worldwide (week 52 of
2021: 196). Our Returners Programme had 220 Consultants deployed at week
52 of 2022 (week 52 of 2021: 156). The Consultant utilisation rate settled at
97.5% (2021: 97.3%).
An analysis of revenue and headcount by region is set out in the table below:
Year ending
31 December
2022
Revenue
£m
Year ending
31 December
2021
Revenue
£m
2022
Consultants
assigned to
clients
at week 52
3
2021
Consultants
assigned to
clients
at week 52
3
UK
139.6
121.8
1,958
1,806
North America
116.9
81.4
1,618
1,095
EMEA
19.7
25.0
318
252
APAC
53.8
39.2
1,011
880
330.0
267.4
4,905
4,033
1
Adjusted operating profit and adjusted profit before tax are
calculated before Performance Share Plan expenses (including social
security costs). Adjusted basic earnings per share are calculated
before the impact of Performance Share Plan expenses (including
social security costs and associated deferred tax).
2
The constant-currency basis is calculated by translating current year
and prior year reported amounts into comparable amounts using the
2022 average exchange rate for each currency. The presentation of
the constant-currency basis provides a better understanding of the
Group’s trading performance by removing the impact on revenue of
movements in foreign exchange.
3
Week 52 in 2022 commenced on 19 December 2022 (2021: week 52
commenced on 20 December 2021).
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
23
Adjusted Group operating profit
margin decreased to 15.8% (2021:
17.7%) with administrative expenses
increasing to £109.8 million (2021:
£84.7 million). The decrease in
adjusted operating margin is due
primarily to the costs associated
with record levels of paid training
in the period, investments in our
Train the Trainer programme, our
Sales Development Programme
and upgrades to a number of our IT
systems, and the impact of the first
full year of paid training costs for
the UK.
Adjusting items
The Group presents adjusted
results, in addition to the statutory
results, as the Directors consider
that they provide a useful indication
of underlying trading performance.
The adjusted results are stated
before Performance Share Plan
expenses including associated
taxes which totalled £6,356,000
(2021: £5,261,000). Details of the
Performance Share Plan are set
out in note 24 to the financial
statements. The Directors believe
that excluding these costs provides
a more meaningful comparison of
the trading performance. These
expenses are based on estimates
relating to a vesting which occurs up
to three years in advance and the
assumptions underpinning those
estimates can change from year
to year.
Net finance expense
The finance expense costs include
lease liability interest of £0.2 million
(2021: £0.6 million). The Group has
no debt.
Taxation
The Group’s total tax charge for the
year was £10.8 million, equivalent
to an effective tax rate of 23.5%, on
profit before tax of £45.7 million
(2021: effective tax rate of 23.2%
based on a tax charge of £9.6 million
and a profit before tax of £41.4
million). The effective tax rate in
2022 is higher than the underlying
UK tax rate of 19% primarily due to
Group profits earned in higher tax
jurisdictions. The effective tax rate
reflects the Group’s geographical
mix of profits and the impact of
items considered to be non-taxable
or non-deductible for tax purposes,
with the increase year-on-year
primarily due to changes in these
factors.
Earnings per share
Basic earnings per share increased
in the year to 32.0 pence (2021:
29.1 pence), whilst adjusted basic
earnings per share were 37.3 pence
(2021: 33.2 pence). Diluted earnings
per share were 31.8 pence (2021:
28.8 pence).
Dividend
During the year, the Group paid two
dividends totalling £38.2 million,
representing in aggregate 35.0 pence
per share.
At the AGM held on 24 May 2022,
a final dividend of 18.0 pence per
share for 2021 was approved by
shareholders and was paid on 10
June 2022. On 27 July 2022, an
interim dividend of 17.0 pence per
share for 2022 was declared and
was paid on 30 September 2022.
The Board has recommended a final
dividend of 19.0 pence per share,
subject to shareholder approval at the
2023 AGM, taking the total dividend
arising from the 2022 financial year
to 36.0 pence per share.
The Board has set a minimum
consistent cash buffer at a Group
level and will always consider the
ongoing needs for the funding of
organic growth across the business
and the distributable reserves
available to the Group when
considering dividend levels. As at
31 December 2022, the Company
had distributable reserves of £59.4
million. This statement does not
form part of the audited financial
statements and the distributable
reserves figure of £59.4 million is
therefore not audited by PwC or
otherwise.
Cash flow and Statement
of Financial Position
The Group’s cash balance decreased
to £45.5 million (2021: £53.1 million).
Cash conversion was 108.3% (2021:
124.1%) reflecting good working
capital management and is in
line with our normal parameters.
Dividends paid in the year totalled
£38.2 million (2021: £46.8 million,
including the deferred 2019 Final
Dividend of £16.3 million arising
from the pandemic). Net capital
expenditure was £1.2 million (2021:
£0.4 million) and tax paid was £13.7
million (2021: £10.6 million).
Mike McLaren
Chief Financial Officer
14 March 2023
FDM Group (Holdings) plc
Annual Report and Accounts 2022
24
Risk Management
Effective risk management is
critical to the delivery of the Group’s
strategic objectives and to secure
the business for the long term.
Approach to risk
The Board has overall responsibility
for ensuring risk is managed
effectively across the Group, with a
focus on evaluating the nature and
extent of the significant risks the
Board is willing to take in achieving
its strategic objectives – its “risk
appetite”. The Board controls 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.
Risk appetite
As above, “risk appetite” defines the
level and type of risk the Group is
able and willing to accept in order
to achieve its strategic objectives.
The Group’s risk appetite influences
operating decisions and is reflected
in the way risk is managed. The
Group Risk Appetite Statement
is reviewed annually by the Audit
Committee.
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. The
register details the Group’s risks,
the potential impact of each risk,
the likelihood of that risk occurring,
the strength of the mitigating
controls in place and how these
are evidenced. The Risk Register
also documents first, second and
third lines of defence or ‘sources of
assurance’. Input is obtained from
all areas of the business, including
support functions, as appropriate.
A member of the Executive Team is
assigned as the owner of each risk to
ensure an appropriate level of focus
and accountability to the Board.
The Board formally reviews the Risk
Register at the half year and at the
year end, following a detailed review
by the Audit Committee as part of
their assessment of the effectiveness
of the risk management process.
The risk management process is
reviewed regularly by our Internal
Audit function. The latest review
concluded that our processes are
suitable for a business of our size
and complexity. All Internal Audit
reviews are risk-based, and each
review is designed to consider
the key risks recorded in the Risk
Register.
The current Risk Register includes
31 risks categorised as strategic,
operational, compliance or financial
risks, ten of which are considered to
be the Group’s principal risks. The
Risk Register was formally updated
in early 2023. In March 2023, the
Audit Committee and the Board
carried out a robust and formal
assessment of the Group’s emerging
and principal risks as set out in the
updated Risk Register.
Principal risks
Our principal risks and uncertainties,
as set out on pages 26 to 30, have
been assessed in accordance with
the methodology outlined above.
We have made one key change to
the presentation of our risks in this
report. Previously we identified
and reported two separate risks
relating to balancing the supply and
demand of our Consultant resource,
one relating to the risk of having
excess Consultant resource and the
other relating to the risk of having
insufficient Consultant resource.
We have in place well established
and consistent processes and
controls around the management
of the supply and demand of our
Consultant resource. These controls
and processes mitigate the risk
associated with both excess and
insufficient resource and as a result
we feel it is more appropriate and
relevant to classify balancing supply
and demand of Consultant resource
as one risk.
In reviewing the profile of our
principal risks, we considered the
following external factors:
•
Economic uncertainty:
The
global economic outlook has
deteriorated over recent times
with the occurrence of high
levels of inflation, rising energy
costs and increases in interest
rates in several of our operating
regions. This has led to increased
concerns that a global recession
is likely, exacerbated by the
Russian invasion of Ukraine,
although the Group has no
operational presence in Ukraine
or in Russia, and no Consultants
placed with clients in either of
those countries. ‘Changes in the
macro-economic environment’ is
our highest rated risk. As a result,
we have not amended the profile
of this risk (risk 1 below). The
Group benefits from a robust
balance sheet and significant
cash balances.
•
Talent:
Following a reduction in
headcount growth as a result of
the COVID-19 pandemic, 2022
saw an increase in competition
for talent and potential
candidates looking for increased
flexibility when considering roles.
Recently we have experienced
notable increases in the number
of applications. In addition, we
can offer some flexibility to our
candidates with the evolution of
our hybrid training model and
some of our clients offer flexible
working arrangements. We have
therefore not increased the risk
profile of this risk (risk 5 below).
•
Cybersecurity:
The threat
of a cyber-attack continues
to increase, in terms of
sophistication, frequency of
attempts, scale and potential
impact. We increased the risk
profile of this risk in the prior
year and believe that the current
risk profile is appropriate
as we continue to focus on
strengthening our cybersecurity
and information-safeguarding
capabilities.
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
25
Principal risks
continued
The following diagram shows the net risk score after taking account of controls and mitigations:
1
Changes in the macro-economic environment
2
Concentration exposure in the financial services sector
3
Balancing supply and demand of
Consultant resource
4
Recruitment and development of highly skilled Consultants
5
Talent development and succession planning
6
Development of new service offerings
7
Business interruption –
caused by successful cyberattack
8
Business interruption –
caused by natural disaster or other similar events
9
Reputation
10
International regulatory non-compliance
High
Almost certain
Very unlikely
Impact
Likelihood
Low
9
7
8
1
4
2
3
5
6
10
The alignment to our strategic
objectives, as set out on page 10,
indicates those aspects of the
business strategy that would be
impacted by each risk, were it
to materialise.
Emerging risks
Our risks continue to evolve and
an awareness of emerging risks
and their potential implications is
important in driving our strategic
planning and decision-making. We
have not identified any emerging
risks not already covered in the
principal risks section above, or
other areas of focus considered
below.
Other risk areas of focus
Climate change
During 2022, the Board engaged
external consultancy CEN-ESG
to assist in the identification
and documentation of climate-
related risks and opportunities. A
management level Climate change
Action Group (“CAG”) has been
established to assess and manage
the Group’s climate-related risks
and opportunities on an ongoing
basis. As detailed on pages 47 to
51, the Group’s climate-change risk
is considered to be low. As a result,
climate change is not considered to
be one of the Group’s principal risks.
We are committed to reducing our
carbon footprint in all appropriate
areas whilst building carbon
efficiencies into our ways of working,
and to:
•
reduce our absolute Scope 1 and
2 greenhouse gas emissions by
50% by 2030 from a 2020 base
year; and
•
reduce Scope 3 greenhouse gas
emissions by 62% per employee
within the same timeframe.
In June 2022, SBTi validated that
these targets conform with the SBTi
Criteria and Recommendations
(version 4.2). The SBTi’s Target
Validation Team has determined
that our targets are in line with
seeking to keep a rise in global
temperature to below 1.5°C.
We are aware that our clients in
some sectors could be adversely
affected by climate change and
there is a risk that this affects
our own business indirectly as
clients’ spending decisions are
constrained by climate-change
challenges. We look to mitigate
this risk by diversifying the sectors
and geographies in which we
operate. We also believe that there
is opportunity for the Group as we
train and deploy Consultants with
the skills to help our clients find
and apply the optimal technical and
business solutions to the challenges
that climate change brings. For
example, some of our clients in
the energy sector are deploying
Consultants on projects to help
them to move towards sourcing
energy from renewable sources.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
26
Risk Management
continued
Risk and impact
Mitigation
Movement in the year
1.
Changes in the macro-economic
environment
➔
➔
No change
A downturn globally or in the
territories in which FDM operates,
including from geopolitical
uncertainties, could curtail demand
and the ability of the Group to
deploy its Consultant resource,
resulting in an adverse impact on
revenue, cost and operating profit;
a shrinking customer base; and a
negative impact on share price.
Risk owner: Chief Financial
Officer
Alignment to strategic objectives:
Whilst external factors such as
macro-economic risks are outside
the Group’s control, the Group
has effective measures in place
to respond to changes, including
robust planning, budgeting and
forecasting and resource allocation
procedures. An updated three-year
plan was approved by the Board in
July 2022.
The flexible nature of the Group’s
business model enables it to
manage resource availability
allowing it to control its cost base in
the medium term.
Notwithstanding the impact of risk
2 below, the Group is focussed on
diversifying its customer base both
by sector and by geography.
The Group’s current financial
position includes a robust balance
sheet with no debt, and significant
cash balances.
The global economic outlook
has deteriorated with the high
levels of inflation, rising energy
costs and interest rate increases
leading to concerns that a global
recession may occur. The conflict
in Ukraine continues to exacerbate
the broader economic situation.
As a result, the Board considers
it appropriate to maintain a high
rating for this risk. Whilst certain
scenarios are outside the Group’s
control, the Board believes that
FDM’s business model is flexible,
and the agile resource represented
by our Consultants remains
attractive to clients during times
of economic, political and social
uncertainty. There is therefore the
potential for an increase in demand
for our services during such times.
Whilst the Board will continue to
review the measures in place to
identify and react to changes in
macro-economic conditions, these
factors, together with FDM’s strong
cash and financial position, give
the Board confidence that FDM can
continue to respond appropriately
to ameliorate the effect of any
adverse economic conditions that
may arise.
2.
Concentration exposure in
the financial services sector
➔
➔
No change
The majority of the Group’s
revenue is generated from the
financial services sector. A crisis in
the financial services sector could
reduce revenue significantly and
have a negative impact on the
majority of the Group’s KPIs.
Risk owner: Chief Commercial
Officer
Alignment to strategic objectives:
As above, the Group is focussed on
growing its customer base both by
sector and by geography as well as
diversifying the services it offers to
clients.
Diversification into new client
sectors forms an element of bonus
targets for Directors and staff.
Further details of Directors’ bonus
targets are in the Remuneration
Report on pages 94 to 95.
Although the proportion of the
Group’s revenue generated from
the financial services sector has
remained broadly similar to the
prior year, the percentage of new
client wins outside of the financial
services sector during the year was
59%.
The Group continues to broaden
the spread of its service offerings
to financial services clients to cover
operational, compliance and IT
services, in addition to increasing its
presence in other sectors.
FDM’s four key strategic objectives
Attract, train and develop high-calibre Consultants
Invest in leading-edge training capabilities
Grow and diversify our client base
Expand our geographic presence through
sustainable and efficient means
FDM’s four key strategic objectives are explained in more detail on page 10.
Strategic risks
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
27
Risk and impact
Mitigation
Movement in the year
3.
Balancing supply and demand
of Consultant resource
➔
➔
New (merging of two risks
from the prior year)
An inability to appropriately
manage the supply and demand
of Consultant resource, resulting
in either excess or insufficient
Consultant resource would result
in lost revenue, increased costs,
eroded customer confidence and
an adverse reputational impact.
Risk owner: Chief Commercial
Officer
Alignment to strategic objectives:
The flexibility of the Group’s
business model is a key mitigation
to this risk. The Group is able to
flex the number of Consultants it
recruits relatively quickly depending
on the Group’s near-term
resourcing requirements.
Resource management meetings
occur weekly to ensure supply
and demand issues are identified
and resolved, and investments in
IT enable us to improve forward
visibility of supply and demand.
The recruitment team maintains
strong links to universities and
other recruitment channels.
An effective social media
recruitment strategy is in place
to maximise applications when
required.
The business operates to maximise
utilisation and optimise flow
through of trainees within the
Academies.
The Ex-Forces, Returners and
Apprentice programmes increase
access to a diverse talent pool.
This is the first year we have reported
this risk as a single risk. Previously
we reported two separate risks,
one relating to the risk of having
excess Consultant resource and the
other relating to the risk of having
insufficient Consultant resource.
4.
Recruitment and development
of highly skilled Consultants
➔
➔
No change
A failure to provide high-quality
Consultants to clients could result in
a loss of customers and damage to
the Group’s reputation.
Risk owner: Chief Commercial
Officer and Chief Operating
Officer
Alignment to strategic objectives:
The Group regularly reviews and
benchmarks the remuneration
packages and incentives it offers to
candidates.
Strong relationships exist in each of
the recruitment channels used by
the Group.
Continuous development
programmes are in place for
Consultants to grow and enhance
their skills.
The accreditation of many of our
training programmes provides
increased assurance to potential
candidates that the content that
FDM delivers meets industry
standards for job readiness.
The Group actively promotes
Women in IT initiatives to attract,
develop and retain Consultant
talent.
The Group promotes its reputation
in the marketplace as a leading
employer.
A combination of the following
factors indicates this risk is being
managed effectively:
•
a record number of training
completions occurred during
2022;
•
recruitment levels of Consultants
are monitored and reviewed by
the Board;
•
the level of global applications
has increased recently; and
•
there is a broad base of talent
from which to recruit through the
Graduate, Ex-Forces, Apprentice
and Returners programmes.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
28
Risk Management
continued
Risk and impact
Mitigation
Movement in the year
5.
Talent development and
succession planning
➔
➔
No change
The ability of the business to
retain and develop key employees,
thereby enabling the business to
expand.
Risk owner: All members of the
Executive Team
Alignment to strategic objectives:
The Group’s Remuneration Policy
states that the overall remuneration
package should be sufficiently
competitive to attract, retain and
motivate Executive Directors.
The remuneration packages of
all employees are reviewed and
benchmarked regularly to ensure
they remain competitive.
The annual development review
includes the identification of
training requirements, which are
fulfilled within the following 12
months.
The Nomination Committee
considers succession matters as a
regular agenda item.
Talent development and succession
planning includes mentoring (some
of which is provided by our Non-
Executive Directors) and coaching
for some key senior managers
around the Group.
The Group’s remuneration packages
remain competitive and, for senior
employees, include long-term share
options to encourage retention.
The Group operates an attractive
Buy As You Earn share plan,
available to all employees, to
reward and encourage talent
retention.
6.
Development of new
service offerings
➔
➔
No change
An inability to develop new service
offerings and sources of revenue
could result in a loss of customers
and market share.
Risk owner: Chief Commercial
Officer
Alignment to strategic objectives:
FDM’s flexible training model
develops and maintains course
material relevant to customers’
evolving needs.
FDM’s training is designed to
provide high-quality content either
face-to-face or remotely.
The Group has a range of touch
points with customers and alumni,
enabling us to keep up to date with
developments in the marketplace
and to identify customer needs.
The Group is responsive to its
customers’ needs which it identifies
through regular contact and
feedback.
New offerings are considered and
developed and are detailed on
page 11.
The Executive Directors are actively
involved in key client relationships.
Operational risks
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
29
Risk and impact
Mitigation
Movement in the year
7.
Business interruption – caused
by cyberattack
➔
➔
No change
Major IT system integrity issues or
data security issues, either due to
internal or external factors, could
result in actual financial loss of
funds; potential loss of sensitive
data with risk of litigation; loss of
customer confidence; and damage
to reputation.
Risk owner: Chief Information
Officer
Alignment to strategic objectives:
The Group’s IT Security team has
significant experience and industry
certifications and includes a CISO
industry-certified expert.
Advance Threat Protection (“ATP”)
solutions are in place to protect
against malware and cyberattacks,
as well as a Global Standard for
Technology Security.
The Group’s IT security policy
complies with ISO 27001.
Staff are regularly made aware of
the risk of cyberattacks and the
appropriate actions necessary to
mitigate the risk.
IT policy and security matters are
regular Board and Audit Committee
agenda items.
The Group’s IT security controls
are regularly reviewed by Internal
Audit – the last detailed review
occurred during 2020 with a follow
up performed during 2021.
Whilst it is recognised that the
global threat of cyberattack
is increasing, FDM continues
to bolster its cybersecurity
and information safeguarding
capabilities.
8.
B
usiness interruption – caused
by natural disaster or other
similar events
➔
➔
No change
A natural disaster, epidemic or
similar health-related event, such as
COVID-19, which could potentially
result in the closure of one or more
of our operating locations, the
temporary closing down of clients,
or the prevention of staff travelling
to their place of work in regions
impacted by such events, could lead
to disruption and a loss of revenue.
Risk owner: Chief Operating
Officer
Alignment to strategic objectives:
Although the occurrence of a
natural disaster, epidemic or similar
health-related event is beyond the
Group’s control, FDM has a Business
Continuity Plan (“BCP”) which
includes procedures to be followed
in the event of a major issue.
The Group reviews its BCP regularly.
The Group has demonstrated
the resilience of its BCP plan
through its ability to respond to
COVID-19, in terms of enabling its
entire workforce to work remotely
effectively and efficiently. The status
of this risk was reduced in 2021,
and has not changed in 2022.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
30
Risk Management
continued
Risk and impact
Mitigation
Movement in the year
9.
Reputation
➔
➔
No change
Reputation is key to the Group
maintaining and growing its
business. Substandard service or
the actions of Consultants or staff
could have an adverse impact
on the Group’s reputation. A
failure to manage any subsequent
crisis through a lack of reactive
procedures could also exacerbate
potential damage. Several of
the Group’s other principal risks
could also involve an element of
reputational risk if they were to
materialise (for example, Risk 4 and
Risk 7). Any impact could be far-
reaching: failure to meet financial
targets; litigation; loss of key clients;
and loss of key staff.
Risk owner: Chief Operating
Officer
Alignment to strategic objectives:
Robust recruitment and training
procedures are in place which
reduce the risk of employing
persons whose actions could result
in a negative impact on FDM’s
reputation.
FDM has a zero-tolerance policy
with respect to any inappropriate
behaviour by an individual
employed by the Group or acting
on behalf of the Group.
The Group focusses on strong
relationship management
and communication with all
stakeholders.
The Group continues to invest in
staff development, quality systems
and processes to mitigate the risk of
operational failure.
The Board regularly consults with its
PR advisors.
The Group has a dedicated
Head of Investor Relations to
assist in the management of the
relationship with shareholders and
stakeholders.
Compliance risk
Risk and impact
Mitigation
Movement in the year
10.
International regulatory
non-compliance
➔
➔
No change
Failure to comply with international
tax, legal, employment and other
business regulations could result
in significant costs, fines and/ or
revocation of business licences.
Risk owner: Chief Financial
Officer
Alignment to strategic objectives:
n/a
The Group has robust recruitment
and training procedures, which
ensure the employment of
appropriately skilled personnel
in areas where compliance with
legislation is required.
The Group seeks appropriate advice
and engages external advisors as
necessary, particularly in overseas
locations, and actively manages
those relationships. The Group
regularly reviews and updates
contractual documentation, policies
and procedures, aiming for ongoing
improvement of the approach to
management of business risk.
The Group ensures that staff
undertake ongoing training and
professional studies where required.
The Group continues to invest in
appropriately skilled personnel and
will outsource where appropriate
in areas where compliance and
expertise are required.
The Group’s in-house Legal and
People Teams are augmented as
appropriate by external advisors
with specialist experience and
knowledge of the countries in which
the Group operates.
Operational risks
continued
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
31
Viability statement
The Directors have assessed the prospects of the Group in accordance with Provision 31 of the 2018 Code.
The period selected by the Board for its assessment is three years. This period was chosen for the following reasons:
the core of FDM’s business is the Consultant model, and three years represents approximately the average life cycle
of Consultants’ engagement with FDM and the Group’s normal investment cycle in its most important asset. Further,
the Group’s strategic plan covers a period of three years and is underpinned by robust financial budgets, forecasts
and a three-year financial plan.
In making its assessment, the Board undertook a review that incorporated the Group’s current financial position and
prospects, the resilience displayed during the COVID-19 pandemic, the longer-term sustainability of the business
model, the Group’s cash flow requirements and other key financial assumptions over the three-year period and
carried out a sensitivity analysis of certain of those assumptions as appropriate. The sensitivity analysis included
consideration of the loss of revenue equivalent to 750 Consultants, which equates to loss of one of the Group’s
largest customers for the three-year viability period. After applying the sensitivities, our modelling showed that the
Group would still maintain a positive cash balance while maintaining forecast dividends during the viability period,
without utilising any third-party debt.
In assessing its viability, the Board has considered the principal risks affecting the Group. Together with the risk
of climate change, which was assessed as having a low net risk on the business, the Board evaluated how these
risks might impact the Group’s future performance, solvency and liquidity. The sensitivity analysis noted above
also considered the impact of certain principal risks. Individually, and when considered together, no reasonable
combination of sensitivities could result in the Directors altering their view of the Group’s viability.
The Group’s financial position is robust with cash balances of £45.5 million at the end of the year and no external 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.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
32
Corporate Responsibility
Corporate Responsibility contents
Page
People and communities
33
UN Sustainable Development Goals
44
Climate change:
Task Force on Climate-related Financial Disclosures (“TCFD”) statement
45
Governance and risk
46
Environmental performance
52
Statement by the Directors in performance of their statutory duties under s.172(1) Companies Act 2006
56
Non-financial and sustainability information statement
57
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
33
People and communities
The long-term success of
the business continues to be
achieved through an inclusive
and collaborative approach
with consideration to our key
stakeholders; our employees, clients,
investors, and the communities in
which we operate. Throughout 2022,
we continued to promote diversity,
equity and inclusion in the workplace,
with the aim of contributing to the
success of our business and the
achievements of our people.
Our values, outlined on page 4,
encourage our employees to be
themselves at work, and to play a
part in creating and fostering an
inclusive and open workplace where
everyone can thrive. FDM promotes
equal opportunity, diversity and
inclusion in the workplace to enable
equity. We know the positive impact
that a diverse workforce has had
on our business, and this is an
important factor which makes our
Consultant model so attractive to
many of our clients.
Our people
FDM identifies, recruits and develops
talented individuals. On the
following pages we publish data on
certain characteristics shared by our
people. However, we understand
that the reality is more complex,
with intersectionality, overlap and
differences within each group.
We recognise that each employee
has a unique identity, and that
our people’s experience can be
more nuanced than it is possible
to express in a matrix of data. We
celebrate these differences. It is
important that we create places
where our employees feel safe, have
the opportunity to thrive and are
encouraged to be their authentic
selves at work, as this promotes
personal wellbeing, psychological
safety and employee engagement.
Consultant Experience
In 2022, we brought together several
teams whose focus has been on
supporting our Consultants, to
create a Consultant Experience
department. The purpose of the
department is to deliver a desirable,
inclusive and engaging experience
focused on career enhancement and
community. A new career framework
is being developed to show how
tailored learning plans can align to
overall career goals, which can be
achieved through the opportunities
FDM has to offer.
Consultants have support and
career guidance available to them
from Consultant Experience Partners
while working on assignment with
our clients. They act as career
coaches for our Consultants to
empower them to explore their
career goals, understand how they
can achieve them and define what
success looks like. They also use
their expertise to work with client
line managers and Consultants to
ensure a positive assignment.
Together with Sales Account
Managers and the respective
client line manager, the Consultant
Success Team arranges formal
touchpoints with Consultants
to receive feedback and gauge
sentiment. The team enables us
to take a data-driven approach to
continuously improve the Consultant
experience. The touchpoints are an
effective support mechanism, which,
along with the social events that
the team runs for Consultants, help
build relationships.
Our Consultant Peer Support
Programme introduces new
Consultants to those already
working on assignment, to help
onboard and settle them into their
new role. We hold regular face-to-
face events at client sites and off-site
events to strengthen connections
between peers.
At the core of our Consultant
Experience activities, we take a
skills-based approach to careers
and incorporate inclusive design
to assess and ensure our practices
are equitable. With the diverse
backgrounds of our Consultants,
focussing on skills over qualifications
or job titles means people have
the flexibility to work across
disciplines, adapt to new roles
and have equal opportunity to
progress. We maintain the integrity
of this approach by identifying
areas that have the potential to be
prone to bias, use data to produce
actionable insight, adjust practices
and continue to track Consultant
journeys at key decision-making
points in the employee life cycle.
We have a significant alumni
network and whilst we have always
remained connected with our
alumni, the Consultant Experience
department, in collaboration
with the Sales team, will increase
the engagement with those who
have come through our various
programmes over the years to
continue to strengthen our alumni
network. Through continuing to
build and engage with our extensive
alumni community, our aim is
to continually grow an effective
ecosystem to create learning
and development, professional
networking and increased career
opportunities for our past, present
and future Consultants.
Wellbeing Programme
Our global Employee Assistance
Programme (‘EAP’) provides all
employees with access to a 24/7
confidential helpline for support,
guidance and resources, and
structured counselling. We have
also hosted drop-in sessions,
informational talks and listening
circles to help remove the stigma
around mental ill health. Employees
receive support from trained Mental
Health First Aiders throughout the
FDM community.
Employee engagement
Our Employee Networks provide
an inclusive community, a sense of
belonging and a place for discussion
and learning. They were created by
our people for our people, providing
an opportunity for individuals to
share their experiences and support
each other. They also enable
valuable and productive consultation
with the business on process, policy
and learning. During the year each
Network has held various events and
Yammer campaigns, including for
example, LGBT History Month; Trans
Day of Visibility; Deaf Awareness
Week; Hispanic Heritage Month; and
Neurodiversity Week.
We continue to monitor employee
engagement through Group-wide
surveys and listening sessions
with Jacqueline de Rojas, our Non-
Executive Director responsible for
‘FDM Voices,’ our programme to help
ensure that voices of our employees
are heard at Board Level. Her ongoing
engagement with the Employee
networks has sparked inclusive
FDM Group (Holdings) plc
Annual Report and Accounts 2022
34
This network provides a safe and
respectful space for the increasing
number of caregivers within
FDM. Members raise awareness,
understanding and offer practical
help and support.
A platform that encourages
employees of all beliefs and religions
to support each other and share
experiences.
Employee networks
Our Employee Networks are the voice of our employees and play
a vital role in fostering an empathetic and inclusive culture.
Leading, educating and supporting diversity,
this network provides a platform to connect
and build a community for Black, Asian and
Ethnic Minorities within FDM.
Through education and representation,
the network supports all LGBTQIA+
employees by creating a space that
encourages authenticity within the
workplace.
Aiming to unify, empower and celebrate
gender diversity at FDM, the network
provides employees with a voice through
sharing experiences, challenges and ideas.
Supporting employees with visible
and non-visible disabilities, Unique
aims to create a place where people
of different abilities feel welcome
and included.
Corporate Responsibility
continued
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
35
Ethnicity
% of those that chose to disclose identify as:
UK
Consultants
2022
%
UK Internal
staff
2022
%
Arab or Arab British
2%
0%
Asian or Asian British
28%
16%
Black or Black British
13%
8%
Mixed or Mixed British
3%
4%
White or White British
46%
65%
Other
4%
4%
Prefer not to say
4%
3%
100%
100%
Ethnicity
% of those that chose to disclose identify as:
US
Consultants
2022
%
US Internal
staff
2022
%
Asian
25%
9%
Black
15%
15%
Hispanic or Latino
12%
12%
White
33%
54%
Two or more races
7%
7%
Other
0%
0%
Prefer not to say
8%
3%
100%
100%
Sexual orientation
Do you identify as LGBTQIA+?
% of those that chose to disclose:
UK
Consultants
2022
%
UK Internal
staff
2022
%
Yes
5%
7%
No
86%
85%
Prefer not to say
9%
8%
100%
100%
Religion
% of those that chose to disclose identify with:
UK
Consultants
2022
%
UK
Internal staff
2022
%
Buddhism
1%
1%
Christianity – Evangelical/Protestant
8%
9%
Christianity – Roman Catholic
9%
9%
Christianity – Other
10%
13%
Hinduism
8%
4%
Islam
16%
9%
Judaism
0%
0%
Sikhism
2%
1%
Another religion
2%
3%
No religion
35%
42%
Prefer not to say
9%
9%
100%
100%
nudges within the organisation. In 2022, working with Inpulse, we carried out a survey to give all our employees an
opportunity to express their views on a range of subjects to enable us to identify areas for improvement. The survey
covered themes such as: employee sentiment and advocacy; career and personal development; organisational
and personal commitment; workload; line manager support; perception of alignment of values; and the subjects of
diversity, equity and inclusion. The survey has provided some insights into our strengths as well as those that are
important to our staff for us to target for improvement.
Our social collaboration platform Yammer enables our employees to keep up to date with news and upcoming events
whilst communicating with fellow FDM employees across the globe. This internal communication tool allows us to stay
connected with our Consultants when they are on a client assignment, helping to foster a sense of belonging with FDM.
Diversity, equity and inclusion
Our purpose is to help people forge long-term careers whilst driving diversity, equity and inclusion. We are proactive
and enthusiastic promoters of diversity, social mobility and inclusion within our workplaces. FDM’s inclusive
Programmes aim to ensure that everyone begins their professional life on an equal footing. Our assessment
processes are designed to spot a range of qualities including candidates’ potential. We encourage applications from
candidates with non-STEM backgrounds. In 2022, we enhanced the assessment process by introducing tools to assess
behaviours and aptitudes of applicants. These tools provide us with guidance as to whether candidates have the
behaviours required for success on our programme, their aptitude in processing information, responding in a logical
manner, and the required numerical literacy to enable them to do well in our training. The guidance provided by
these assessments helps us in the final strength-based interview stage of our selection process.
We value the fact that our colleagues come from a wide range of backgrounds, and we look to be representative of
the communities and geographies in which we operate. By building a diverse and inclusive workforce, we broaden
the range of skills, expertise and perspectives contributing to the success of our business, enhancing innovation and
growth, and making our business more robust and sustainable.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
36
Corporate Responsibility
continued
Our analysis is published where sufficient data is available. It includes the following four groups of respondents,
together with the response rate for each group: UK Consultants (94% response rate); US Consultants (100% response
rate); UK internal staff (89% response rate); and US internal staff (98% response rate). We are working to obtain
data for other groups around the business. By monitoring characteristics we can assess how the business and our
recruitment policies are performing.
Supporting social mobility
We are proud to have been ranked 48th in the Social Mobility Foundation’s Employer Index for 2022. The index
recognises the UK employers who have taken the most action on social mobility in the workplace, to identify, access
and progress talent from all backgrounds. We strive to support people from low opportunity communities, promoting
equal opportunities for career success regardless of socio-economic demographic.
We have furthered our ongoing relationship with ‘The Cornerstone’ network through our involvement with ‘Future
Goals’ Enterprise Adviser Programme. This is a network of business volunteers connected to secondary schools
and colleges to prepare young people for the world of work. Our collaboration with ‘The Cornerstone’ will forge
stronger links between employers and education, creating opportunities for FDM to access new talent and shape the
Company’s future workforce.
We will also be supporting the Apprenticeships and Technical Education Programme (‘ATEP’) by working closely with
students from local secondary schools and colleges with the aim of increasing knowledge and giving experience of
apprenticeship opportunities as well as the application process.
Apprenticeship Programme
Our apprentices have the opportunity to gain degree-level qualifications whilst developing the skills required to
succeed in key IT roles. We take school leavers from a wide range of backgrounds through to achieving a university
degree, all funded by FDM.
UK Apprenticeship Programme
In 2020, FDM added an Apprenticeship Programme to its business model operating from our Leeds centre.
The programme aims to deliver a new, highly skilled technical talent pipeline while creating opportunities for
a career in technology for anyone regardless of background. Driven by a desire to help increase access to, and
participation in, Higher Education the programme aims to represent the diversity in society and include students
from under-represented groups.
The three-year, fully-salaried programme at levels 4-6, combines on-the-job learning alongside a BSc degree in
Digital and Technology Solutions via Sheffield Hallam University, with FDM paying the fees and accommodation.
In the UK, the programme has grown to more than 30 apprentices and is expanding its geographical reach by
partnering with university training providers beyond Yorkshire including London South Bank University and
Queen Mary University with plans to expand further as clients start to partner with us.
By mirroring our existing programmes and partnering with clients to provide work placements, our objective is
to expand talent pipelines of young people into business to bridge the digital skills gap; upskill individuals in new
technologies who wouldn’t have the opportunity to attend university in the traditional way and reinforce FDM’s
core values around diversity, equity and social inclusion.
67% of our UK apprentices are from an ethnic minority background and 36% are first in their family to go to
university. The programme also aims to increase participation of females in technology and is partnering with
all-female schools, such as Batley Girls High, to help students understand what a career in technology could look
like and give them the confidence to apply.
Universities are selected to ensure that the curriculum fits with employer needs and taking account of
location to appeal to local students in inner-city areas from the right demographic. Each apprentice receives
an employer-appointed mentor and is given a minimum of one day per week of off-the-job training time for
university study as well as exposure to specific employment experiences in order to cover the requirements of
the degree curriculum and assessment.
In Australia in 2022, we worked with a leading professional services firm to launch its inaugural Technology
Traineeship. This involved ten high school graduates from Sydney, joining a three-year Technology Traineeship
programme to launch their careers in technology as an alternative career pathway to university. Our Technology
Traineeship programme offers each trainee a mixture of FDM’s bespoke best-in-class training, followed by rotations
in key technology business units within a leading professional services firm. The trainees work on real live technology
engagements, while gaining micro-credentials and New South Wales state certified training qualifications.
People and communities
continued
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
37
6%
57%
9%
17%
2%
9%
3%
7%
12%
10%
8%
60%
7%
38%
55%
10%
36%
54%
During the course of the Technology Traineeship, each trainee is supported with buddies and FDM’s support network.
The Technology Traineeship has proved very successful in 2022 and FDM is currently recruiting for a new cohort of
high school graduates for its 2023 intake.
We aim to tackle inequality through partnering with schools in social mobility cold spots, encouraging enthusiastic
pupils to pursue a career in tech.
FDM Tech Talks
Over Summer 2022 we
held a series of online
tech skills workshops
and career insights.
Our recruitment processes are reviewed regularly and designed to be as inclusive as possible. For example:
•
our opportunities are available to everyone who can show us that they have the aptitude to thrive on our
programme and have the attitude that our clients are looking for;
•
we use strength-based interview questions throughout the process ensuring candidates are not assessed on
previous experience or social capital; and
•
all staff involved in interviewing applicants undergo training to raise awareness of the potential impact of
unconscious bias and to mitigate this in the assessment process.
School type attended
UK Consultants 2022
School type attended
UK internal staff 2022
First in family to attend university
UK Consultants 2022
First in family to attend university
UK internal staff 2022
State: Non-Grammar
State: Grammar
Private
Other
Outside the UK
Prefer not to say
Yes
No
Prefer not to say
FDM Group (Holdings) plc
Annual Report and Accounts 2022
38
Corporate Responsibility
continued
People and communities
continued
Gender equality
We have been a signatory to the United Nations Women’s Empowerment Principles (“UNWEP”) since 2013 and have
been supporting the annual FDM Everywoman in Technology Awards, recognising and celebrating the achievements
of women in the IT industry, for ten years. These awards provide opportunities for candidates at all stages of their
careers and celebrate the tech industry’s most talented women.
We recognise the achievements of female FDM Consultants every week with Women in Tech Wednesdays. This is a
testament to the number of talented Consultants that deliver positive outcomes for our clients. We also leverage our
social channels to share their success, shining a spotlight on our people.
#SheLivesTech:
Inspiring the next generation of women in tech
We held a series of events as part of our She Lives Tech initiative to inspire the
careers of our female FDM Consultants working in the tech sector. We are planning
to expand this series in 2023.
In February 2023, FTSE Women Leaders ranked FDM 12th in their ‘FTSE 250 Rankings
2022 Women on Boards and in Leadership’ and we achieved the highest position
amongst participants in the Industrial Goods and Services sector category for the
level of gender diversity in our senior management team.
FTSE Women Leaders (previously the Hampton-Alexander Review) is the UK’s independent, voluntary and business-
led initiative supported by the UK government, aimed at increasing the representation of women on FTSE 350 Boards
and in their Leadership teams. We are proud to be one of the 143 companies which the FTSE Women Leaders
identified as having met the target to have women make up at least 33% of Board members. With this in mind, we
monitor our demographic data regularly to help inform action plans and areas on which to focus, from attraction and
recruitment right through to progression and retention.
The table below shows the gender split at different levels within the Group as at 31 December 2022.
As at 31 December 2022
Number of
males
Number of
females
On the Board
6
3
Within senior management (Executive Team)
4
1
Within senior management team and their direct reports
19
20
All employees
4,990
2,233
Included in the above global statistics are the following legal gender metrics (as at 31 December 2022):
•
UK Consultants: 29% female, 71% male
•
UK internal employees: 44% female, 56% male
We recognise that the above gender information is binary and that our employees have their own gender identity.
Our UK employees identify as follows (as at 31 December 2022):
•
UK Consultants: 28% female; 69% male; below 0.5% identify as either non-binary or transgender or other; and
2.5% prefer not to say.
•
UK internal staff: 43% female; 53.7% male; below 0.5% identify as non-binary; and 3% prefer not to say.
31% of our worldwide employees are female. Our UK mean gender pay gap reported in 2022 was -4.0% (2021: 0.5%),
and our median gender pay gap for the same period was -4.3% (2021: -9.6%) meaning that our median female
employee is paid more than our median male employee. These figures are significantly better than average for the
UK where the average pay gap reported for full-time employees was +8.3% (Office for National Statistics - Annual
Survey of Hours and Earnings 2022). We monitor these results and keep our policies under review.
Strategic Report
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Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
39
Accreditation
Following on from our success in 2021, FDM’s Tech Ops (Technical Operations) training programme was
accredited in April 2022. This took the total to eight graduate training programmes accredited at Tech Industry
Gold Foundation level.
At the operational level, all programmes have been rolled out across our UK and EMEA Academies. Our New
York Academy ran an accredited Software Development programme for the first time, marking the entry of FDM
accredited training into North America. In total 653 graduates completed accredited training in 2022 across the
eight available programmes.
Tech Industry Gold Certified Practitioner Programme
We have assisted TechSkills in defining a separate credential to be awarded to FDM Consultants who have
completed most or all of their initial two years assigned to clients, practising and applying what they have
learned in their initial training in a reflective way on-site. This credential is known as “Certified Practitioner”.
Consultants do not receive their awards until the end of their initial two years with FDM, at which point there is
a rigorous assessment process. A pilot programme with a small number of Consultants is in progress prior to
rolling out this important credential at scale.
Flexible Training Programmes
We have developed with TechSkills a way to accredit Tech Industry Gold Flexible Training Programmes for
training pathways that have wider-ranging learning outcomes than the first eight graduate programmes already
accredited. Additional skills, over and above the core skills, may then be defined by FDM to meet specific
employer requirements. This would ensure, for example, that trainees on high-volume bespoke programmes
can receive Tech Industry Gold standard recognition for their achievements.
Returners Programme and Ex-Forces Advanced Course
Consultants from these programmes differ from our graduate intake in many ways, including:
•
that they come from various mid-career positions;
•
that at the other end, they go into a wide variety of roles, i.e. no single discipline on the Software Development
Life cycle; and
•
much of the training they receive is focussed around refreshing previous knowledge and skills, as well as
building confidence to apply these and new knowledge and skills in a new working environment.
In 2023, we are expecting to have our Returners programme and Ex-Forces Advanced Course (“EFAC”) accredited
as Flexible Training Programmes, allowing us to award successful Consultants credentials that showcase their
special achievements and capabilities, in light of their backgrounds and experience.
Disability
The Group gives full and fair consideration to the employment of disabled people. Throughout the recruitment and
selection stages, we encourage candidates to disclose any reasonable adjustments they may require, to remove
barriers and to ensure all candidates have the opportunity to be successful. These adjustments may include, for
example, providing 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 can continue either in their current role 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.
Disability
% of those that chose to disclose:
UK
Consultants
2022
%
UK Internal
staff
2022
%
Identify as having a disability
6%
4%
Identify as not having a disability
91%
91%
Prefer not to say
3%
5%
100%
100%
Disability
% of those that chose to disclose:
US
Consultants
2022
%
US Internal
staff
2022
%
Identify as having a disability
1%
4%
Identify as not having a disability
91%
87%
Prefer not to say
8%
9%
100%
100%
We have been a member of the Business Disability Forum since 2017. The specialist advice and support which it
provides enables us to improve our understanding of how we can enhance our accessibility to disabled employees
and customers.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
40
Corporate Responsibility
continued
People and communities
continued
Employee development
We provide our people with a range of opportunities for their development, including face-to-face and online training
on diverse subjects. Ongoing learning and development for our Consultants is supported through access to e-learning
platforms such as LinkedIn Learning, Intuition Knowhow, Skillsoft and our own bespoke Academy materials.
Alongside the coaching, mentors also help Consultants to identify development areas and skills gaps so they can
signpost individuals to resources or opportunities. An internal digital library was created in 2021 and has been further
developed in 2022. This will be a critical tool to support the Consultant learning journey.
Via the Skillsoft platform we provide our employees with a range of compliance-related topics, with each employee
receiving modules when they start and refresher modules annually. Alongside our compliance training we have also
rolled out an Inclusivity Awareness Programme, covering Diversity, Equity and Inclusion topics. These topics such as
unconscious bias and disability awareness provide our employees with an inclusive mindset to apply to recruitment
or to their day-to-day work.
Our Pods continue to be run globally and provide trainees with hands-on, project-based experience of working in
cross-functional groups using an Agile methodology. Pods produce Consultants who are able to get up to speed
quickly and deliver what our clients need most effectively. With the support of the Academy, we have provided
training to internal staff in Scrum and Agile methodologies, whilst also providing workshops to Consultants in skills
such as coaching, leadership and time management. Several of our colleagues are currently undertaking study
toward FDM-sponsored degree-equivalent or higher qualifications.
Our Consultant training is accredited to Gold Standard by TechSkills. This is the industry ‘kitemark’ for tech related
education and training (see page 39).
Recognition
We believe it is important to recognise and reward the commitment and hard work of our colleagues. The FDM Consultant
of the Month and FDM Stars initiatives reward those that excel, as nominated by our clients or other employees within the
business. We recognise and reward the commitment and contribution of employees who have completed five, ten, twenty,
and even thirty years with FDM.
In addition:
•
During 2022 we made further awards to employees under our discretionary Performance Share Plan (“PSP”).
•
The Buy As You Earn share plan, launched in January 2019, is open to all our employees.
These plans provide a longer-term incentive to enable participants to share in the success of our business and reap
the rewards of their contribution to our shared goals. Details of the PSP are set out in note 25 to the Consolidated
Financial Statements. At year end our Buy As You Earn share plan had more than 200 participants, who had
demonstrated their commitment to the business by setting aside a portion of their monthly salary to purchase shares
in FDM. The shares purchased will be matched with additional shares for those who hold their shares and remain
in employment for the required period. The second award of matching shares was made in 2022, as a proportion of
shares purchased under the plan during 2020.
Ex-Forces, Returners and Apprenticeship pathways
We recognise that people who have served in the Armed Forces have many transferable skills for a successful career
in the corporate world, ranging from adaptability and maturity to responsibility and leadership. Our dedicated Ex-
Forces Programme in the UK and USA provides training to ex-Forces personnel in relevant commercial skills, assisting
them to make a smooth transition into the civilian workplace and leading to deployment as one of our IT or business
Consultants. The Programme is run by ex-service personnel and employs ex-servicemen and women from all ranks
across all three services. We are proud holders of a Gold Award from the UK Government’s Defence Employer
Recognition Scheme, acknowledging our strong commitment and drive in delivering our pledges under the Armed
Forces Covenant, to which we are also a signatory. We have again been ranked as one of the Military Times Best for
Vets Employers in 2022.
Our Returners Programme aims to address the challenges faced by professional individuals who have taken a
planned career break. It gives them the opportunity to re-enter the workforce at a level appropriate for their
experience. Our returners to work typically have between 10 and 15 years of experience and are an invaluable source
of talent for our clients. Our programme aims to provide participants from a diverse range of social, ethnic and
educational backgrounds, and from a wide range of age groups, with intensive training to learn new skills, refresh
existing knowledge and help individuals to regain the confidence to return to their business careers. On average
the participants on the programme have had a career break of around five years. More than 200 careers have been
relaunched since our Returners Programme began.
Our Apprenticeship Programmes are detailed on page 36.
Strategic Report
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Financial Statements
41
FDM Group (Holdings) plc
Annual Report and Accounts 2022
42
Corporate Responsibility
continued
People and communities
continued
Our communities
We work with numerous charitable partners and community groups through a combination of employee
volunteering, donations, and employee time. We tailor our community activities to reflect the needs and interests
of the communities in which we operate, prioritising programmes that use our training expertise to illustrate the
possibilities surrounding a career in technology – particularly for underrepresented groups – and maintain that each
of our charitable ventures aligns with our values.
University Partners
Our close relationship with our University Partners continues. Our Recruitment team attended 780 university events
(2021: 825). The overall number of recruitment events decreased as we changed the mix of events to attend more
face-to-face and fewer virtual events in 2022. Face-to-face events are more personal to potential candidates and more
impactful.
FDM Attraction Events
Events continue to operate on a hybrid basis, which promotes opportunities for wider student and university
outreach. In 2022, the number of in-office and on-campus fairs and events increased. Using both formats allows us to
connect with students who are more comfortable engaging in person or virtually, and with or without their peers.
Events include technical content for those with a STEM background as well as those from other courses who would
like to upskill; information about the diverse, equitable and inclusive culture at FDM; and employability skills to help
students and graduates. Events are open to students from all universities and degree subjects.
We have provided digital bootcamps focussing on Excel, introductory sessions on Python, SQL, HTML and CSS, and
sessions that explain to students from all degrees which of the skills they will gain at university will be useful in a career
in IT. These events enable us to engage with a new audience of non-technical students, helping them to gain practical
skills which they can use elsewhere, including when applying for graduate roles with FDM. We believe our digital
upskilling bootcamps provide unique interest for students in a sector where the market for job opportunities is buoyant.
In celebration of International Women’s Day, we hosted a Digital Bootcamp for students from under-represented
groups. We combined the session with a confidence building workshop and the opportunity for the students to
showcase their learned skills to internal stakeholders. Additionally, we hosted ‘IamRemarkable’ sessions for two of
our University Partners. ‘IamRemarkable’ is a Google initiative empowering women and other under-represented
groups to celebrate their achievements in the workplace and beyond. Participating in this initiative allows us to
continue our commitment to improving gender diversity in the IT industry.
University Partnership’s ‘Curriculum Projects’
In support of our UK University Partners, in 2022 we participated in six university curriculum and consultancy-based
projects with 209 student participants. We designed, delivered, and supported the students with project briefs
that contributed towards their university grade and/ or experience. These projects gave students from all degree
backgrounds the opportunity to gain commercial insight, experience working on live business challenges and the
opportunity to build relationships with industry professionals, whilst developing their soft skills.
Donation of IT hardware
During the year we donated over 100 computers, refurbished by our IT team, to schools in Lewisham and Bradford
that had been identified through a personal reference.
RefuAid
In response to the humanitarian crisis arising as a result of the Russian invasion of Ukraine, FDM made a charitable
donation of £125,000 to RefuAid, to provide English language tuition, employment and resettlement support for
50 Ukrainian refugees in the UK. RefuAid supports access to language tuition, education, finance and meaningful
employment to people suffering from forced migration.
Walking With The Wounded
Spearheaded by the Ex-Forces team, our employees are involved with Walking With The
Wounded, a UK charity that delivers employment, mental health care coordination and
volunteering programmes in collaboration with the NHS to support those who served in the
Forces, and their families, whether mentally, socially or physically wounded, in reintegrating
back into society.
In 2022, FDM was a lead partner of Walking With The Wounded’s Cumbrian Challenge, with
numerous FDM UK teams participating in the hike and raising funds.
Strategic Report
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Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
43
Changing Faces
We are proud to partner with Changing Faces, a charity that aims to end appearance-related
discrimination. Our partnership signifies a real commitment to better represent and support
people with visible differences, so they feel seen, heard, and celebrated in the workplace and
across wider society. Together, we will create a culture at FDM that values people for who they are,
rather than judging them for how they look.
Human resource policies and respect for human rights
We are committed to making FDM a great place for all our employees. Our policies on maternity, paternity, adoption,
personal and special leave, and on sickness absence go beyond the minimum required by law. We are committed to
fulfilling our obligations in accordance with the relevant legislation for applicants and existing employees who have
disabilities. We give equal consideration to applicants with disabilities, and our staff who interview applicants receive
training in disability awareness and unconscious bias in the recruitment process.
We have in place policies that prohibit discrimination and harassment in the workplace. We believe that our policies
provide an effective framework to ensure that all our stakeholders and any other individuals with whom we interact
in the course of our work are treated with respect and dignity, and in a way which accords with the Universal
Declaration of Human Rights.
Anti-slavery and human trafficking policy
We are committed to ensuring that there is no modern slavery or human trafficking in our supply chains or in
any part of the business. We have considered the degree of risk that modern slavery could present within the
organisation or in supply chains.
The nature of our business and the direct relationship we have with applicants to the training programmes means
that the risk of modern slavery in our own organisation is low. We have reviewed supply chains and taken steps to
address the potential risks of modern slavery and human trafficking.
The Group has in place an Anti-Slavery and Human Trafficking policy to assist in mitigating this risk, and continues to
undertake a process of due diligence on key suppliers to ensure that they meet our expectations in this area, enabling
us to comply with our obligations under the Modern Slavery Act 2015. There is a pre-contract due diligence process,
used with new suppliers to ensure that they confirm their commitment to comply with our policies and values, or that
they have in place appropriate equivalent policies of their own. We have also developed a set of standard contractual
clauses for inclusion in supplier contracts to reinforce this approach. The Group aims to promote a high level of
understanding of the risks of modern slavery and familiarises all staff with these policies on induction. Additional
training may be provided to key staff members where appropriate. The effectiveness of these steps is monitored
annually by the Board.
Our clients and shareholders
Our business development teams develop relationships with our clients to gain insight and understanding of their
evolving requirements. We work closely with our clients through the process of interviewing and selecting our
trainees for deployment as Consultants on client projects, which enhances our understanding of the skills and
qualities they are looking for. Clients have attended virtual demonstrations and feedback sessions for our agile Pod
training tool. This interaction helps to ensure that the Consultants we put forward are well matched to the client’s
requirements and project criteria, which ultimately makes for a successful deployment.
This year we hosted virtual and in-person meetings with current and potential investors, involving our Executive
Directors and senior managers, to enable shareholders to further their understanding of our work, ethos and
activities in other areas. Our in-house investor relations function works with our external brokers and financial PR
advisors to provide an overall programme of communication with shareholders and prospective investors, and to
increase the information available to them through our website and other channels.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
44
Corporate Responsibility
continued
UN Sustainable Development Goals
The sustainability of our business can benefit all our stakeholders, as a result of the much broader impact we can
have on the lives of those in our stakeholder communities.
In partnership with governments, the private sector and civil society, the United Nations (“UN”) 17 Sustainable
Development Goals (“UNSDGs”) aim to improve the lives of future generations. We have reviewed the UNSDGs and
identified six goals that are most closely aligned to our business and strategy. We are committed to implementing our
strategy in a way that will support the achievement of these goals.
United Nations Sustainable
Development Goals
Our contribution
Examples
Ensure inclusive
and equitable
quality education
and promote
lifelong learning
opportunities
for all
Our recruitment processes
are designed to be as
inclusive as possible.
Our training programmes are available
to anyone who can show us that they
have the aptitude and attitude to thrive.
Achieve gender
equality and
empower all
women and girls
Women currently make
up 31% of our global
workforce. We are
committed to improving
gender diversity in our
teams around the world,
making our business more
robust and sustainable.
We are a signatory to UNWEP. Our
annual FDM Everywoman in Technology
Awards recognise and celebrate the
achievements of women in the IT
industry, aiming to create a more
gender-balanced workforce for FDM and
our clients.
Promote sustained,
inclusive and
sustainable
economic growth,
full and productive
employment and
decent work for all
Our reputation is
dependent on the people
we employ. We treat our
employees fairly and help
them to launch rewarding
careers in technology.
We provide our graduates, ex-Forces
personnel, returners to work and
apprentices with bespoke IT and
business training, together with
invaluable industry experience gained
whilst deployed with our clients.
To reduce
inequalities
within and among
countries
We take action to improve
social mobility in the
workplace to identify,
access and progress talent
from all backgrounds.
Our Apprenticeship programme takes
school leavers from a wide range of
backgrounds through to achieving a
university degree, all funded by FDM.
Ensure sustainable
consumption
and production
patterns
We are committed to
reducing the impact of
our operations on the
environment by making
our consumption of
energy and materials more
sustainable.
Our on-site and hosted infrastructure
uses a cloud-based solution using best-
in-class datacentres to increase energy
efficiency and to reduce our carbon
footprint.
Where possible, our old IT hardware is
donated to charities and schools who
can continue to use it.
Take urgent action
to combat climate
change and its
impact
FDM has produced a
Carbon Reduction Plan.
The Group is committed
to reducing its Scope 1,
2 and 3 greenhouse gas
emissions (see page 55).
We are liaising with the landlords of our
leased premises to switch the electricity
supplied to our sites to 100% renewable
sources.
Strategic Report
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Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
45
Climate change
Implementation of the Task Force on Climate-related Financial Disclosures
(“TCFD”) framework
In 2022, we continued making progress with FDM’s climate strategy. This report covers FDM’s governance of climate
change, its integration with overall risk management, strategy for managing climate-related issues and opportunities,
and the metrics used to measure progress towards our targets in line with the Group’s Carbon Reduction Plan. In
recognition of Listing Rule 9.8.6R(8), the following pages set out our climate-related financial disclosures consistent
with the Recommendations and Recommended Disclosures as outlined in “Implementing the Recommendations of
the Task Force on Climate-related Financial Disclosures”, published in October 2021 by the Task Force on Climate-
related Financial Disclosures (“TCFD”).
Recommendation
Recommended disclosures
Reference
Governance
Disclose the organisation’s governance
around climate-related risks and
opportunities
a)
Describe the Board’s oversight of climate-related
risks and opportunities
Page 46
b)
Describe management’s role in assessing and
managing climate-related risks and opportunities
Page 47
Strategy
Disclose the actual and potential impacts
of climate-related risks and opportunities
on the organisation’s businesses,
strategy, and financial planning where
such information is material
a)
Describe the climate-related risks and opportunities
the organisation has identified over the short,
medium, and long term
Page 47
b)
Describe the impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy, and financial planning
Page 48
c)
Describe the resilience of the organisation’s
strategy, taking into consideration different climate-
related scenarios, including a 2°C or lower scenario
Page 49
Risk management
Disclose how the organisation identifies,
assesses, and manages climate-related
risks
a)
Describe the organisation’s processes for
identifying and assessing climate-related risks
Page 47
b)
Describe the organisation’s processes for managing
climate-related risks
Page 47
c)
Describe how processes for identifying, assessing,
and managing climate-related risks are integrated
into the organisation’s overall risk management
Page 47
Metrics and targets
Disclose the metrics and targets used
to assess and manage relevant climate-
related risks and opportunities where
such information is material
a)
Disclose the metrics used by the organisation to
assess climate-related risks and opportunities in
line with its strategy and risk management process
Page 52
b)
Disclose Scope 1, Scope 2, and, if appropriate,
Scope 3 greenhouse gas emissions, and the related
risks
Page 54
c)
Describe the targets used by the organisation to
manage climate-related risks and opportunities and
performance against targets
Pages 49
and 55
FDM Group (Holdings) plc
Annual Report and Accounts 2022
46
Corporate Responsibility
continued
Climate change
continued
Governance
Board level
At FDM, the Board has responsibility for climate change management, including oversight of climate-related risks
and opportunities, as with all matters of Group strategy. The Board is supported and informed on climate-related
issues via two channels. This ensures that any potential impacts of climate change are incorporated into the reviews
of Group strategy, business plans and risk management. An operational and strategic channel reports into the Board
via the Board sponsor for climate change, Mike McLaren, CFO. This occurs through the Climate-change Action Group
which reports to the CFO a minimum of every two months. The risk channel monitors and informs the Board of
climate-related risks through the Audit Committee, supported by the Risk Management Team.
The Board
Overall responsibility for managing climate-change
Climate-change Action Group (‘CAG’)
Cross-functional team that considers and reports
on climate-change related matters and metrics and
recommends actions to promote behaviours intended
to reduce the Group’s greenhouse gas emissions
Mike McLaren
Board-level sponsor for
climate change
Audit Committee
Bi-annual risk review
Operational and strategic
channel
Risk channel
Risk Management
Team
Bi-annual risk review
The level of climate-related expertise is considered to be sufficient given our assessment of climate-rated risk and
opportunities and the likely impact on the Group’s strategy. External advice is obtained where appropriate.
The Board approved FDM’s Group Carbon Reduction Plan in 2021, which contains clear targets associated with
emissions and a long-term commitment to net zero by 2050. Progress against climate targets is monitored and
overseen by the Board, based on information (progress, KPIs and metrics) received from the operational and strategic
channel. The Audit Committee meets twice a year to review all risks, with the Audit Committee referring key matters
of risk to the Board, including climate-related issues.
Strategic Report
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Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
47
Management level
Mike McLaren, CFO, has executive-level responsibility for climate change and leads the management-level
Climate-change Action Group (‘CAG’), a cross-functional team that assesses and manages climate-related risks
and opportunities and resulting strategic impact, reporting into the Board. FDM’s risk management framework
also channels climate-related risk information from the Risk Management Team to the Audit Committee. Progress
and measurement against the Group Carbon Reduction Plan are incentivised at the executive and certain senior
management levels through metrics applied under the Directors’ Remuneration Policy. In 2021, the Remuneration
Committee adjusted the metrics for the annual bonus opportunity available to the Executive Directors to include an
amount of 10% of salary for meeting set greenhouse gas emissions targets. The overall maximum bonus opportunity
remained unchanged. The emissions target for performance in 2022 is based upon a percentage year-on-year
reduction in a metric which combines FDM’s Scope 1 and 2 greenhouse gas emissions and Scope 3 greenhouse gas
emissions per employee.
Risk management
FDM’s climate-related risk management is integrated into the Group’s overall risk management framework. All
climate-related risks are assessed in the same manner as other Group risks, so that their relative significance can
be assessed. The Group’s Risk Register categorises all existing and emerging risks, including climate-related risks,
with the register covering the probability of the risk occurring and the degree of the potential impact. Potential risks
are assessed whether they occur within the Group’s own operations, or upstream and downstream of the Group and
whether they first occur within the short- (0 to 2 years), medium- (2024 to 2030), or long term (beyond 2030). Risks that
first occur in the short or medium term may persist into the long term. See pages 24 to 31 for further information.
Climate-related risks and opportunities relevant to FDM were identified with the help of an external consultancy,
CEN-ESG. All risks are assessed on a 5x5 matrix incorporating an assessment of both impact and likelihood, which
allows for the prioritisation of risks.
Risk impact (materiality) is defined by the following table:
Impact
Insignificant
Minor
Moderate
Major
Serious
Financial
Impact or lost
opportunity of
<£0.5m
Impact or lost
opportunity of
£0.5 - £2m
Impact or lost
opportunity of
£2m - £7.5m
Impact or lost
opportunity of
£7.5 - £30m
Impact or lost
opportunity of
> £30m
Risk likelihood is defined under five categories: Very unlikely, Unlikely, Possible, Likely, Almost certain.
Any mitigation factors for risks, including climate-related risks, are also included in the Group Risk Register and this
combined exposure informs the decision for managing risks (e.g. further mitigation, accept, or control). Internally,
the cost of mitigation is described, where possible, along with an explanation of how this is derived. Risks are
subject to ongoing refinement and quantification over time, which enables us to build a complete picture and assists
with incorporating the management of any climate-related risks into the ongoing strategy, budgets and financial
statements. The Risk Management Team meets regularly and reports to the Audit Committee once every six months
(see page 24).
Strategy
Climate change has had observable effects on the environment and we realise climate change may present both risks
and opportunities to FDM. As a service business, FDM Group’s overall net risk to climate change has been assessed as
low. The gross risk, that before mitigation and controls, has been assessed as moderate and, in isolation, the impact
of most climate-related risks before mitigation is limited. For example, in assessing all locations for physical climate
change risks over a timeframe out to 2040, it was concluded that the risk was extremely limited. Our only physical
risk exposure is from riverine flood risk. We consider this risk to be limited; all our locations are in large cities with
modern flood defences. Further mitigating factors of flood risks include:
•
High rise office locations in central business districts.
•
All offices are leased, and most leases are short or medium term. If appropriate, we will consider flexible
workspaces with even shorter leases, decreasing our asset risk exposure further.
•
Consultants work from client sites or at home and not from our centres.
•
Established work-from-home procedures mean limited loss of business productivity in the event of travel-related
or site-related disruption.
•
Insurance recovery in the event of natural disasters.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
48
Corporate Responsibility
continued
Climate change
continued
Other physical climate-related risks (higher mean temperatures, rising sea levels, wildfires, severe weather) are also
not seen as having any impact over the forecast period.
The Group Carbon Reduction Plan and our long-term commitment to net zero by 2050 provides a strategically agreed
carbon emissions management plan and ambition that limit our exposure to transition risks. Transition risks that
were considered but deemed immaterial include:
i.
Increased cost of capital as a result of linkage with sustainability criteria (Market)
Rationale: The business operates with no debt, maintains a cash buffer, and is not expected to seek external
equity capital.
ii.
Transitioning to low emissions technology/early retirement of existing assets (Technology)
Rationale: FDM Group has no material technology at risk of transitioning/writing off.
iii. Risk of non-compliance with environmental regulation (Policy and Legal)
Rationale: Risk exposure is only assumed to be reputational (see below).
We have used scenario analysis to improve our understanding of the sensitivity of certain risks to different climate
outcomes, which helps assess the resilience of our business to climate change. We selected three climate-related
scenarios, looking out over a timeframe to 2050:
•
Net Zero Emissions by 2050 (NZE)*:
a normative scenario which sets out a narrow but achievable pathway for the
global energy sector to achieve net zero CO
2
emissions by 2050. It does not rely on emissions reductions from
outside the energy sector to achieve its goals. This meets the TCFD requirement of using a “below 2°C” scenario
and is included as it informs the decarbonisation pathways used by the SBTi.
•
Stated Policies (STEPS)*:
the roll forward of already announced policy measures. This scenario outlines a
combination of physical and transition risk impacts as temperatures rise by around 2.5°C by 2100 from pre-
industrial levels, with a 50% probability. This scenario is included as it represents a mid-way pathway with a
trajectory implied by today’s policy settings.
•
RCP 8.5**:
where global temperatures rise between 4.1-4.8°C by 2100. This scenario is included for its extreme
physical climate risks as the global response to mitigating climate change is limited.
*
IEA (2022), World Energy Outlook 2022, IEA, Paris.
** IPCC, 2014: Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth Assessment Report of the Intergovernmental Panel on
Climate Change.
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
49
Risks
Looking out over a timeframe to 2050, three key climate-related risks have been identified:
Risk
1.
Risk to FDM of not
meeting its Scope 1
and 2 net zero targets
2.
Cost to FDM of carbon
pricing in the value chain
3.
Risk of failure to meet
the expectations of
customers and other
stakeholders
Type
Transition
(Market and reputation)
Transition
(Current and emerging
regulation)
Transition
(Market and reputation)
Area
Own operations/ upstream
Own operations/ upstream
Upstream/ own operations
Primary potential
financial impact
Lower profit margins
through increased costs
and lower revenue
Higher costs associated with
energy and other inputs
Loss of revenue due to
decreased customer demand
Time horizon
Medium term
Medium term
Medium term
Gross likelihood
Unlikely
Likely
Possible
Gross impact
Moderate
Minor
Major
Net likelihood
(with mitigation)
Unlikely
Unlikely
Unlikely
Net impact (with
mitigation)
Minor
Insignificant
Minor
Location or
service most
impacted
New York, Singapore,
Hong Kong
Purchased goods and services
Global
Metrics used to
monitor risk
Scope 1 and 2 greenhouse
gas emissions
Scope 3 greenhouse gas
emissions
Scores from external
sustainability ratings
(including CDP and EcoVadis)
The physical risk of climate change was assessed over a timeframe out to 2040 as extremely limited (see page 47) and
has not been assessed further.
Climate change net risk heat map
Serious
Almost certain
Unlikely
Impact
Likelihood
Insignificant
2
1
3
1
Risk to FDM of not meeting its
Scope 1 and 2 net zero targets
2
Cost to FDM of carbon pricing
in the value chain
3
Risk of failure to meet the
expectations of customers and
other stakeholders
FDM Group (Holdings) plc
Annual Report and Accounts 2022
50
Corporate Responsibility
continued
Climate change
continued
1) Risk to FDM of not meeting its Scope 1 and 2 net zero targets
FDM Group has clear targets associated with climate change, but some aspects of the delivery against this plan
are reliant on third parties. At present the largest source of operational emissions for the Group is within Scope
2 (electricity purchased), where the ability to decarbonise our electricity supply may be hindered by the pace of
renewable energy adoption by the Group’s landlords. Some of our centres (i.e. New York, Singapore and Hong Kong)
are currently in locations with more limited options for renewable energy. The resulting impact of this has been
evaluated through a combination of potential reputational damage and loss of customer revenue. Failure to meet the
defined net zero targets may dissuade potential investors or result in greater costs due to the introduction of carbon
pricing. The results of this could affect revenues alongside a difficulty in retaining business. This has been reflected
in the choice of assigning a ‘moderate’ impact risk before mitigation. The following table estimates the residual
emissions for FDM Group with no action taken, factoring in forecast global electricity grid decarbonisation. Results
are shown under both STEPS and NZE scenarios projected out to 2050. The resulting emissions balance is that which
requires direct action from FDM or indirect action from third parties.
FDM market-based Scope 2 residual emissions tCO
2
e
2022
2030
2040
2050
STEPS
No action (grid decarbonisation)
112
84
57
43
NZE
No action (grid decarbonisation)
112
46
0
0
*
Based on a 50% reduction from a 2020 base year of which Scope 2 market-based emissions from purchased electricity were 312 tCO
2
e.
The business negotiates with its landlords on an ongoing basis to move towards energy supply agreements that are
fully renewable. In terms of management incentives to aid the transition to net zero, the business has linked a portion
of the Executives’ annual bonus (and that of certain senior managers) with progress against the Group’s Carbon
Reduction Plan.
2) Cost to FDM of carbon pricing in the value chain
The scope of carbon pricing (applied directly or indirectly) is expected to expand over the medium term, and the
price of carbon is expected to rise in the drive to make businesses more responsible for their energy use and carbon
emissions. Our analysis has shown the impact to be mostly ‘insignificant’. Additional mitigations include the schemes
being rolled out as part of our Carbon Reduction Plan, such as a nascent recycling scheme for IT equipment.
3) Risk of failure to meet the expectations of customers and other stakeholders
FDM Group has obligations to its stakeholders, such as investors, to communicate progress against sustainability
goals as well as to meet customer expectations. For example, some of FDM’s largest customers require suppliers to
maintain SBTi approved targets, have a net zero plan in place, and complete CDP’s Climate Change questionnaire.
Failure to communicate progress effectively or meet stakeholder expectations may lead to reputational issues or
lower revenue due to lost custom. We have categorised the net likelihood of this risk as ‘unlikely’, given the Group
has net zero targets approved by SBTi and meets all necessary expectations from external stakeholders in terms of
reporting. The business has taken a forward-looking approach to identifying future expectations to enable actions to
be taken in order to address them. In addition to this, FDM has a diversified client list with plans to further diversify
to prevent reliance on any single customer. We rather view our market position with respect to climate change
performance and reporting as providing an opportunity, as outlined on the following page.
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
51
Opportunities
Looking out over a timeframe to 2050, four key climate-related opportunities have been identified:
Opportunity
1.
Opportunities in
climate-related
consulting
2.
Energy savings
3.
Renewable
energy
4. Increased
competitive
advantage in the
market
Type
Products and
services
Resource efficiency
Energy source
Resource efficiency
Primary potential
financial impact
Increased sales
Decreased costs
Decreased costs
Decreased costs
Time horizon
Medium term
Medium term
Medium term
Medium term
Likelihood
Likely
Almost certain
Possible
Possible
Impact
Moderate
Minor
Minor
Minor
Location or
service most
impacted
Global
New York,
Singapore,
Hong Kong
New York,
Singapore,
Hong Kong
All services
1) Opportunities in climate-related consulting
Customers, especially within the Energy and Utilities
sectors, require Consultants to assist with accelerating
their green transition. Some customers are creating
training content that enables staff to be pre-disposed to
help in their green transition and raise ESG awareness.
In addition, more opportunities are being created as
large energy/ utility companies make acquisitions of
smaller renewable businesses, requiring IT Consultants
to facilitate the integration with the wider group’s
architecture. This would increase sales and diversify
FDM’s client base in this sector. Under the NZE scenario,
companies will need to be more proactive with
transitioning to net zero, resulting in increased business
opportunity for FDM. A secondary impact as a result may
be an improved reputation with regards to this type of
work, leading to further sales opportunities. This is a new
market which FDM can target, with very minimal shift in
strategy required.
2) Energy savings
Decreasing energy consumption by reducing energy use
and increasing efficiency may decrease outgoing costs
and mitigate against the cost of future carbon pricing.
This will have the emergent benefit of further mitigating
the impact of Risk 1 outlined above, as the magnitude
of this opportunity is the inverse of the cost of residual
emissions from Scopes 1 and 2. As offices are leased,
the strategy to realise this opportunity will partly involve
engagement with landlords to introduce energy saving
measures. Best practice in energy management with
current offices will also factor in reducing consumption.
Alternatively, the business may have the opportunity to
move to more energy efficient locations at the time of
lease renewal.
3) Renewable energy
Transitioning to renewable energy sources (self-
generation or power purchase agreements) can help
in reducing market-based emissions to zero. Based on
this, the effect of carbon pricing on Scope 2 emissions
would become nullified. As per Risk 1, the locations most
impacted have been identified based on the currently
limited renewable energy options. Negotiation of
landlords’ power purchase agreements for the supply of
renewable energy would be required. Given the short-
term lease agreements and energy requirements of a
services-based business, investment in self-generation
would be unfeasible.
4) Increased competitive advantage in the market
We believe there is an opportunity from the Group
being well-placed in terms of its sustainability reporting
and performance against expectations from external
stakeholders. FDM Group is transparent in its non-
financial disclosures, has net zero targets that are SBTi
approved, and this is the second year of reporting
against TCFD. Compared to the market, this positions
the business well and if more potential clients become
selective in their sustainability requirements, it could
lead to more opportunities to capture market share
against FDM Group’s competitor. This will be achieved by
continuing to support the Group’s sustainability strategy,
maintain engagement with customers to understand
future expectations, and ensuring that targets are met.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
52
Corporate Responsibility
continued
Climate change
continued
Metrics and targets
The Group Carbon Reduction Plan contains clear targets associated with climate change which are in line with the
UK Government’s commitment to net zero by 2050 and validated by the Science Based Targets Initiative (SBTi). These
include the Group’s target to reduce absolute Scope 1 and 2 greenhouse gas emissions by 50% by 2030 from a 2020
base year; and to reduce its Scope 3 greenhouse gas emissions by 62% per employee by 2030 from a 2020 base year.
We report on our Scope 1, 2 and 3 emissions, emissions intensity, and energy consumption from the next page. The
calculation of FDM’s carbon footprint is in line with the principles and requirements of the Greenhouse Gas Protocol.
Further details can be found on page 54. We also monitor the amount and percentage of electricity consumed from
renewable sources, this metric is included on page 54.
Whilst acknowledging the recommendation to integrate an internal carbon price, Risk 2 highlights that it is currently
not financially material and therefore deemed unnecessary to implement. However, this may be used in assessing
future large capital expenditure and investment activities.
Environmental performance
Operating in a sustainable manner
At FDM, we recognise the significance of climate change, and realise that our activities and operations have an
associated environmental impact. As such, we take into consideration and aim to reduce the impact our business
activities have on the environment and on climate change.
The risk of climate change on the Group is described on page 47. This includes assessing the risks of the direct
physical effects of climate change, the transition to a low carbon economy and how climate change might impact the
Group’s ability to continue its business activities.
We report our carbon and energy data following Streamlined Energy and Carbon Reporting (“SECR”) requirements.
Carbon and energy data 2022
Directors’ statement of SECR compliance
FDM Group continues to meet the greenhouse gas emissions reporting requirements of The Companies (Directors’
Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018. We have prepared this
report in accordance with the requirements for quoted companies under these regulations.
We report the Group’s carbon footprint from our global operations to include Scope 1, Scope 2 and Scope 3
emissions. In this Annual Report, we have expanded our reporting from only limited Scope 3 categories to include our
full Scope 3 emissions profile from the following categories:
Scope 3 emissions by category, now reported
1
Purchased goods and services
2
Capital goods
3
Fuel- and energy-related activities
5
Waste generated in operations
6
Business travel
7
Employee commuting
There are 15 categories of Scope 3 emissions, however, the following Scope 3 categories are immaterial or not
applicable to the Group: Category 4 (Upstream transportation and distribution); Category 8 (Upstream leased assets);
Category 9 (Downstream transportation and distribution); Category 10 (Processing of sold products); Category 11
(Use of sold products); Category 12 (End-of-life treatment of sold products); Category 13 (Downstream leased assets);
Category 14 (Franchises); and Category 15 (Investments).
We also include metrics related to our Group Carbon Reduction Plan, which is outlined on page 55.
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
53
2022 performance: greenhouse gas emissions
Annual greenhouse gas emissions for 2020, 2021 and 2022
Scope 1
Scope 2
Scope 3
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2020
2021
Total greenhouse gas emissions (tCO
2
e)
2022
2020
2021
Total greenhouse gas emissions
(Scopes 1, 2 and 3)
per employee (tCO
2
e)
2022
0.0
0.2
0.4
0.6
0.8
Our Scope 1 emissions remain low. They increased to 62 tCO
2
e in 2022, as we consumed more natural gas in our
leased UK centres, based on higher employee numbers and increased office use as we returned to our centres post-
pandemic lockdowns. Our Scope 2 market-based emissions are 62% lower reflecting the downsizing in our NY centre
and the effect of our London centre being supplied from renewable energy sources for the whole year (switched
July 2021). Our total Scope 3 emissions in 2022 increased as trading activity in the Group grew, including increased
business travel. The change in emissions from Purchased Goods and Services is broadly in line with changes in annual
overhead spend.
Although the combined total Scope 1, Scope 2 and Scope 3 emissions increased by 23%, our total emissions per
employee reduced to 0.48 tCO
2
e, reflecting the significant growth in headcount.
Environmental initiatives introduced in 2022
In 2022, electricity supplied to our Frankfurt centre began to be sourced from 100% renewable energy sources.
In June 2022, the Science Based Targets initiative (“SBTi”) validated our greenhouse gas emission targets (see page 55).
Ongoing environmental initiatives
We continue to virtualise our IT estate: Our energy requirement is lower because our cloud-based systems and data
are hosted at efficient datacentres, run by Microsoft Azure, that flex capacity in line with our usage.
We have policies and facilities in place to promote:
•
recycling of paper, plastics and cans at our centres; and
•
the use of video conferencing technology and other collaborative tools to reduce the need for travel.
At year end the Group had two company cars (2021: two), both used as pool cars for business usage only.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
54
Corporate Responsibility
continued
Environmental performance
continued
Emissions
Emissions source
2020
tCO
2
e
2021
tCO
2
e
2022
tCO
2
e
Scope 1
Natural gas
56
44
59
Company cars
7
2
3
Total Scope 1
63
46
62
Scope 2
Electricity
312
299
112
Purchased Steam
23
–
–
Total Scope 2
335
299
112
Scope 3
Purchased goods and services
1,748
1,449
1,705
Capital goods
85
39
96
Fuel- and energy-related activities (not included in Scope 1 or Scope 2)
97
128
122
Waste generated in operations
14
7
25
Flights
317
123
521
Other business travel
65
70
39
Employee commuting
882
453
525
Total Scope 3
3,208
2,269
3,033
Total emissions (Scope 1, 2 and 3) (Market based)
3,606
2,614
3,207
Total emissions (Scope 1, 2 and 3) (Location based)
3,668
2,666
3,327
Number of employees
5,231
5,364
6,685
Emissions (Scope 1, 2 and 3) per employee ( tCO
2
e)
0.69
0.49
0.48
£ million of revenue
267.7
267.4
330.0
Emissions (Scope 1, 2 and 3) per £ million of revenue (tCO
2
e)
13.5
9.8
9.7
Energy usage
1
2020
kWh
2021
kWh
2022
kWh
Energy usage
2
1,882,187
1,688,635
1,457,533
– from renewable sources
358,701
382,981
622,634
– from non-renewable sources
1,523,486
1,305,654
834,899
2020
2021
2022
% of electricity consumed from renewable sources
28%
32%
58%
2021
2022
Emissions and energy usage by geography
UK
Global
(excluding UK)
UK
Global
(excluding UK)
Scope 1 and 2 emissions (tCO
2
e) (Market-based)
83
262
59
115
Total energy usage
2
(kWh)
813,731
874,904
969,244
488,289
1
This work is partially based on CO
2
emission factors developed by DEFRA.
2
Energy reporting includes kWh associated with Scope 1 and Scope 2 emissions and fuel used in personal or hire cars on business use.
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
55
2022 emissions’ methodology
As an IT-focussed global professional services provider, we recognise the importance of quality data management.
We have processes and controls in place to capture actual consumption where possible. In line with common
practice, where the data is incomplete we model the consumption using estimates. We work with CEN-ESG, a leading
provider of sustainability advisory services, to ensure that we continue to follow best practice in the assessment and
reporting of our environmental performance. Our engagement with CEN-ESG enables us to provide transparency to
stakeholders and to further identify opportunities to improve our environmental performance.
The Group has defined its organisational boundary using an operational control approach with no material emissions
from within the organisational boundary of the Group. The methodology used to calculate the greenhouse gas
emissions is in accordance with the principles and requirements of the following:
•
World Resources Institute (WRI) GHG Protocol: A Corporate Accounting and Reporting Standard (revised version);
and
•
DEFRA’s Environmental Reporting Guidelines: Including Streamlined Energy and Carbon Reporting requirements
(March 2019).
Emissions have been calculated using the appropriate conversion factors such as the 2022 issue of the UK
government’s Greenhouse Gas Conversion Factors for Company Reporting and spend-based factors from
Environmentally-Extended Input-Output (EEIO) models. For a number of our top suppliers, we have used supplier
specific emissions where the data is publicly available.
Group Carbon Reduction Plan
The Board approved the Group Carbon Reduction Plan in December 2021. FDM is fully committed to playing its part
in addressing the climate crisis and to ambitious near-term science-based targets in line with a 1.5°C limit to global
warming, and to delivering net zero emissions across all Scopes by 2050. The Climate-change Action Group has been
established to consider and report on climate change-related matters and metrics and to recommend actions and
promote behaviours intended to reduce the Group’s greenhouse gas emissions.
Our baseline and commitment targets include capturing emissions from more Scope 3 subcategories than we
reported in previous Annual Reports. The broader data collection allows us to monitor our carbon footprint and
includes emissions from our purchased goods and services, and from employee commuting.
FDM is committed:
•
to reduce its absolute Scope 1 and 2 greenhouse gas emissions by 50% by 2030 from a 2020 base year; and
•
to reduce its Scope 3 greenhouse gas emissions by 62% per employee by 2030 from a 2020 base year.
In June 2022, the Science Based Targets initiative (“SBTi”) validated that these targets conform with the SBTi Criteria
and Recommendations (version 4.2). The SBTi’s Target Validation Team determined that our targets are in line with
seeking to keep a rise in global temperature to below 1.5°C.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
56
Corporate Responsibility
continued
Statement by the Directors in performance of their statutory
duties under s.172(1) Companies Act 2006
The Directors of the Company have an obligation to act in accordance with a general set of duties which are set
out in section 172 of the Companies Act 2006 (“Companies Act”). This states that the Directors must act in the way
they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its
shareholders as a whole and, in doing so, have regard (amongst other matters) to:
•
the likely consequences of any decisions in the long term;
•
the interests of the Company’s employees;
•
the need to foster the Company’s business relationships with suppliers, customers and others;
•
the impact of the Company’s operations on the community and environment;
•
the desirability of the Company maintaining a reputation for high standards of business conduct; and
•
the need to act fairly as between shareholders of the Company.
Directors are briefed on these duties as part of their induction, and have access to professional advice on them, from
the Company Secretary or, if they consider it necessary, from an external independent advisor. The Directors fulfil
this duty partly by delegating responsibility for day-to-day decision-making to the Executive Team and other senior
managers, under a robust governance structure which is described in further detail in our Corporate Governance
Report.
The Directors consider, both individually and together, that they have acted in accordance with their duties under
s.172 of the Companies Act in the decisions taken during the year ended 31 December 2022 (see page 63). There are
examples throughout this Annual Report of how the Board takes into account the matters referred to above. The
table below sets out the stakeholder groups which the Board has identified, and refers to examples in the report of
the Board’s engagement with those groups, and the outcome:
Stakeholder group
How we have engaged and the outcome
Our employees
Details of the Group’s activities to engage with our employees and the
outcome on pages 67 and 68.
Our University Partners
Universities can be seen as a key supplier. Information on our
engagement with our University Partners can be found on page 42.
Our trainees
All our trainees are asked to provide formal feedback on the content and
delivery of the courses which they receive during their time in our Academies.
See page 10 for further information on how we invest in their training.
Our clients
We enhanced our service offerings in response to our clients’ current and
future requirements, see page 11.
Our shareholders
We discuss our programme of investor engagement and outcomes on
page 67.
Our local communities
Further information on our activities with the communities in which we
operate can be found on pages 42 and 43.
The environment
We are conscious that all business activities have an impact on the
environment and climate change, and we are committed to finding ways
to mitigate that impact. Our Group Carbon Reduction Plan and net zero
emissions commitments are outlined on page 55.
Strategic Report
Governance
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
57
Non-financial and sustainability information statement
We comply with the requirements of sections 414CA and 414CB of the Companies Act. The information provided below
is to help our stakeholders understand our position on key non-financial matters, specifically activity relating to:
(a) environmental matters (including the impact of the Company’s business on the environment);
(b) the Company’s employees;
(c) social matters;
(d) respect for human rights; and
(e) anti-corruption and anti-bribery matters.
Reporting requirements
See pages
Environmental matters
47 to 55
Employees
33 to 43
Social matters
33 to 43
Respect for human rights
43
Anti-corruption and anti-bribery matters
82
The Strategic Report was approved by the Board on 14 March 2023 and signed on its behalf by:
Rod Flavell
Chief Executive Officer
14 March 2023
58
Governance contents
Page
Board of Directors
59
Corporate Governance Report
62
Audit Committee Report
74
Nomination Committee Report
84
Remuneration Report
87
Directors’ Report
108
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
59
Strategic Report
Governance
Board of Directors
David Lister
Non-Executive Chair of the Board
Rod Flavell
Chief Executive Officer
Sheila Flavell CBE
Chief Operating Officer
Date of Appointment
Chair of the Board March 2019
Non-Executive Director March 2016
Date of Appointment
Founded FDM in 1990
Date of Appointment
Chief Operating Officer January 2008
Joined FDM 1998
Experience
David has over 40 years of experience
in operations and technology
roles 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 was a management
consultant at PricewaterhouseCoopers
LLP (“PwC”). Other former non-executive
appointments include Interxion Holdings
B.V., HSBC Bank plc, CIS General Insurance
Limited and the Department for Work and
Pensions.
Experience
Rod is the founder and Chief Executive
Officer of FDM Group and has more than
40 years’ experience in the technology
sector. He has been instrumental in
the development of the Group into an
international, award-winning employer
with a prestigious client base operating in
multiple markets.
Rod is a strong advocate of improving
diversity in the technology industry, as
demonstrated by the Group’s Women in
Tech, Returners Programme, Ex-Forces and
veteran career transition initiatives. In 2019,
he was featured in the Management Today
Agents of Change Power List for the second
consecutive year. He was also featured in
the Yahoo HERoes Top Advocate Executives
of 2019 for his work promoting gender
equality in the workplace.
Experience
Sheila has over 30 years of experience in
both the public and private IT sectors. She
spearheads FDM’s global Women in Tech
initiative and Returners Programme.
Sheila was awarded a CBE in the 2020 New
Year Honours List for services to gender
equality in IT, and graduate and returners’
employment.
In 2022 Sheila was elected President
of techUK, the trade association which
brings together business, government and
stakeholders to realise the potential of what
digital technology can achieve. She has been
invited to advise government committees
on improving the digital skills shortage and
gender pay gap in the UK. Her work has
been acknowledged by numerous awards,
including inclusion in Computer Weekly’s
‘Most Influential Women in UK Tech, Hall
of Fame’. At the 2020 European Tech
Women Awards, the Department of Trade
and Industry recognised her outstanding
achievements by conferring Sheila with a
‘Career Recognition’ award.
External Appointments
HSBC Private Bank (UK) Limited (Non-
Executive Chair, appointed December 2019)
Marks and Spencer Financial Services Plc
(Non-Executive Chair, appointed September
2020)
HSBC UK Bank Plc (Non-Executive Director,
appointed May 2019)
Nuffield Health (Member of the Board of
Governors, appointed February 2014)
External Appointments
Rod has no external appointments.
External Appointments
techUK Limited (President, originally
appointed June 2016)
Committee Membership
Committee Membership
Committee Membership
Remuneration Committee
Nomination Committee Member
Audit Committee Member
Chair of Committee
FDM Group (Holdings) plc
Annual Report and Accounts 2022
60
Board of Directors
continued
Andy Brown
Chief Commercial Officer
Mike McLaren
Chief Financial Officer
Peter Whiting
Non-Executive Director
Date of Appointment
Chief Commercial Officer January 2008
Joined FDM 1994
Date of Appointment
Chief Financial Officer April 2011
Joined FDM 2011
Date of Appointment
Non-Executive Director June 2014
Senior Independent Director June 2014
Chair of the Remuneration Committee
June 2014
Experience
Andy progressed through the Group’s Sales
team to become Global Sales Director in
2007 and, subsequently, Chief Commercial
Officer.
Andy oversees the expansion of the Group
with a focus on the sales 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 to the Group’s
Graduate programme, which are both key
areas to the success and growth of the
Group. Andy also played a key role in the
launch and success of the UK Ex-Forces
Programme.
Experience
Mike is a Fellow of the Institute of Chartered
Accountants in England and Wales.
Prior to joining FDM, Mike fulfilled the
roles of Group Finance Director and Chief
Operating Officer in a premium listed
business in the software and services
sector. In addition, Mike has been an
Independent Non-Executive Chair and
Non-Executive Director on the boards of a
number of other companies. Overall, Mike
has more than 30 years’ experience of
working within the technology sector in a
range of senior financial, commercial and
operational roles.
Experience
Peter has over 20 years of 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. With more
than thirty board-years of NED experience
in the financial services and technology
industries, including with TruFin plc,
Keystone Law Group plc and Aptitude
Software Group plc, Peter has developed
a strong technology-led NED portfolio.
External Appointments
Andy has no external appointments.
External Appointments
ActiveOps plc (Non-Executive Director, Chair
of Audit Committee, appointed March 2021)
External Appointments
Kooth plc (Non-Executive Chair, appointed
September 2020)
D4T4 Solutions plc (Non-Executive Director,
Chair of Remuneration Committee,
appointed July 2018)
Page 71 in the Nomination Committee
Report includes a statement about Peter
Whiting’s tenure as a Director of the
Company.
Committee Membership
Committee Membership
Committee Membership
Remuneration Committee
Nomination Committee Member
Audit Committee Member
Chair of Committee
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
61
Strategic Report
Governance
Michelle Senecal de Fonseca
Non-Executive Director
Jacqueline de Rojas CBE
Non-Executive Director
Alan Kinnear
Non-Executive Director
Date of Appointment
Non-Executive Director January 2016
Date of Appointment
Non-Executive Director October 2019
Date of Appointment
Non-Executive Director January 2020
Experience
Michelle is an experienced senior executive
specialising in technology and international
communications. She was formerly the
Global Vice President for Global Strategic
Alliance Partnerships and Regional VP for
Sales and Services at Citrix Systems. Prior
to Citrix, she was Global Director of Cloud
and Hosting Services at Vodafone. Michelle
has previously worked at the European
Bank for Reconstruction and Development
where she managed the Telecom, Media
and Technology banking team. Michelle is a
co-founder and board member of Women
in Telecoms and Technology, a UK not-
for-profit organization. In 2020, Michelle
joined the Strategic Advisory committee to
TEDI-London, a new design-led engineering
school in the UK.
Experience
Jacqueline is a highly regarded leader in the
UK technology field, with a strong reputation
as a champion of women and minority voices.
She sits on the board of technology trade
association techUK where she has used her
platform as president to shape policy over
the last seven years to enable the technology
industry to thrive. Her commitment to
diversity and building tech skills in the sector
is her driver for co-chairing the Governance
Board of the Institute of Coding.
Prior to this, Jacqueline held senior executive
roles at major tech companies including
Sage Group, Citrix Systems, CA Technologies,
Novell and McAfee International. She was
previously a non-executive director at AO
World plc and Home Retail Group plc. In 2019,
Jacqueline was awarded a CBE for Services to
International Trade in Technology.
Jacqueline is the Board’s designated Non-
Executive Director for engagement with the
Group’s workforce, enabling employees
to share ideas and concerns with senior
management and the Board.
Experience
Alan is a member of the Institute of
Chartered Accountants of Scotland.
Alan was with PwC for 35 years until his
retirement in 2015, including 23 years
as an audit partner working with listed,
private equity-backed and fast-growth
entrepreneurial companies. He was a
member of PwC’s South East regional board
and a national leader for audit services in
the private equity sector. He has significant
skills and experience in financial reporting,
regulation, corporate governance and risk
management.
During the year following his retirement
from PwC in 2015, Alan was a non-executive
director with CEGA Holdings Limited.
External Appointments
Alphawave IP Group Plc (Non-Executive
Director, appointed May 2021)
Women in Telecoms and Technology (WITT)
Limited (Director, appointed May 2008)
Thunderbird School of Global Management
(Director, appointed April 2009)
ASU Global Foundation UK Ltd (Director,
appointed October 2021)
MOVE Capital (Investment Board member,
appointed September 2017)
External Appointments
Costain Group plc (Non-Executive Director,
appointed November 2017)
Rightmove plc (Senior Independent Director,
appointed December 2016)
techUK Limited (Director, appointed July 2014)
Industrial and Financial Systems, IFS
AB (Sweden) (Non-Executive Director,
appointed May 2021
External Appointments
Alan has no external appointments.
Committee Membership
Committee Membership
Committee Membership
FDM Group (Holdings) plc
Annual Report and Accounts 2022
62
Corporate Governance Report
Chair’s Governance Overview
This report follows the principles of the 2018 Code and
aims to provide readers with an understanding of how
the Board has assessed the Group’s progress, and how
we ensure that we make informed decisions to secure
sustainable growth for the long-term benefit of our
shareholders and other key stakeholders. This part of
the Board’s role is particularly important during periods
when the external economic and political environment in
which we operate is as challenging and unpredictable as
it has been over the past year. The Board is committed
to maintaining high standards of corporate governance
and control, supported by a robust framework which is
summarised in this report. I hope you find it informative
and useful.
We take great care to ensure that the content of our
Annual Report is fair, balanced and understandable. A
review by the Audit Committee can be found on page 74
and a formal statement from the Directors is included
on page 110 to 111.
Further information on the Board’s primary areas of
focus in 2022 is set out on page 66. In response to
feedback from our employees, we have made a number
of important changes to our Consultant training model
during the year to make FDM an even more attractive
prospect for our graduate applicants. The success of
these measures has been reflected in record numbers of
individuals training in our academy and has contributed
to the business passing the impressive milestone of
5,000 Consultants deployed with clients. Since my
last report, the business has continued to develop its
Academy of the future, using a virtualised environment
to enhance the user experience, whilst further improving
quality and our training capacity. Further developments
and technological changes are planned during the year
which will further professionalise the delivery of our
training, supporting the cornerstones of our strategy
(see page 10).
The Board continues to focus on the Group’s
environmental and social impact and during the year
published its Environmental, Social and Governance
policies. We increased our focus this year on the Group’s
response to climate-related risks and opportunities, and
our approach is outlined on page 47. I am particularly
pleased that during the year we implemented
enhancements to our governance, analysis and reporting
of climate change which bring us into alignment with
all the recommendations of TCFD. We have also made
good progress towards achieving the medium-term
greenhouse gas emissions reduction targets which we
set for ourselves at the end of 2021. Importantly, in June
2022 the Science Based Targets initiative validated that
those targets are in conformance with their criteria and
recommendations, and in line with a 1.5°C trajectory.
We also made our first submission to CDP (formerly the
Carbon Disclosure Project), and I am delighted to report
that we achieved a B rating overall – see page 68 for
further information.
Our aim is to continue improving our work in this area
over the coming year.
On behalf of the Board,
I am pleased to present
FDM’s Annual Report for
the financial year ended
31 December 2022.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
63
Strategic Report
Governance
UK Corporate Governance Code 2018
As a premium listed company, we are expected to
explain how FDM Group has applied the main principles
of the 2018 Code issued by the Financial Reporting
Council in July 2018.
The Board considers that FDM Group has complied with
the 2018 Code during 2022.
Further information on the 2018 Code can be found at:
www.frc.org.uk
The main principles of the 2018 Code are as follows:
•
Board Leadership and Company Purpose
•
Division of Responsibilities
•
Composition, Succession and Evaluation
•
Audit, Risk and Internal Control
•
Remuneration
1. Board leadership and Company
purpose
An overview of the Board’s role
The Board is required to establish the Group’s purpose
and to define its strategy. FDM exists to deliver
customer-led, sustainable, profitable growth on a
consistent basis, through our well-established Consultant
model. This is our purpose, and its key components are
set out in more detail on page 5. The Board’s view is that
enabling the successful achievement of FDM’s purpose
will secure the long-term sustainable success of the
Group for our staff, customers and other stakeholders,
generating value for shareholders.
In support of this purpose, the Board has developed a
strategy that will enable us to launch new careers for our
talented Consultants around the world, while delivering
high levels of client service. This aims to ensure that all
the investments we make and activities we carry out
can deliver quantifiable improvements to our business
for our customers, staff and shareholders. You can read
more about our strategy and its four key objectives,
including how each has been delivered during 2022, on
pages 10 to 11 of the Strategic Report.
The Group has established a set of core values that
reflect FDM’s culture. Each of the Executive Board
members aims to be a role model for these values,
promoting them and FDM’s culture. Our values and
culture are central to the continued success of the Group
and support the implementation of our strategy.
The Board is responsible for identifying the risks that may
stand in the way of meeting FDM’s strategic objectives,
considering which of those risks the Group is prepared
to take to achieve its goals, ensuring that appropriate
procedures and controls are in place to manage or
mitigate those risks insofar as it is reasonably practicable
to do so, and regularly testing the effectiveness of those
mitigations. In 2022 we considered in further detail the
climate-related risks (and opportunities) that may impact
the delivery of our strategy.
The Board has a remit to ensure that the Group has
the necessary resources in place to achieve its strategic
goals, both in terms of people, finance, and systems,
and to monitor performance and measure progress
towards those goals. It is the Board’s duty to support
and challenge the Executive Team to ensure that FDM’s
business is managed in accordance with that strategy.
The Board meets regularly through the year to
review operational and financial matters, develop
and refine strategy, and monitor progress towards
strategic objectives. When setting and monitoring the
implementation of the Group’s strategy, the Directors
keep in mind their individual duty to act in the way
that they consider, in good faith, will be most likely to
promote the success of the Group for the benefit of
its stakeholders as a whole, as set out in s.172 of the
Companies Act.
The Directors act with reasonable care, skill and diligence
in their work, taking steps to ensure that they exercise
independent judgement at all times and that processes
are in place to enable robust decision-making, especially
when there are more difficult decisions to be made.
FDM’s network of stakeholders includes its shareholders,
clients, employees, and members of the communities in
which we operate. The interests of these stakeholders
are varied but interconnected, and we recognise our
responsibilities to engage with them and to take their
interests into account. Additionally, in the event of any
notable vote against a Board recommendation proposed
at an AGM, FDM will carefully review the voting outcomes
and will engage with shareholders to understand their
reasons. We will then provide details of the actions taken
in response in the next Annual Report.
Further details of the steps taken by the Board to meet
the requirements of s.172 of the Companies Act are set
out in our s.172 Statement which can be found on page
56.
The Board has responsibility for managing the Group’s
strategy on climate change, including oversight of
climate-related risks and opportunities. The Board
is supported and informed on these matters via two
channels: an operational and strategic channel reporting
through the Board sponsor for climate change (CFO),
and a risk channel, which monitors climate-related risks
through the Audit Committee with input from the Risk
Management Team.
Further information on the Group’s climate change
governance and governance can be found beginning on
page 46. In line with Listing Rule 9.8.7R(8), the Group sets
out its climate-related financial disclosures consistent
with the Recommendations and Recommended
disclosures of TCFD, including providing information on
risks and opportunities arising from climate change and
the transition to a low-carbon economy, and the use of
scenario analysis to assist in understanding the impact
of different potential climate outcomes on the impact of
certain risks on the Group’s business.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
64
Corporate Governance Report
continued
The Board’s financial responsibilities include approving
the interim, preliminary and annual financial statements,
the annual budget and longer-term forecasts, significant
contracts and capital investment. Each of these
responsibilities underpins the principles of the 2018 Code.
The Board’s other responsibilities include monitoring
the impact of its decisions on our employees, promoting
strong business relationships with clients, suppliers and
others, and considering the impact of our operations
on the wider community and the environment. The
Board supports the Executive Team in ensuring that
the Group’s reputation for high standards of business
conduct is maintained, and is mindful of the need to
achieve a fair balance between the interests of different
shareholders and other stakeholders.
The Board and its Committees – a structure for
robust governance
The Board understands that the opportunity to promote
the long-term sustainable success of the Group is
maximised by ensuring that the Board remains effective,
has the right blend of skills, knowledge and experience,
and retains the key elements of an entrepreneurial
culture which is at the core of FDM.
As recommended by the 2018 Code, where appropriate,
the Board delegates some of its responsibilities to
the Audit Committee, Remuneration Committee and
Nomination Committee (“the Committees”), which
play a key role in supporting the Board’s aims and the
application of the principles of the 2018 Code. The terms
of reference and composition of these Committees are
reviewed annually and updated as appropriate. Whilst
the Board retains overall responsibility, the establishment
of Committees enables particular aspects of the Board’s
work to be carried out at a more detailed level by Board
members who have particular expertise, experience
and interest, allowing deeper analysis and oversight of
those areas. The Chairs of each Committee report to
the Board on matters considered and decisions taken
and make recommendations on matters for which the
Board reserves final approval. Minutes of all Committee
meetings are made available to other Board members to
be viewed at any time via the Board’s secure online portal.
The Nomination Committee keeps under review the
blend of skills, experience, independence and knowledge
across the Board’s members. It leads the process for
new appointments to the Board, ensuring a fresh and
entrepreneurial approach which enables strategic
opportunities to be identified, analysed and effectively
managed to ensure long-term sustainable success.
More information about these areas is set out in the
“Composition, succession and evaluation” section on
page 70 and in the Nomination Committee Report on
pages 84 to 86.
The Audit Committee monitors the application of
the financial reporting, internal control, and risk
management principles set out in the 2018 Code and
ensures that the Group maintains an appropriate
relationship with its auditors. More information about
risk and internal controls can be found in the “Audit, risk
and internal control” section on page 72 and in the Audit
Committee Report beginning on page 74.
The Remuneration Committee is responsible for setting
the Company’s Remuneration Policy, determining
each Executive Director’s total individual remuneration
package (including salary, benefits, bonus and
pension entitlements, and participation in share and
other incentive schemes) and setting the targets for
performance-related pay. The Committee is also
responsible for determining the remuneration of the
next tier of senior management below Board level. The
Remuneration Committee’s work supports the strategy
set by the Board, by promoting the opportunity for long-
term sustainable success, and by aligning executive and
senior managers’ remuneration to the achievement of
the Group’s purpose and promotion of its values, and to
the successful delivery of long-term strategic goals. The
Remuneration Report, beginning on page 87, contains
more information on our application of these principles
of the 2018 Code. The current Directors’ Remuneration
Policy was approved by shareholders at the AGM held on
28 April 2021.
Information about the membership of each Committee
can be found in the relevant Committee’s report.
The Board’s agenda
The Board meets regularly throughout the year,
following an agenda which is agreed in advance based
on themes from the Group’s business plan. Although the
setting of the agenda is led by the Chair of the Board in
discussion with the Chief Executive and the Company
Secretary, all Board members are welcome to put
forward topics for discussion.
Standing items, including operational and financial
reviews and Committee updates are considered at each
scheduled Board meeting, with unplanned items such
as commercial or property-related decisions considered
as and when required. In addition, potential topics are
identified for management updates and other Board
discussions.
Ahead of each Board meeting, all Board members are
supplied with an agenda and a set of specific papers
on particular strategic issues, as well as reports and
management information on current trading, operational
issues, compliance, risk, accounting and financial matters.
This enables the Chair to ensure all Directors are properly
briefed on the matters to be discussed. The Chair works
with the Company Secretary to ensure that the supporting
papers are clear, accurate, timely and of sufficient detail
to enable the Board to discharge its duties effectively. The
Board’s forward agenda is coordinated with those of its
Committees and the Chairs of the Committees report on
the activity of their Committees at Board meetings. The
agenda is designed to provide an appropriate balance
between strategic planning items and reports which
enable the Board to monitor the management and
performance of the Group, ensuring it operates within
the appropriate risk appetite and the Board’s strategy to
deliver FDM’s purpose.
The format of the Board Reports is reviewed regularly
and updated as appropriate to ensure that the reports
provide the required information in the most useful
format to enable Board members to carry out their
oversight role effectively.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
65
Strategic Report
Governance
At regular intervals throughout the year, senior managers from around the Group attend Board meetings to update the
Board on progress being made and matters arising in their areas of operation. The Board aims to ensure that there is
sufficient time for the Board to discuss significant matters or matters of a more discursive nature. To assist with this, the
usual approach is to hold informal gatherings after certain scheduled Board meetings which allow the Directors greater
time to discuss key topics with additional internal and external participants. This enables the Non-Executive Directors to
explore business and operational issues in greater depth with the senior managers who have reported to the Board.
The Board has identified certain matters on which decisions are formally reserved for the Board’s approval, a
schedule of which is available on the Group’s website www.fdmgroup.com/investors/corporate-governance/.
They include the following:
•
Approving financial results and other financial, corporate and governance matters;
•
Approving material contracts;
•
Approving material capital or operational expenditure;
•
Approving Group strategy;
•
Approving appointments to the Board;
•
Determining dividend policy, as well as approving and recommending dividends, as appropriate;
•
Reviewing material litigation;
•
Reviewing annually the effectiveness of internal control and the nature and extent of significant risks identified by
management and associated mitigation strategies; and
•
Approving the Group’s annual budgets and three-year plans.
Board decisions are generally reached by consensus at Board meetings. However, should the situation arise,
decisions may be taken by a majority of Board members. FDM’s Articles of Association provide the Chair with a
casting vote in the case of an equality of votes.
Details of the number of meetings of the Board and Committees (which only certain Directors are required to
attend) and individual attendances by Directors are set out in the table below. During 2020 and the early part of
2021 restrictions on gatherings and rules on social distancing required that some meetings of the Board and its
Committees took place using virtual conference technology. During 2022 the Board was largely able to meet in
person, but the availability of, and familiarity with, this technology enables a greater degree of flexibility for hybrid
Board meetings when necessary, if any Director is unable to be present in person. The Company’s Articles of
Association allow meetings of the Board to be held validly in this manner.
Board
meetings
Audit
Committee
meetings
Remuneration
Committee
meetings
Nomination
Committee
meetings
Number of meetings at which present, as a proportion of maximum possible
Number of meetings held in 2022
9
5
4
3
David Lister
9/9
n/a
1
n/a
1
3/3
Rod Flavell
9/9
n/a
1,2
n/a
1
n/a
1,3
Sheila Flavell
9/9
n/a
1
n/a
1
n/a
1
Mike McLaren
9/9
n/a
1,2
n/a
1
n/a
1
Andy Brown
9/9
n/a
1
n/a
1
n/a
1
Peter Whiting
9/9
5/5
4/4
3/3
Alan Kinnear
9/9
5/5
4/4
n/a
1
Michelle Senecal de Fonseca
9/9
5/5
4/4
3/3
Jacqueline de Rojas
9/9
n/a
1
n/a
1
3/3
1
Not applicable, not a member of the Committee and not required to attend.
2
At the invitation of the Audit Committee (but not as members) Rod Flavell attended four meetings and Mike McLaren attended five meetings of the Committee during the year.
3
At the invitation of the Nomination Committee (but not as a member) Rod Flavell attended three meetings of the Committee during the year.
Conflicts of interest
Procedures are in place for the disclosure by the Directors of any interest that conflicts, or may possibly conflict, with
the Group’s interests and for the appropriate authorisation to be sought if a potential conflict arises, in accordance
with the Company’s Articles of Association. An up-to-date schedule of the Directors’ other Board appointments,
related parties’ interests and relevant shareholdings is included as an appendix to each set of Board papers to ensure
full transparency of their respective relevant interests.
In deciding whether to authorise a conflict or potential conflict of interest only non-interested Directors (i.e. those
who have no interest in the matter under consideration) will be able to vote on and take the relevant decision. In
doing so, the Directors must act in a way they consider, in good faith, will be most likely to promote the success of
the Company, such that they may impose any limits or conditions which they think fit. The Board has reviewed the
procedures in place and considers that they operate effectively. No actual conflicts of interest arose during the year
under review, to the date of this report or in the previous year.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
66
Corporate Governance Report
continued
The key areas of focus by the Board in 2022
During the year there have been a number of areas where the Board has focussed its governance to ensure the
delivery of the Group’s strategy:
•
We further enhanced the remuneration packages of our Consultants in several of our territories. Previously,
Consultants were remunerated by way of a base salary, and an additional daily bonus which was paid when
Consultants were deployed with a client. In the US, UK and Canada we have now added the daily bonus into the
base salary, which means that Consultants are paid the same amount whether they are deployed with a client
or are between placements. This has boosted our recruitment programme in those territories, assisting us to
attract, train and develop high-calibre Consultants, in line with our strategy. As a result of feedback received
from candidates during our recruitment process, the Board has introduced other enhancements for trainees
and Consultants, including reducing the expectation that Consultants will be geographically flexible in the UK and
Ireland, and removing the expectation that UK Consultants will contribute to the cost of the training which FDM
has provided to them if they leave FDM before completing their two-year employment commitment to us.
•
The Board has approved the implementation of a Consultant Experience transformation programme, driven by a
dedicated experienced team. The programme aims to:
–
provide additional clarity for Consultants on their career options, where appropriate enabling some of them to
see FDM as a longer-term career option;
–
enhance engagement with Consultants, enabling them to feel more supported by the business, and provide an
increased sense of community through the development of various networks; and
–
identify Consultant skills gaps and provide access to enhanced resources, ongoing training throughout clients
placements and career development coaching.
We expect that this programme will bring significant benefits to our Consultants, clients and our business, increasing
the average tenure of Consultants, developing alumni of FDM’s programme to become advocates of our business,
aligning Consultant career development with our clients’ goals, and increasing overall Consultant and client satisfaction.
Other areas of focus for the Board during the year are set out below:
Strategy
•
Reviewed the Group’s budget and three-year plan (2023-2025)
•
Received regular updates on the evolution of the Group’s training model
•
Received regular updates on the Group’s project to obtain TechSkills accreditation for the Group’s training
courses
•
Received strategic updates from the Group’s senior management teams
Operational
•
Reviewed the requirements for Academy and other office space in the light of changes to methods of
working (including the delivery of training in FDM’s Academies)
•
Received business updates from the Group’s senior management teams
•
Reviewed information on recruitment and Academy utilisation
•
Reviewed our Consultant remuneration model
Financial
•
Reviewed monthly business performance against strategic goals
•
Reviewed trading updates
•
Reviewed and updated the Treasury policy and Treasury risk appetite statement
•
Reviewed and approved preliminary, full-year, and half-year results
•
Reviewed and approved Group budget, three-year plan and reforecasts
•
On the recommendation of the Audit Committee, approved the appointment of PwC to continue as
external auditors beginning with the financial year ending 31 December 2023
•
Approved a final dividend in respect of the 2021 financial year
•
Approved an interim dividend in respect of the period ending 30 June 2022
Risk
•
Undertook bi-annual reviews of the Risk Register and risk management process, including reviews of
the potential risks posed by climate change to the Group’s business
•
Reviewed the Group’s cybersecurity arrangements and controls
Governance
•
Reviewed data on the Group’s Scope 1, Scope 2 and full Scope 3 carbon emissions and received an
update on progress against the Group’s carbon reduction plan
•
Reviewed an analysis of the potential impact on the business of different climate scenarios, and considered
the risks and opportunities arising for the Group’s business from the transition to a low-carbon economy
•
Carried out a review of the effectiveness of the Board and its Committees
•
Reviewed the Group’s Gender Pay Gap data
•
Provided an update on Modern Slavery Act compliance
•
Approved updated terms of reference for the Board’s Committees
•
Assessed and approved the viability statement
•
Conducted a going concern review
Employees
•
Received updates on employee engagement
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
67
Strategic Report
Governance
Engagement with stakeholders
The Board has identified the following key stakeholders:
shareholders, clients, employees, prospective
candidates, university partners, our local communities,
and the environment.
Engagement with shareholders
The Group has an internal investor relations function led by
Mark Heather, the Company Secretary, who works with the
Group’s brokers and financial public relations advisors to
operate a programme of regular engagement with current
and prospective investors. We will continue to develop
our investor relations activities, to include an expansion
of the investor area of our website to provide additional
information on our strategy, business model, competitive
position, financial information and strategic progress.
To maintain dialogue with institutional shareholders,
the Chief Executive Officer and Chief Financial Officer
meet with major shareholders following interim and final
results announcements and otherwise as appropriate.
The Chief Executive Officer, Chief Financial Officer
and Company Secretary also speak regularly with
shareholders and potential investors to explain details of
our business model, our Consultant recruitment, training
and deployment programme, and our approach to other
important aspects of our work such as sustainability,
inclusion, diversity, social mobility and our plans for
carbon reduction.
While we are always happy to host visits in person from
current and prospective shareholders at our offices
around the world, offering the opportunity for investors
to tour our facilities and speak informally to members
of our sales and recruitment teams, as well as trainers
and trainees. Those investors who take advantage of
these visits often tell us that they provide an ideal way to
understand our business model, and we are glad to have
the opportunity to demonstrate our purpose and the
way in which our culture and values support this to drive
our business towards our strategic objectives. The recent
improvement in technologies facilitating virtual meetings
also enables more regular and efficient engagement with
shareholders.
Other Executive and Non-Executive Directors also
engage with shareholders from time to time, in particular
when there are matters of governance to be discussed
or when feedback is sought on particular proposals.
The Company uses the AGM as an opportunity to
communicate with its shareholders and welcomes their
participation; shareholders who attend the AGM have
the opportunity to ask questions and all Directors are
expected to be available to take questions. In accordance
with the 2018 Code, the Notice of AGM will be sent
to shareholders at least 20 working days before the
meeting and any other notice of general meeting will
be sent to shareholders at least 14 days before each
general meeting and will include details of the proposed
resolutions and explanatory notes. It is proposed that the
AGM will be held at 2.00 pm on Tuesday 16 May 2023.
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 withhold their vote on each
resolution. As soon as practical after the conclusion
of the AGM (or general meeting, as applicable), we
will announce the proxy votes cast, including details
of votes withheld, to the London Stock Exchange via
its Regulatory News Service. We will also publish the
information on our website.
The Group’s website (
www.fdmgroup.com
) is the
primary source of information on the Group.
Engagement with employees
The Executive Directors and senior management team
regularly spend time in each FDM centre and meet with
employees at all levels of seniority. This enables them
to promote FDM’s culture and values throughout the
organisation. The FDM Newsletter allows the Group’s culture
to be spread from the Executive Team to all employees.
The management team meets with partners that promote
the transition to the civilian work environment from the
Armed Forces, and those returning to work after a career
break. Sheila Flavell is President of techUK. In this role she
engages extensively with the UK Government to assist
them in developing policy to allow the technology industry
to thrive. She has advised government committees
on issues including bridging the digital skills gap and
enhancing diversity in the workplace.
Jacqueline de Rojas is a member of the board of techUK.
In her role as co-chair of the Governance Board at the
Institute of Coding, she promotes lifelong learning
through industry collaboration to address the growing
skills gap in technology and to encourage widening
participation and pathways to digital skills through
diversity and inclusion programmes.
Key managers in our People Team work closely with the
Board and its Committees to assist them in assessing
and monitoring the culture of FDM to ensure that policy
and behaviour are aligned with the Group’s purpose and
strategy. We carry out regular surveys of our Consultants
and internal staff to gather their views on a range of
matters. Our new Consultant Experience programme is
driving more frequent engagement with our Consultants.
The priorities identified from our engagement with
employees have directly influenced a number of areas
considered by the Board this year. In particular:
•
As a result of feedback received from candidates
during our recruitment process, and from some
of our clients, the Board has introduced a number
of enhancements to our model for trainees and
Consultants, including reducing the expectation that
Consultants will be geographically flexible in the UK
and Ireland, and removing the expectation that UK
Consultants will contribute to the cost of the training
which FDM has provided to them if they leave FDM
before completing their two-year employment
commitment to us. In addition, the Consultant daily
bonus has been added to the base salary, providing
additional certainty and security for Consultants
when they are between placements (see page
[69]
).
•
The current uncertainty in the global economic
environment has contributed to significant increases
in the cost of living in many of the territories where
we operate. In recognition of this we increased our
Consultants’ remuneration packages in all of our
regions during 2022 (having already made some
increases in 2021).
FDM Group (Holdings) plc
Annual Report and Accounts 2022
68
Corporate Governance Report
continued
Further information about our employee engagement
can be found in our Corporate Responsibility report from
pages 32 to 43.
The results of our programmes will continue to
inform our engagement with staff. This will assist us in
promoting a diverse, inclusive and fulfilling culture in
which our people can thrive, optimising our Consultants’
experience during their time with us, and ensuring that
our employees promote and embody our values and our
unique service offering.
In accordance with Provision 5 of the 2018 Code, the
Board has appointed Jacqueline de Rojas to engage
with the workforce to ensure that the voices of our
employees are heard at Board level.
Engagement with clients
Together with members of the Sales team, members
of the Executive Team meet on a regular basis with
customers in our different territories to discuss their
requirements. The senior members of our Sales team
maintain close long-term relationships with senior
executives in our client organisations to ensure we are
able to anticipate our clients’ needs. We regularly update
the structure and content of our training programme
to reflect commercial and technological changes in the
sectors in which our clients work.
Engagement with University Partners
We have continued to engage with our University
Partners, working to help them develop more effective
ways of hosting remote careers fairs. We have also
created our new “FDM attraction events” allowing us to
engage with students from multiple Universities in one
event. Further information about these engagements
can be found on page 42.
Environmental responsibility
During the year we established an internal working
group to identify opportunities to reduce the Group’s
carbon footprint and promote their implementation. The
group monitors greenhouse gas emissions against the
targets set by the business and reports to the Board on
the emerging trends. The Group is engaging with FDM’s
key suppliers to reduce the Scope 3 emissions from our
purchased goods and services and has worked with
landlords of our premises to increase the use of energy
from renewable sources.
In July 2022 the business completed its first
climate change submission to CDP. CDP is a global
environmental disclosure and ratings platform which
is recognised as one of the leaders in the market and
is used by many of our customers and shareholders
to help them make decisions about supply chains and
investments. We had been encouraged by some of
our larger shareholders and customers to make an
annual submission to CDP, to enable them to review
FDM’s efforts to measure and manage our risks and
opportunities on climate change. CDP awarded FDM with
a ‘B’ rating in 2022. Further information on the steps we
are taking can be found on pages 45 to 55.
2. Division of responsibilities
Chair of the Board, Chief Executive and Senior
Independent Director
The roles of the Chair and Chief Executive, as well as
those of the Senior Independent Director, and the
division of responsibilities between them are clearly
defined and agreed by the Board. As Chair, David Lister
leads the Board and is responsible for ensuring that it
performs its role effectively. The Chair aims to ensure
that Board meetings are collaborative and provide an
opportunity for all Directors to express their views, to
contribute and add value to the Board’s work. David
Lister was appointed as Chair on 5 March 2019 and on
appointment was independent when assessed against
the circumstances set out in Provision 10 of the 2018
Code.
As Chief Executive, Rod Flavell’s main responsibility is to
manage the Group’s business and to lead the Executive
Team in the implementation of the strategies that are
adopted by the Board. The Executive Directors under
the leadership of the Chief Executive are responsible
for managing the day-to-day activities of the Group,
communicating the Group’s objectives to the wider
management team and ensuring that the necessary
resources are available to enable those objectives to
be achieved. The Executive Team has formal monthly
meetings and meets more informally at other times
between those meetings.
This separation of roles enhances the independent
oversight of executive management by the Board and
more closely aligns the Board with shareholders. It also
means that no one individual or group of individuals
dominates the Board’s decision-making. This oversight is
further strengthened by the formal reservation of certain
matters for the Board’s approval, as referred to on page
65. The Directors’ powers are set out in the Company’s
Articles of Association.
Peter Whiting is the Group’s Senior Independent
Director. In performing this role, Peter acts as a sounding
board to provide support to the Chair and the Non-
Executive Directors. He also provides shareholders with
a point of contact with whom they can meet if they have
any concerns which might not be addressed through
normal channels, for example with the Chair or Executive
Directors, and ensures that meetings with the Non-
Executive Directors are held at least once per annum (or
more regularly if circumstances so require) to evaluate
the Chair’s performance. The Senior Independent
Director serves as an important intermediary role in
FDM’s governance process. In carrying out his role, Peter
ensures he maintains a thorough understanding of the
views of the Company’s shareholders.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
69
Strategic Report
Governance
Support available to the Board
All Board Directors have access to the Company
Secretary, who advises them on Board and governance
matters. During the year, members of the Audit
Committee received external training covering
updates in corporate governance and corporate
reporting. The Remuneration Committee Chair and the
Company Secretary also received external updates on
developments during the year in governance and trends
in shareholder expectations and good practice relating
to executive remuneration.
As well as the support of the Company Secretary,
there is a procedure in place for any Director to take
independent external professional advice at the
Company’s expense in the furtherance of their duties. As
stated previously, the Chair and the Company Secretary
work to ensure that comprehensive information is
provided well in advance of Board meetings to give
Directors the time and materials they need to contribute
to an effective and efficient Board.
Role of the Non-Executive Directors
The Group’s Non-Executive Directors have a broad and
complementary mix of business skills, knowledge and
experience acquired across diverse business sectors
and territories. This allows them to provide strong,
independent, external perspectives to Board discussions,
which complement the skills and experience of the
Executive Directors, facilitating a diversity of views aired
at Board meetings. This diversity of skills, expertise and
backgrounds enables the Non-Executive Directors to
offer specialist advice where appropriate, enables robust
and constructive debate and improves the quality of the
decision-making process. At the same time, it also reduces
the likelihood of any one perspective prevailing unduly.
A key role performed by the Non-Executive Directors is
the scrutiny of executive management in meeting agreed
objectives and monitoring the reporting of performance.
They also constructively challenge and help develop
proposals on strategy and ensure that financial controls
are rigorous and that the Group is operating within
the governance and risk framework approved by the
Board. The Chair works to ensure a culture of open and
transparent debate in Board meetings.
Non-Executive Directors are appointed for an initial
minimum period of three years and are subject to
annual re-election at the Company’s AGM. Their
appointments then continue until terminated by either
the Director or the Company giving notice to terminate.
Their appointments as Directors would end if they were
not re-elected by the shareholders at the Company’s
AGM. The terms and conditions of appointment of
Non-Executive Directors, including the expected
time commitment, are available for inspection at the
Company’s registered office.
The Board regularly reviews the independence of each of
the Non-Executive Directors. When determining whether
a Non-Executive Director is independent, the Board
considers each individual against the criteria set out in
the 2018 Code and also considers how they conduct
themselves in Board meetings, including how they
exercise judgement and independent thinking. Taking
these factors into account, the Board considers that
all the Non-Executive Directors are independent when
assessed against the criteria specified in Provision 10 of
the 2018 Code.
Board commitment
When making new appointments, the Board considers
other demands on Directors’ time to ensure that they
are able to devote sufficient time and focus to their
role at FDM. New external appointments may not be
undertaken without the prior approval of the Board, and
where any significant new appointments are approved
by the Board, we intend to explain in the subsequent
Annual Report the Board’s rationale in giving that
approval. For Executive Directors we recognise that
external board exposure can be useful as part of their
development as Directors, but we will not normally
permit them to take on more than one external non-
executive directorship of a publicly listed company (or
another equivalent significant appointment). Sheila
Flavell is President of techUK. Mike McLaren is a non-
executive director and chair of the audit committee on
the board of ActiveOps plc. No other Executive Director
currently has an external commitment.
Non-Executive Directors are expected to commit at least
24 days per annum to FDM and in practice may commit
considerably more time than this. The Board keeps this
under regular review.
The current key external commitments of the Directors
are included within their biographies on pages 59 to 61.
The Board has reviewed the time commitments of its
Directors to ensure that they remain able to devote the
appropriate amount of time and focus to their work at
FDM.
In approving any external appointments, the Board
considers the size and complexity of the relevant
businesses, the work involved in the roles, and the
overall time commitments involved. The Board also
recognises that there is a benefit to FDM from enabling
its Directors to gain experience from operating on
different boards, and to have a rounded exposure to a
range of businesses and markets.
The Board considers that throughout the year all FDM’s
Directors (including the Chair) have been, and will
continue to be, able to devote sufficient time and focus
to their respective roles at FDM.
Details of the remuneration received by each of the
Executive Directors for the year ended 31 December
2022 are shown in the single figure table presented on
page 93 of the Remuneration Report.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
70
Corporate Governance Report
continued
3. Composition, succession and
evaluation
Composition of the Board
The Board currently comprises four Executive Directors
and five Non-Executive Directors (including the Non-
Executive Chair). Further biographical details about each
Director, including information on their prior experience,
are set out on pages 59 to 61.
As required by Provision 11 of the 2018 Code, at least
half the Board (excluding the Chair) is made up of
independent Non-Executive Directors.
Board diversity policy
The Board is committed to the promotion of diversity
and inclusiveness of all kinds throughout the
organisation. In 2022, we reported a median gender pay-
gap of -4.3% (2021: -9.6%), and our mean gender pay-gap
was -4% (2021: 0.5%).
We believe that by making the most of our differences
of approach, and using the collective experiences,
backgrounds, skill sets and knowledge of our talented
and diverse employees, we will drive innovation and
success and achieve more for our stakeholders. This
applies equally to our Board. The composition of our
Board is vital to its effectiveness and that, in turn,
enhances good governance. In line with the targets
set by the FTSE Women Leaders Review (formerly the
Hampton-Alexander Review) and the Parker Review, at
year end, 33% of our Board Directors were female and
one Director identifies as Mixed White Asian. Diversity
at Board level enables our employees who are from
traditionally under-represented groups to aspire to
senior management positions. This strengthens diversity
and inclusion throughout our workforce, and directly
supports our strategic aim to attract, train and develop
high-calibre Consultants by making FDM attractive to the
widest possible group of people as a place for them to
launch their careers in technology.
The Board’s primary obligation is to make appointments
based on objective criteria to ensure that the best
individuals are appointed for every role. Within this
context, the Board is committed to a policy of promoting
a rounded Board which reflects a diversity of all
relevant personal attributes, including skills, experience,
educational and professional background, gender, race
and age. In support of this policy, the Board intends:
•
to consider all aspects of diversity including gender
and ethnicity when reviewing the composition and
balance of the Board as part of the Board’s annual
effectiveness evaluation;
•
to ensure that the succession planning and talent
management programme includes initiatives to
develop the pipeline of talent, to encourage and
monitor the development of a diverse range of
internal high-calibre employees and to promote
diversity in appointments to the senior management
team who will in turn aspire to a Board position;
•
wherever possible to engage executive search
firms who have signed up to the Voluntary Code
of Conduct for Executive Search Firms on gender
diversity and best practice;
•
to require executive search firms to identify and
present an appropriately diverse range of candidates
for each vacancy;
•
to develop further the level, frequency and quality
of interaction between Board members (including
Non-Executive Directors in particular) and those
aspiring senior managers to enable them to gain
more exposure to, and understanding of, the Board’s
work; and
•
to review this policy and report on progress on an
annual basis.
Appointments to the Board, succession planning
and talent management
There have been no new appointments to the
Board during the financial year. When making new
appointments, the Board operates a formal, rigorous
and transparent procedure for the appointment of
new Directors, the primary responsibility for which
is delegated to the Nomination Committee. There is
more information about this procedure and the way
the Nomination Committee applies it on page 70. The
appointment and removal of the Company Secretary is a
matter reserved for the decision of the Board.
The Board recognises its responsibility for succession
planning and regularly considers the balance of skills,
experience and knowledge of the Board, to ensure it
remains appropriate to the business and that the Board
is best placed to achieve the Group’s strategic objectives.
The Group’s People Team has in place a Talent
Management and Succession Planning programme with
the following key elements:
•
building effective succession by proactively managing
risk and distributing key knowledge and skills more
widely;
•
ensuring a well-prepared pipeline of talent in advance
of requirements arising, based on merit and objective
criteria, identifying and resolving any gaps in the
pipeline; and
•
focussing on the skills and diversity of representation
which the business needs to ensure sustained future
growth.
The programme is designed to promote sustainable
organisational performance through smooth succession
and to provide investors with assurance that there is
stability of talent within the FDM Group. By further
developing diversity in our organisation, we ensure we
can draw from a range of experiences, backgrounds and
approaches which should help us to avoid “groupthink”
and maximise our ability to recognise potential
opportunities and threats. The programme also provides
our senior managers clarity with regard to career paths,
which will enable increased engagement and improved
retention of key talent. The Nomination Committee will
continue to monitor progress of the programme in the
coming year.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
71
Strategic Report
Governance
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 Group’s business, governance and
stakeholders.
Elements of the programme include:
•
briefings from senior management to provide
a business overview, update on current trading
conditions and strategic commercial issues;
•
meetings with the Company’s key advisors and major
shareholders, where necessary;
•
meetings with employees at different FDM Academies
and centres;
•
provision of a legal and regulatory memorandum
and briefing on the duties of directors of listed
companies;
•
details of the Group’s corporate structure, Board and
Committee structures and arrangements and key
policies and procedures; and
•
the latest statutory financial reports and
management accounts.
The Chair, in conjunction with the Company Secretary,
ensures that Directors are provided with updates on
changes to the legal and regulatory environment in
which the Company operates. These are incorporated
into the annual agenda of the Board’s activities
along with wider business and industry updates.
The Company’s principal 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.
The Company Secretary updates the Board as
appropriate on developments in corporate governance
and any relevant legal or regulatory changes. In this
way, each Director keeps their skills and knowledge
current so that they remain competent at fulfilling their
role, both on the Board and on any Committee of which
they are a member. Specific training and development
needs of individual Directors are explored as part of
Board evaluations (and may be requested by individual
Directors directly) and are addressed by the provision
of in-house training or external courses, as appropriate.
Non-Executive Directors also experience development
in the course of the outside roles they may hold, which
contributes to their knowledge and experience in
performing their work at FDM.
Evaluation of the Board and its Committees
In accordance with current best practice and the 2018
Code, the Board undertakes a rigorous and formal
annual evaluation of its performance and effectiveness
and that of each Director and its Committees. The
process is led by the Nomination Committee, and it is the
Board’s policy to invite external advisors to assist with
that evaluation every three years.
In January 2023 an internal evaluation of the
effectiveness of the Board and its Committees during the
2022 financial year was carried out as recommended by
the 2018 Code. This year the evaluation was facilitated
internally by the Company Secretary, in consultation
with the Chair and the Board Committee Chairs. The
most recent external evaluation was conducted by Lien
Consulting Limited during 2020/21. Further information
about the evaluation can be found in the Nomination
Committee Report on page 85. Overall, the evaluation
concluded that the Board and its Committees functioned
well, were well chaired and the position was positive.
Members of the Committees had the appropriate
skills, experience and a particular interest in the
work of the Committee to debate issues and provide
challenge to management. All of the individual Directors
demonstrated the expected level of commitment
to the role and contributed effectively during board
discussions.
The Non-Executive Directors met without the Chair
to evaluate David Lister’s performance as Chair and
concluded that he had operated effectively in the role.
Re-election of Directors at the 2023 AGM
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 2023 AGM,
in compliance with Provision 18 of the 2018 Code (and
reflecting the Company’s membership of the FTSE 250),
all Directors will retire and offer themselves for re-
election.
In determining whether a Director should be proposed
for re-election at the 2023 AGM, the Board took into
account the Nomination Committee’s advice based on
the results of a review of each Director’s contribution
to the Board’s effectiveness, which formed part of the
2022 Board evaluation. This review confirmed that all
Directors continue to be effective and demonstrate
commitment to their roles and so the Committee
recommended their reappointment.
The Board notes that, by the time of the 2024 AGM,
Peter Whiting (Senior Independent Director and Chair
of Remuneration Committee) will have served on the
board for more than nine years from the date of his first
appointment, and accordingly will not seek re-election
in 2024. The Nomination Committee has commenced
the search for an additional independent Non-Executive
Director, who is expected to be appointed to the Board
before Peter Whiting steps down. Further information
is included in the Nomination Committee report on
page 85.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
72
Corporate Governance Report
continued
4. Audit, risk and internal control
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 81. A statement of the Directors’ responsibilities
in relation to the financial statements is set out on pages
110 to 111.
Independence of internal and external audit
functions
The Board has in place processes which are managed
on its behalf by the Audit Committee, and which are
intended to ensure that the services provided by the
internal and external auditors remain independent and
effective. Further information on these processes is set
out in the Audit Committee Report on pages 82 and 83.
Risk management and internal control
The Board is ultimately responsible for maintaining
sound risk management and internal control systems
and for reviewing their effectiveness. 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 the Financial Reporting
Council’s ‘Guidance on Risk Management Internal
Control and Related Financial and Business Reporting’
(September 2014)). This process has been in place for
the year under review and up to the date of approval
of the Annual Report. The Group’s principal risks are
recorded in a Group Risk Register which is updated twice
a year by the management team and reviewed by the
Executive Team. After each update it is reviewed by the
Audit Committee and then submitted to the Board for
approval. The Board’s view of the Group’s key risks and
how the Group seeks to manage those risks is set out on
pages 24 to 30.
The Group has in place appropriate internal control and
risk management systems around financial reporting.
The Group’s 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.
An outsourced Internal Audit function is in place for
the Group and the scope of work undertaken during
2022 was carried out in accordance with the annual
Internal Audit Plan which was discussed and approved
in advance by the Audit Committee. A more detailed
overview of the areas of focus and programme of work
undertaken by the Internal Audit team in the year
appears on page 81.
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 prior year and operational issues in the
business;
•
Operational and financial controls and procedures
are in place including authorisation and approval
policies for financial expenditure; authorisation and
approval policies for contracts and agreements;
signing authorities; IT application controls; and
appropriate segregation of duties and reviews
by management. Further, there are additional
procedures in place to address other risks to the
business, including a code of conduct and covering
ethics and conflicts of interest, an Anti-Fraud policy,
an Anti-Slavery and Human Trafficking policy, an
Anti-Bribery and Corruption policy, policies covering
Environmental, Social and Governance matters, a
Vetting policy and a Procurement Policy;
•
The Group’s finance function is centralised;
•
The Group has implemented a portal to deliver
training to all employees on key regulatory and
compliance matters such as Health and Safety,
Workplace Harassment and Information Security
and the General Data Protection Regulation.
Successful completion of the training is monitored,
and employees’ understanding can be refreshed as
appropriate;
•
An outsourced Internal Audit function is in place,
working for 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.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
73
Strategic Report
Governance
5. Remuneration
The Remuneration Committee is focussed on ensuring
that remuneration policies and practices for Executive
Directors and other senior managers support the
Group’s strategy and promote long-term sustainable
success. Targets and metrics for bonuses and long-term
incentives are reviewed annually by the Committee to
ensure that they incentivise the behaviours which are
necessary to deliver the Group’s strategy and promote
long-term sustainable success. The primary aim of
the strategy established by the Board is to deliver the
Group’s purpose (which is described in further detail on
page 5). Setting executive remuneration in a way which
promotes the delivery of that strategy ensures that
remuneration is aligned to the Group’s purpose
and values.
The Board delegates responsibility for developing
policy on executive and senior managers’ remuneration
to the Remuneration Committee to ensure that the
development of the policy is formal and transparent.
The Committee regularly seeks independent advice
from its external remuneration advisors and keeps
itself informed about market trends in executive
remuneration and on remuneration-related areas
which are important to the Group’s shareholders. The
Committee consults with key shareholders prior to
making significant changes in the Remuneration Policy.
The Directors’ Remuneration Policy contains detailed
and transparent information about the rationale behind
its key provisions to enable shareholders to understand
the link between the policy and delivery of the Group’s
long-term strategy. Each member of the Remuneration
Committee exercises independent judgement and
discretion when authorising remuneration outcomes, in
line with the policy.
The Board as a whole takes responsibility for approving
the remuneration of Non-Executive Directors.
The Directors’ Remuneration Report provides
more detailed information about the work of
the Remuneration Committee and details of the
remuneration of each Director.
The Corporate Governance Report was approved by the
Board on 14 March 2023 and signed on its behalf by:
David Lister
Chair
14 March 2023
FDM Group (Holdings) plc
Annual Report and Accounts 2022
74
Chair’s introduction
On behalf of the Board, I am pleased to introduce
the Audit Committee Report for the year ended 31
December 2022. This report, which has been prepared
in accordance with the 2018 Code, provides insight into
the activities the Committee has undertaken during the
year. The Committee continues to have a key governance
role for the Group and oversees, on behalf of the
Board and shareholders, important matters relating
to financial reporting, internal controls, the assurance
framework, and risk management. We reviewed our
terms of reference during the year to ensure that they
remain aligned with the requirements of the 2018 Code.
No updates were required at that stage, but we will
keep the terms of reference under close review during
the coming year as regulatory requirements for non-
financial reporting increase, and especially in light of
the refinements the UK Government intends to make
to the UK’s audit and corporate governance framework
following the 2021 BEIS consultation on “Restoring
Audit Committee Report
On behalf of the Board,
I am pleased to present
the Audit Committee
Report for the year ended
31 December 2022.
Trust in Audit and Corporate Governance” (“BEIS
Consultation”).
Although many of our territories were free of any
significant COVID-19 restrictions for much of the year,
some locations in APAC remained subject to restrictions
into the second half of the year, causing continuing
challenges for businesses (including some of our clients).
Other threats to geo-political and macro-economic
security emerged during the period, introducing
inflationary pressures and heightening the risk of
recession occurring in some territories, most notably in
the UK, over the next twelve months. The Committee’s
role in careful monitoring of the financial performance of
the Group therefore remains as important as ever.
During the year we obtained assurance from management
that the Group’s key financial controls continued to operate
as designed. The Committee also applied scrutiny to
management’s stress testing of the financial and business
models. The Executive Team’s focus on a strong balance
sheet and prudent cash buffer have continued to provide
assurance to the Board that the business is in a solid
position to continue as a going concern despite these
macro-economic challenges. The Committee was also able
to support the Board in its assessment of the viability of the
Company over the longer term.
In 2022, the Internal Audit plan included a detailed
follow-up review of some findings identified in previous
reviews. The review found that improvements had
been made in many areas, with other improvements in
progress. In addition, the Internal Auditors commenced
new assessments of financial controls, policies and
procedures relating to Consultant working hours, and
the Group’s use of social media.
In December the members of the Audit Committee
visited FDM’s Finance Team at our office in Brighton. We
received comprehensive updates and assurance from
our experienced finance management team on their
work and the controls in place to mitigate risk in this
area of the business. We also received an update on the
Group’s climate change management programme, and a
presentation from the in-house legal team about its key
areas of focus.
Effective risk management is critical to the delivery of
the Group’s strategic objectives. The Board establishes
the nature and extent of the risks it is prepared to take
in order to achieve its strategic aims, and is responsible
for ensuring that the Group’s internal control and
risk management systems operate effectively across
our business. The Board has delegated to the Audit
Committee responsibility for oversight of the measures
we have in place, and reviewing the effectiveness of
the risk management process remains one of the
most important areas of focus for the Committee’s
work. The risk management process this year has
included additional focus on climate-related risks and
opportunities as part of our work on TCFD reporting. We
have worked with our external advisors to put in place
enhanced governance structures around our efforts
to reduce our carbon footprint, and our reporting of
Environmental, Social and Governance matters.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
75
Strategic Report
Governance
As in previous years, the Committee carried out a
review of the Group’s risk management process. Our
overall conclusion is that the process continues to
operate effectively across the Group. The Committee
is reassured that our approach to reviewing potential
risks, which includes discussions with a wider range
of employees within the organisation, has shown that
risk management is well embedded in the culture of
our business. This process is designed to provide us
with earlier visibility of emerging risks, and has been
successful in increasing the breadth of information
available to us to update our assessment of risk. We
keep the process and risk-management culture under
review to identify any areas where further improvements
can be achieved. Further information about the principal
risks to our business is set out on pages 26 to 31.
The risk of cyberattacks and the threats to data security
are ever increasing and the Committee continues to
receive regular updates from the Chief Information
Officer and the IT Security team. The Committee
also received progress reports on the Group’s key IT
development and implementation projects.
The Committee continues to provide appropriate
challenge to the decisions and approach taken by
the management team in relation to the content
and disclosures within the Group financial reports
and challenges management to explain the rationale
and basis for key judgements and estimates before
accepting them. The Committee aims to ensure that
the information provided about the key judgements
and estimates made is clear and helpful, and assists
investors in reaching a fair assessment of FDM’s financial
position. The Committee has also focussed on ensuring
that disclosures are fair, balanced and understandable.
The key management judgement areas and significant
financial reporting items in respect of the financial year
are disclosed in this report on pages 80 to 81.
During the year we continued to monitor the potential
regulatory developments emerging from the UK
Government’s response to the BEIS Consultation.
Although not mandatory for FDM Group, we are
developing an Audit and Assurance Policy which will
be helpful to the Committee in codifying the different
strands of work involved in assuring the integrity of
FDM’s reporting – including, but not limited to, the
financial statements – and the handling of risk. The
Committee will ensure that we implement any other
changes which may be required in a way which adds
value to the Committee’s work and enhances assurance
for our stakeholders.
During the year, the FRC wrote to us requesting
additional information on the Group’s 2021 Annual
Report. Details of the principal areas where the FRC
requested additional information and clarification are
set out on pages 79 to 80. The Committee reviewed
the queries and worked with management to analyse
the underlying facts and judgments, and to prepare
responses to the FRC’s questions. The FRC was satisfied
with the response provided and closed its enquiries.
Finally, the Committee undertook a full tender process
during the year to select a firm to carry out the external
audit beginning with the year ended 31 December 2023.
PwC were appointed as the Group’s auditor during 2013
and performed their first audit for the year ended 31
December 2013. Under The Statutory Audit Services for
Large Companies Market Investigation (Mandatory Use
of Competitive Tender Processes and Audit Committee
Responsibilities) Order 2014 (“CMA Order”), the Group
was required to carry out a competitive tender process
prior to the audit for the year ended 31 December 2023.
PwC emerged from the process as the preferred firm
and will be reappointed to carry out the audit of the
2023 financial year. We look forward to continuing to
work with them. Further details of the tender process
can be found on page 82.
Role of the Committee
The Committee is appointed by, and reports to, the
Board. The Committee’s terms of reference were
reviewed during the year to ensure that they continue to
reflect the Committee’s approach and the requirements
of the 2018 Code. No amendments were required
following that review, but the Committee will keep
the terms of reference under close review during
the coming year as regulatory requirements for non-
financial reporting increase, and especially in light of the
refinements which the UK Government intends to make
to the UK’s audit and corporate governance framework
following the BEIS Consultation. The terms of reference
are available in the Corporate Governance section of the
Group’s website at
www.fdmgroup.com
.
The key responsibilities of the Committee are to:
•
Monitor the application of financial reporting and
internal control principles set out in the 2018 Code,
and to maintain an appropriate relationship with the
Company’s auditors;
•
Monitor the integrity of the financial statements
of the Company and any formal announcements
relating to the Company’s financial performance,
including any significant financial reporting
judgements contained in them;
•
Provide advice to the Board on whether the Annual
Report and Accounts, taken as a whole, is fair, balanced
and understandable, and provides the information
necessary for shareholders to assess the Company’s
position and performance, business model and strategy;
•
Review the Company’s internal financial controls and
the Company’s internal control and risk management
systems;
•
Agree the scope of work for the Internal Auditors and
review their reports and findings;
•
Monitor and review the effectiveness of the
Company’s Internal Audit function;
•
Review the arrangements by which the Company’s
staff may raise concerns in confidence about possible
improprieties in matters of financial reporting or other
matters, and ensure that arrangements are in place
for the proportionate and independent investigation of
such matters and for appropriate follow-up action;
•
Ensure compliance with laws, regulations, ethical and
other issues;
•
Make recommendations to the Board, and for
approval by shareholders, on the appointment,
reappointment and removal of the external auditors;
FDM Group (Holdings) plc
Annual Report and Accounts 2022
76
Audit Committee Report
continued
•
Agree the scope of the external audit and review the reports and findings of the external auditors;
•
Monitor the external auditors’ independence and objectivity and the effectiveness of the external audit process;
•
Oversee the engagement of the external auditors to supply non-audit services; and
•
Manage the external audit tender process.
Priorities
Last year, in addition to the business-as-usual work, the Committee set itself some key priorities for 2022, progress
against which is outlined below:
2022 priorities
Progress
Following up the findings
and recommendations of
the Internal Audit reviews
carried out during 2021 in
accordance with the 2021
Internal Audit Plan.
The Committee requested the Internal Auditors to carry out a follow-up review to
check on progress with the implementation of recommendations made following
Internal Audit reviews carried out between 2019 and early 2022. Further information
on this follow-up review is on pages 81 and 82.
Running a competitive
tender process in respect
of the appointment of the
external auditor (see page
82 for further details).
In line with the requirements of the CMA Order, the Committee keeps the
appointment of the external auditor under review. The Committee conducted a
competitive tender process to appoint an external auditor beginning with the audit
in respect of the financial year ending 31 December 2023. PwC, who were first
appointed as the Group’s external auditors in 2013, emerged as the preferred audit
firm and were reappointed. Further information on the process is on page 82.
Review the Group’s
cybersecurity
arrangements.
During the year, the Committee received regular updates from the Chief Information
Officer and the Information Security team on their work. The Committee has been
encouraged by the evident technical knowledge of the IT teams and their continued
vigilance in protecting FDM. Changes have been made to IT systems to increase
resilience to cybersecurity incidents. Mitigations have been implemented to manage
key person risk, and succession plans for the IT security team have been updated. The
IT Security Team has enhanced its work to increase awareness in the organisation
of the risk of phishing attacks and other similar activity. The Committee continues to
monitor closely the management of these issues.
Monitor the impact of
COVID-19 and other
current macro-economic
pressures on the Group’s
business.
The Committee invited the CEO and CFO to attend its meetings regularly during 2022
to enable close monitoring of the impact of these factors on the Group’s trading and
financial position. Management has continued to take a prudent financial approach,
maintaining a robust balance sheet and strong cash management to maximise
resilience, whilst also doing the right thing by trainees, Consultants and internal staff
to ensure their wellbeing and the sustainability of the business.
Monitor regulatory
change, focussing in
particular on proposed
changes to regulation
of the statutory audit
profession and of audit
committees.
The Committee has reviewed the UK Government’s response to the BEIS Consultation,
and is considering the intended refinements to the UK’s audit and corporate
governance framework. Under current proposals, the requirements for an Audit and
Assurance Policy and a disclosure on the steps the Board has taken to prevent and
detect material fraud will not be mandatory for FDM. However, the Committee is
developing an Audit and Assurance Policy to assist in drawing together the different
sources from which management and the Committee obtain assurance on the
integrity of FDM’s reporting – including, but not limited to, the financial statements –
and the handling of risk.
This year, the external auditors will be required to apply ‘The International Standard
on Auditing (UK) 240 (Revised May 2021)’. This sets out the external auditor’s
responsibility for obtaining reasonable assurance that the financial statements taken
as a whole, are free from material statement, whether caused by fraud or error.
In order to assist with this, management documented its assessment of the risk of
fraud, which was reviewed by the Committee and the auditors. The Committee has
also requested that the internal auditors carry out a detailed internal audit review of
FDM’s fraud risk management process in 2023.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
77
Strategic Report
Governance
2022 priorities
Progress
Climate change risk
and environmental
sustainability, and our
reporting on it.
The Committee has received updates during the year on our approach to SECR
and the framework put forward by the TCFD. Building on last year’s work on TCFD,
we have enhanced our TCFD disclosure this year to include additional analysis of
risks and opportunities arising from climate change, and a climate change scenario
analysis. This disclosure can be found on page 45, we are fully consistent with the
TCFD recommendations.
FDM has been working with an external sustainability consultancy to continue
analysing its carbon emissions, which will now be measured half-yearly, enabling us
to see more clearly the trends in our progress against our carbon reduction targets
from the 2020 baseline. The Committee continues to monitor the quality of the
Group’s reporting on these matters.
During the year, the Internal Audit team carried out a follow-up review which included
checking on progress with some recommendations made by them in early 2022
after a review of the design and effectiveness of the governance, risk-management
and controls in place for FDM’s ESG reporting. The follow-up review found that good
progress had been made on strengthening governance, including the development
of a non-financial reporting framework, and strategy with a view to ensuring valid
reporting of these matters against the underlying data held in FDM systems. Steps
have also been taken to reduce the reliance on manual processes to reduce the
risk of errors appearing in a few specific categories of environmental and social
disclosures. Further planned systems changes will help with this over the coming year.
Annual review of financial
controls.
The Internal Audit team carried out its annual review of Financial Controls during the
year and reported that the controls tested were operating effectively. Management
has adopted recommendations to the processes which will enable the documentation
of control descriptions to be clarified or improved.
Embed a culture of risk
awareness into the
development of new
projects.
In 2021 the Internal Audit team carried out a review of risk management processes
across the organisation which made some recommendations for the enhancement
of mechanisms to identify, capture and mitigate risks in internal projects. The project
manager responsible for the implementation of current internal IT systems projects
has reported regularly to the Committee throughout 2022 on the current status of
those projects and the Committee was able to gain assurance on the management of
risk in those projects and the implementation of the recommendations made by the
Internal Audit team.
In addition to continuing to focus on a number of the issues referred to above, in the coming year the Committee
intends to focus on the following:
•
The Group’s financial controls framework
•
The findings and recommendations of each of the Internal Audit reviews carried out during the year in
accordance with the 2023 Internal Audit Plan
•
A further assessment of the risk of fraud in the Group
•
Monitoring any proposals made by the UK Government following the BEIS Consultation and implementing any
resulting changes in approach, policies, procedures and reporting
Composition of the Committee
During the year, the members of the Committee were Alan Kinnear (Chair of the Committee), Michelle Senecal de
Fonseca and Peter Whiting.
The Board is satisfied that Alan Kinnear, a chartered accountant with significant financial and audit experience in a
public company environment, has the recent and relevant financial and accounting experience required by the 2018
Code. Michelle Senecal de Fonseca and Peter Whiting also have experience in financial and reporting matters through
their other business experience and current external roles. The Committee as a whole has a sufficiently wide range of
business experience and expertise, including significant experience and competence in the sector within which FDM
operates, such that the Committee is in a position to fulfil its role effectively.
In compliance with the 2018 Code, the Committee membership is limited to independent Non-Executive Directors of
the Company.
Members’ experience is documented in their biographies included on pages 59 to 61.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
78
Audit Committee Report
continued
As reported elsewhere in this Annual Report, Peter Whiting does not intend to stand for re-election to the Board at
the AGM to be held in 2024, because he will, by then, have served on the Board for more than nine years from the
date of his first appointment. The Board expects to appoint another independent Non-Executive Director, who will be
appointed as a member of the Audit Committee, before Peter Whiting steps down, to ensure that the composition of
the Committee remains in compliance with Provision 24 of the 2018 Code.
The Committee’s agenda
The Committee has a broad agenda of business which focusses on the Group’s assurance, risk and audit processes
through a series of scheduled meetings during the year. The agenda follows an annual plan which is set in advance
in discussion with senior management, the financial reporting team, the external auditors, and the Internal Audit
function. The annual plan incorporates items driven primarily by the financial calendar of the Group but also includes
work on the Internal Audit programme and is adapted through the year to address any other relevant matters which
may require the Committee’s attention.
The Committee acts autonomously and sets its own agenda in addition to routine matters and those suggested by
the main Board. In setting the agenda, the Committee keeps in mind the regulatory framework, the 2018 Code and
the FRC’s Guidance on Audit Committees.
The Committee met five times during the financial year with all members in attendance. This included one special
meeting to receive the presentations of the audit firms participating in the competitive tender for external audit
services (see page 82). During the year, the Chief Executive Officer, Chief Financial Officer, Chief Information Officer,
Group Financial Controller, Head of Commercial Finance, Commercial Systems Manager and Group Data Protection
Officer attended certain meetings at the invitation of the Committee to ensure that the Committee remained fully
informed of events and developments within the business. Presentations were received on legal, regulatory and
climate change matters, IT security and systems projects, contributing to the Committee’s role in monitoring the
management of risk.
The Group’s external auditors, PwC, attended four of the five Committee meetings during 2022 (including the
special meeting at which they made their presentation in the tender for external audit services). On a number of
occasions after the formal meetings during the year, PwC had the opportunity to hold an informal discussion with the
Committee members without any of the executive management team being present. The Committee Chair also met
with PwC on several occasions outside of the Committee.
The Internal Auditors, KPMG LLP (“KPMG”), attended all four of the ordinary meetings during the year to discuss plans
for their programme of work and to present their findings. KPMG attend for the full duration of each meeting, as the
Committee believes that the effectiveness of the Internal Audit function is enhanced by an understanding of other
matters covered at the meetings, and of the external audit work being carried out by PwC. KPMG and PwC have direct
access to the Committee Chair.
In addition to the meetings of the Committee, the Committee Chair and other Committee members met with other
members of the Finance team, senior management and regional operating management during the year. This
included a visit by the members of the Committee to the Group’s office in Brighton to meet with senior members of
the Finance and Legal teams. This enabled them to discuss in further detail, outside the formal setting of a Committee
meeting, the finance team’s work and the controls in place to mitigate risk in this area of the business. The Legal team
provided a helpful insight into their work, which is an important element in the Group’s management of risk.
Activity
Principal activities during the year
The following principal activities have been carried out by the Committee during the financial year:
March 2022
•
Reviewed the initial draft Internal Audit plan for 2022, making some adjustments to reflect the Committee’s
updated priorities
•
Received a report from KPMG covering their review of ESG reporting
•
Received a presentation from PwC on their audit of the financial statements for the year ended 31 December
2021, and reviewed the Auditors’ Report to the Audit Committee
•
Reviewed the latest updates to the Group Risk Register
•
Reviewed and recommended to the Board the approval of the Preliminary Announcement and the 2021
Annual Report. This work included: ensuring that the report is fair, balanced and understandable; reviewing
the significant judgements applied in the Annual Report; reviewing disclosures and the summary of significant
accounting policies; considering the appropriateness of the going concern statement and the viability statement;
reviewing the Directors’ statement about the performance of their statutory duties under s.172 of the Companies
Act; and approving the statement of principal risks to the business as set out in the Annual Report
•
Approved the Committee’s agenda for the remainder of 2022
•
Considered the requirements of Committee members for additional training and development in areas
relevant to the Committee’s business
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
79
Strategic Report
Governance
May 2022
•
Approved the updated 2022 Internal Audit plan
•
Received an update from KPMG on progress with the ongoing Internal Audit testing of Financial Controls
•
Considered progress on the competitive tender process for the appointment of the external auditor
•
Received an update on current systems projects, including the new Applicant Tracking system, CRM system,
Academy Management system, HR Information system and the implementation of expenses functionality
within the Group’s time recording system
•
Received a presentation from the Chief Information Officer and Group Head of Information Security on
cybersecurity and IT business continuity
•
Received an update on the reporting, accounting and governance changes applicable to the Group
•
Reviewed the Audit Committee’s Terms of Reference and identified areas for updating
•
Reviewed the effectiveness of the Audit Committee
•
Reviewed the effectiveness of the external auditors
•
Considered the effectiveness of the Internal Audit function
•
Considered developments arising from the UK Government’s response to the BEIS Consultation
June 2022
•
Received presentations from the firms tendering for the Group’s external audit work
•
Concluded the audit tender process and resolved to recommend to the Board the appointment of PwC to
continue as external auditors beginning with the financial year ending 31 December 2023
July 2022
•
Received a report from KPMG on their review of Financial Controls
•
Received a report on the review of, and updates to, the Group Risk Register
•
Reviewed PwC’s report to the Committee (interim review for the six months to 30 June 2022)
•
Reviewed and approved the statement of principal risks and uncertainties set out in the Interim Report
•
Reviewed the Interim Report, including the going concern statement and key disclosures, and recommended its
approval to the Board
•
Received an update from the external auditors on their understanding of the latest themes emerging from the
BEIS Consultation
•
Reviewed and approved the letter of engagement for the external auditors and their proposed fees for the
interim review and the full year audit for the 2022 financial year
•
Reviewed the letter received from the FRC, discussed the issues raised and considered the Committee’s
response (see below for further details)
October 2022
•
Reviewed and approved PwC’s plan for the audit of the 2022 financial results
•
Received a report on the findings of the Internal Auditors following their follow-up review of Treasury, IT,
Procurement, Compliance and ESG reporting
•
Reviewed proposed terms of reference for the upcoming Internal Audit review of policy and procedures
relating to Consultant working hours
•
Received an update on reporting, accounting and corporate governance changes and the processes and key
themes for inclusion in the Annual Report 2022
•
Reviewed steps taken by the Directors during the year to comply with s.172 of the Companies Act 2006, and
matters proposed for disclosure in the s.172 Statement to be included in the Annual Report 2022
•
Received a progress report on the implementation of the key IT systems projects and the management of risks
within those projects
•
Received an update on the Group’s ESG and climate change activities and the proposed approach to reporting
on these matters
•
Reviewed and approved the Group’s new Economic Social and Governance Policies
•
Discussed the structure and content of the proposed new Audit & Assurance Policy
•
Reviewed a paper from management assessing fraud risk in the business and reviewed and approved the
Group’s new Fraud Policy
•
Undertook a review of whistleblowing and anti-bribery policies and procedures
In addition to the work outlined above, as a standing item on the agenda of every meeting, the Committee reviews
the level of fees incurred with PwC on non-audit work to ensure compliance with the Group’s policy on non-audit
fees. During 2022, the only non-audit work performed by PwC has been their review and report on the Group’s
half-year financial statements.
During the year, the FRC wrote to the Chair of the Committee requesting additional information on the Group’s 2021
Annual Report. The principal areas where the FRC requested additional information and further clarification were:
•
Nature and classification of amounts owed by subsidiary undertakings in the Parent Company accounts and
classification of associated cash flows.
•
Clarification of the nature of the accruals and deferred income balance.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
80
Audit Committee Report
continued
The Committee worked with management to review the underlying facts and judgements behind these items, and
to prepare responses to the FRC’s questions within the required timescale. The FRC was satisfied with the responses
provided and closed its enquires. The FRC made other recommendations to assist the Group in making continuous
improvements in the quality of its future corporate reporting. The Committee found these recommendations helpful
and, after further consideration, the management team has implemented a number of changes to the presentation
of this Annual Report, including enhancing disclosures relating to: accruals; share-based payments; Alternative
Performance Measures; related party transactions; and operating segments, to address the FRC’s observations.
Scope and limitations of FRC review
The FRC’s review was based on the Group’s 2021 Annual Report and did not benefit from detailed knowledge of the
Group’s business or an understanding of the underlying transactions entered into. It was, however, conducted by staff of
the FRC who have an understanding of the relevant legal and accounting framework. The review provides no assurance
that the Group’s Report and Accounts are correct in all material respects; the FRC’s role is not to verify the information
provided but to consider compliance with reporting requirements. The review was provided on the basis that the FRC
(which includes the FRC’s officers, employees and agents) accepts no liability for reliance on it by the Company or any third
party, including but not limited to investors and shareholders.
Significant financial reporting items
The Committee scrutinises matters it considers important by virtue of their potential impact on the Group’s results
or the degree of estimation or judgement 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. During the year the Committee challenged management in respect of their underlying rationale and basis for
key judgements and estimates before accepting them. The Committee has considered all significant estimates and
judgements identified in note 4 to the Consolidated Financial Statements, having received drafts of the Annual Report
and Accounts in sufficient time ahead of signature to enable a thorough review, and allow for the opportunity to
challenge and discuss the Report’s content.
The main areas of focus 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.
Volume rebates are accrued in the period in which the
revenue is recognised, with the value of the rebate
offset against revenue. The rebates are calculated
with regard to specific threshold levels of revenue
recognised for certain customers in a contractual
period. To the extent the volume rebates are material,
amounts are disclosed, along with any significant
judgements made in their estimation.
The introduction of the Group’s automated time
recording system has reduced the risk of revenue being
misstated. 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 estimates remain appropriate.
To the extent volume rebates are material, the
Committee would discuss with management and the
auditors the basis of the calculations supporting the
volume discount accrual and the disclosures contained
in the Annual Report. The value of volume rebates at
31 December 2022 is disclosed on page 145.
Share-based payments
For an eighth consecutive year, the Company granted
awards under the FDM Performance Share Plan.
Associated with accounting for the awards are estimates
relating to the number of shares which will vest.
The Committee is informed of the key assumptions
and estimates applied in calculating the share-based
payment charge. The Committee is satisfied that the
assumptions and estimates applied are appropriate.
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 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.
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, including that the risk
of climate change on the business is low, 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 31.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
81
Strategic Report
Governance
Area of focus
Steps taken to address each area
Climate risk and reporting
To be consistent with the TCFD’s recommendations,
FDM is required to:
•
Demonstrate that climate change is incorporated
into FDM’s risk management processes and
business strategy.
•
Consider the risks and opportunities arising from
climate change, in line with the categories outlined
in the TCFD guidance.
FDM has worked with external sustainability
advisors to identify opportunities for the Group to
work towards TCFD best practice. Based upon their
recommendations, management has established a
Climate-change Action Group with formal governance
structures and internal reporting processes.
With the external advisors, management has considered
all risk and opportunity categories outlined in the TCFD
guidance. Further information can be found on page 45.
The likely impacts from climate changes are not currently
considered to be material enough to require revisions
to the Group’s current capital expenditure envelope or
meaningful for additional strategic consideration.
FDM’s risk management framework channels climate
risk information from the bi-annual risk reviews to the
Audit Committee and on to the Board.
Fair, balanced and understandable
As requested by the Board, the Committee has
considered whether, in its opinion, the Annual Report
and Accounts 2022 is fair, balanced and understandable
and provides the information necessary for shareholders
to assess the Group’s position and performance,
business model and strategy. In forming its opinion, the
Committee considered the information it had received
and the discussions that have taken place with senior
managers in the business.
All members of the Committee received a full draft of
the Annual Report and Accounts two weeks prior to
the meeting at which it was required to provide its final
opinion. The Committee reviewed the report to ensure
that: it provided a balanced reflection of the Group’s
performance; the presentation of adjusted measurements
was relevant and understandable; all material matters
were considered; and there was internal consistency
and there were linkages throughout, including the
presentation of the risks and significant judgements.
The Committee concluded that the Annual Report and
Accounts 2022, taken as a whole, was fair, balanced,
and understandable, and considers that it provides the
information necessary for shareholders to assess the
Group’s position and performance, business model
and strategy. The Committee made a recommendation
to the Board to this effect. The Directors’ statement of
responsibilities on a fair, balanced and understandable
Annual Report is given on page 111.
Internal control and risk management
The Committee is responsible for monitoring and
reviewing the effectiveness of the Group’s internal
control and risk management systems. This is achieved
by the presentation and review of management reports
relating to internal control and risk management systems
as well as reports from Internal Audit throughout
the year. Through monitoring the effectiveness of its
internal controls and risk management, the Committee
maintains a sound understanding of the Group’s
trading performance, its key judgemental areas and
management’s decision-making processes.
The key elements of the Group’s internal control
framework and procedures are set out on page 72.
Internal audit
The Committee oversees and monitors the work of
the Internal Audit function, which is wholly outsourced
to KPMG. The Committee considers that it remains
appropriate to outsource the Internal Audit function
for the following reasons: first, outsourcing ensures
the process is independent and second, it guarantees
that specialist input is available when required, taking
into account the international nature of FDM’s business
and the need for technical specialism, particularly when
reviewing non-financial areas of the business.
The Internal Audit Plan for 2022 was reviewed by the
Audit Committee in March 2022 and approved in May
2022. The Plan is risk-based, prioritising reviews of the
areas which are identified as principal risks in the Group
Risk Register, and covering all key financial, operational,
and regulatory parts of the business. Specifically, in
2022, the Committee received reports on reviews of the
following areas:
•
ESG reporting, which included a review of the
design and effectiveness of the governance, risk
management and controls in place for ESG reporting
in addition to validating the ESG reporting included in
the 2020 Annual Report;
•
Financial Controls; and
•
a follow-up review into previous high and medium-
rated recommendations.
The findings from the reviews were presented to the
Audit Committee during the period. The Group’s financial
controls were found to be operating effectively, and
no serious weaknesses were identified by the Internal
Audit reviews in any of the other areas. KPMG noted that
improvements had been made in all the areas covered
by the follow-up reviews. Where further work is required,
detailed action plans have been put in place which
specify target dates for addressing those findings.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
82
Audit Committee Report
continued
During the year the Internal Auditors also commenced
reviews of the following areas, and will report to the
Audit Committee on their findings in the first quarter
of 2023:
•
policies and procedures relating to Consultant
working hours and time recording; and
•
the Group’s use of social media.
The effectiveness of the Internal Audit function’s work
is monitored on an ongoing basis using a number
of inputs, including the reports received, the Audit
Committee’s engagement with the Group Financial
Controller who is the Group’s primary point of contact
with the internal auditors, and an assessment during
the year of the internal auditors’ performance against
the KPIs identified in the Internal Audit Plan. The Audit
Committee considers that the Internal Audit process is
an effective tool in the overall context of the Group’s risk
management systems.
The Audit Committee Chair also met with the Internal
Audit team in advance of every meeting without
management present.
External Audit Tendering
PwC was selected to continue as external auditor for
the year ended 31 December 2023 following a robust
external audit tender process. The process was based on
a clear election and assessment criteria, in compliance
with the CMA Order.
The external audit tender process was overseen by
the Committee, which approved the tender process
to be undertaken. A series of reports and updates
were provided to the Committee in preparation and to
monitor progress. The firms requested to tender were
chosen having given proper regard to the complexity of
the Group, and the Group’s desire to be in a position to
select from highly capable and experienced audit firms
with strong track records and technical expertise. The
tender was open to audit firms outside the Big Four
accounting firms.
•
Late 2021
– the Audit Committee Chair and Group
Financial Controller had informal discussions with
representatives of various audit firms to identify
suitable firms who were interested in taking part.
•
January 2022
– a Framework Document outlining the
proposed competitive tender process and selection
criteria was prepared and submitted to the Audit
Committee for approval.
•
March 2022
– FDM Group issued to audit firms an
invitation to tender which:
–
outlined the scope of the services being tendered;
–
outlined the tender process and timetable;
–
provided information on FDM Group and outlined
that additional information would be available via
a data room;
–
outlined the selection criteria that would be used
to assess the participating firms; and
–
requested confirmation of the audit firms’
willingness to participate in the tender process.
•
April 2022
– a virtual data room was opened to the
participating audit firms.
•
May 2022
– scoping meetings took place between
the tendering audit firms and the Chair of the Audit
Committee, Chief Executive Officer, Chief Financial
Officer, Company Secretary & Head of Investor
Relations, Group Financial Controller and Head of
Commercial Finance. These meetings enabled the
tendering firms to gather information on the Group
and key members of the management team to assist
them in developing their proposals.
•
Early June 2022
– written proposal documents
were submitted by each of the tendering firms and
reviewed by the Committee.
•
Late June 2022
– the participating firms delivered
presentations to the Committee and question
and answer sessions were held with them. The
Committee recommended the appointment of PwC
to continue as External Auditor, a recommendation
which the Board approved. The decision on the audit
appointment was communicated to the firms with
feedback on their proposals.
The Audit Committee is of the view that the competitive
tender process ensures the continued high quality of the
external audit in the best interests of the Group and its
shareholders.
External auditor
PwC is the Group’s current external auditor, having been
appointed in 2013. The Group keeps this appointment
under review and, as stated in the previous paragraph,
performed a competitive tender process to appoint an
external auditor beginning with the audit in respect of
the financial year ending 31 December 2023. PwC was
successful in this process and will be re-appointed by the
Board as external auditor.
The Statutory Audit Services for Large Companies
Market Investigation (Mandatory Use of
Competitive Tender Processes and Audit Committee
Responsibilities) Order 2014 (“CMA Order”).
The Company confirms that it has complied with the
provisions of the CMA Order for the 2022 financial year.
In accordance with the CMA Order, the Company is
required to put the external audit contract out to tender
not later than 2023. As outlined above, the Group carried
out a competitive tender process to appoint an external
auditor beginning with the audit in respect of the
financial year ending 31 December 2023.
Auditors’ independence and objectivity
Both the Committee and the Board keep the external
auditor’s independence under review. Since July 2016,
the Committee has been monitoring the fees paid to the
external auditor for non-audit work at each Committee
meeting. Any non-audit work which will result in fees
exceeding £5,000 must be approved in advance by
the Committee Chair. More substantial work involving
fees exceeding £50,000 requires the approval of the
Committee as a whole. The Group receives a formal
statement of independence and objectivity from PwC
each year, and confirmation that PwC’s partners and
staff have complied with UK regulatory and professional
requirements, including the Ethical Standard 2019 issued
by the Financial Reporting Council. The Committee also
obtains quotes in a competitive tender for all non-audit
work performed, other than for the auditor’s review of
the half-year results.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
83
Strategic Report
Governance
Fees for non-audit work carried out by PwC as a
percentage of audit fees for the year ended 31
December 2022 were 22% (2021: 22%) and related solely
to PwC’s review of our Interim Report. See note 7 to the
Consolidated Financial Statements.
External audit partners are rotated every five years. The
external audit partner in respect of the 2022 financial
year has been Katharine Finn, who has now completed
three years in the role.
The Group continues to engage KPMG, an independent
accounting firm, to perform Internal Audit work to
further ensure that the independence and objectivity of
the external auditors are not compromised.
Effectiveness of external auditors
During the year, the Committee reviewed the
effectiveness and independence of the external auditors,
using a questionnaire which was completed by key
members of the Finance team and each member of
the Committee. The questionnaire asked individuals
to rate the performance of the PwC audit team in the
following areas: knowledge and expertise; independence
and objectivity; effectiveness of the planning process;
ability to firmly challenge management; and quality of
audit deliverables. The feedback from the questionnaire
was then used as the basis for a more wide-ranging
discussion at the meeting held in May 2022 (at which
PwC were not present). The Committee reviewed the
external auditor’s discussions with, and reports to,
the Committee over the year to examine the degree
of objectivity exercised by the external auditors, the
robustness of their challenge to management, their
views on controls around the Group and their testing of
areas which involved the exercise of judgement by the
management team. Based on the feedback and their
further discussions, the Committee concluded that:
•
the overall audit approach, materiality threshold and
areas of audit focus were appropriate to the business;
•
the auditors had displayed the necessary level
of challenge and objectivity to demonstrate an
appropriate level of independence; and
•
the audit team possessed the necessary quality,
expertise, and experience to provide an independent
and objective audit.
The findings were fed back to PwC by the Chair of the
Committee.
Whistleblowing
The Group has in place a whistleblowing policy which
enables employees to report concerns on matters
affecting the Group or their employment, without fear
of recrimination.
The Committee reviewed the Group’s whistleblowing
policy and procedures in October 2022 and is satisfied
that they remain appropriate. There were no instances
of whistleblowing during the year. The key aspects of
the review were discussed at the next meeting of the
full Board.
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, and training is provided
to all current employees and new starters to ensure
that they understand the Group’s policy and the
importance of compliance. The Committee reviewed
the effectiveness of the policy in October 2022 and
concluded that it remains an effective tool for managing
the anti-bribery and corruption risks faced by the Group.
Fraud policy
The Group is committed to acting with integrity and
honesty and takes all reasonable steps to mitigate the risk
of fraud arising within the organisation. The reputation
of FDM’s business is based on the trust which our clients,
shareholders, employees, and the general public have in
the integrity of our business.
During 2022 the Committee approved a new Fraud Policy
which outlines the steps which the Group takes to reduce
the opportunity for fraud by putting and maintaining in
place appropriate technical and organisational security
measures and controls, and by such other methods as we
consider necessary. The Group’s policy is to take prompt
action in the case of any suspected fraudulent activity
from any client, employee, or supplier.
Audit Committee effectiveness
An evaluation of the effectiveness of the Committee in
discharging its duties was conducted internally during
May 2022. The evaluation process was facilitated by the
Company Secretary and was based on the completion
of questionnaires (which included questions to be
scored and free text questions) by members of the
Committee. The questionnaire was designed to address
the key elements of Audit Committee effectiveness
identified in the 2018 Code, the FRC’s Guidance on
Board Effectiveness published in July 2020, and the FRC’s
Guidance on Audit Committees published in April 2016.
The results, once reviewed by the Company Secretary,
were then discussed with the Committee Chair, and
tabled at a meeting of the Committee for discussion.
The Committee regularly reviews its terms of reference
and updates them as necessary to reflect current best
practice and to ensure that its approach remains in
line with those terms of reference and the Financial
Reporting Council’s Guidance for Audit Committees.
The effectiveness of the Audit Committee was also
reviewed as part of the main Board Effectiveness
Evaluation which was facilitated internally this year. Further
information on that review can be found on page 71.
Following these reviews, the Committee is satisfied that
it continues to be effective in discharging its duties.
Alan Kinnear
Audit Committee Chair
14 March 2023
FDM Group (Holdings) plc
Annual Report and Accounts 2022
84
Nomination Committee Report
Chair’s introduction
The primary role of the Nomination Committee is to lead
the process for appointments to the Board, to monitor
its composition, diversity and performance, and to plan
for orderly succession to the Board and the Group’s
senior management team.
The Board undertook a review of its effectiveness
during 2022 and concluded that it continues to operate
effectively. Of course, there are areas where can
enhance our effectiveness further and we will ensure
that we address the key themes arising from that review
during the coming year.
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. Its members during the year were as follows:
•
David Lister (Committee Chair)
•
Peter Whiting
•
Michelle Senecal de Fonseca
•
Jacqueline de Rojas
In line with provision 17 of the 2018 Code, a majority
of members of the Nomination Committee are
independent Non-Executive Directors.
As reported elsewhere in this Annual Report, Peter
Whiting does not intend to stand for re-election to the
Board at the AGM to be held in 2024, because he will,
by then, have served on the Board for more than nine
years from the date of his first appointment. The Board
expects to appoint another independent Non-Executive
Director before Peter Whiting steps down and will review
the composition of the Nomination Committee at that
point.
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;
•
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;
•
Keep under review the leadership needs of the
Group, both executive and non-executive, with a
view to ensuring that FDM can continue to compete
effectively in the marketplace;
•
Review the results of the Board performance
evaluation process which impact on Board
composition; and
•
Ensure that Non-Executive Directors are allocating
sufficient time to their work at FDM to allow them to
fulfil their duties.
I am pleased to present the
report of the Nomination
Committee for the year
ended 31 December 2022.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
85
Strategic Report
Governance
Succession planning
•
The most important ongoing responsibility of the
Committee is to oversee the Company’s succession
plans for members of the Board and the senior
management team over the short, medium and
longer term, to ensure that the Board maintains the
appropriate balance of skills and experience to carry
out its work in the most effective way. In particular,
when the opportunity arises for refreshment of the
Board, the Board bears in mind the need to ensure
that its membership is diverse. The Board currently
meets the targets set by the FTSE Women Leaders
Review (formerly the Hampton-Alexander Review)
and the Parker Review, and details of the Board’s
diversity policy are set out on page 70.
•
The Board’s primary aim is to make appointments
based on objective criteria that ensure that the best
individuals are appointed to each Board role. We
believe that a Board made up of individuals with
a diverse range of personal attributes, including
skills, experience, educational and professional
background, gender, race and age, will contribute to
diversity in the Board’s thinking and approach and, in
turn, will enhance the quality of decision-making.
•
During the year the Committee carried out a review
of the remaining tenure of our existing Non-Executive
Directors, noting that the 2018 Code recommends
that Non-Executive Directors who have served on the
Board for more than nine years from the date of their
first appointment should no longer be considered
independent. The Committee noted that the timing
of appointments over the last seven years has meant
that the need to identify replacements for retiring
Non-Executive Directors is reasonably spaced out
over the next three years, and has begun to plan the
processes by which appointments will be made to
replace retiring Non-Executive Directors over that
period. Those processes will be driven primarily by
an intention to ensure that the Board incorporates
a wide range of experience and the necessary skills,
enabling it to support as effectively as possible the
Group’s plans for growth. As the opportunity arises
we will also keep in mind the Board’s emphatic view
that a diverse Board is an effective Board. By making
the most of the Directors’ differences of approach,
and using the collective experiences, backgrounds,
skill sets and knowledge of our talented and diverse
employees, we will be able to drive innovation,
growth and success and achieve more for our
stakeholders. Details of the tenure of our Directors
can be found in the Board of Directors section of this
report on pages 59 to 61.
•
In June 2023, Peter Whiting (Senior Independent
Director and Chair of Remuneration Committee)
will have served on the Board for nine years. Peter
will stand for re-election to the Board at this year’s
AGM (which is due to be held on 16 May 2023).
However, our intention is that Peter will not stand
for re-election at the subsequent AGM to be held in
2024. The Nomination Committee has considered the
qualities, experience, skills and personal attributes
required in the individual(s) who will replace Peter
Whiting as Senior Independent Director and Chair of
the Remuneration Committee, and will be working
over the coming months to appoint an additional
Non-Executive Director to the Board who has the
necessary experience to take on the role of Chair of
the Remuneration Committee. It is the Committee’s
current intention that the new Non-Executive Director
will join the Board initially as a member of the
Remuneration Committee and, during the remaining
months of Peter’s tenure, will work to gain familiarity
with the work and approach of our Remuneration
Committee before taking on the role of Chair of the
Remuneration Committee when Peter steps down
from the Board. Having appointed the new Non-
Executive Director, the Committee will also determine
which of the Non-Executive Directors is best placed to
take on the role of Senior Independent Director. The
new appointment will also provide the Board with an
opportunity to review the composition of the Board’s
committees.
•
FDM operates a Group-wide formal mentoring
programme. In the last two years, this has been
expanded to involve the Non-Executive Directors
providing mentoring to a selection of senior
managers from all our territories. The programme
has been successful and has been highly valued by
those who have taken part. We intend to expand
this senior management mentoring programme in
the coming year, as well as relaunching the formal
mentoring programme which is in place across the
rest of the Group. The Committee will continue to
monitor the progress of these projects carefully
during 2022 and will review the strengths identified
in the talent pipeline and actions needed to close
any gaps. The Committee will focus closely on the
data arising from the programme which will help to
assess diversity in the Group, career progression and
attrition.
2022 Board effectiveness review
Our view is that the Board evaluation is a valuable
process that provides a regular mechanism by which
the Board can challenge itself to identify any areas
where its performance can be improved to enhance the
effective and efficient conduct of Board business, for the
benefit of FDM and all its stakeholders. The 2018 Code
requires that FTSE 350 Companies should arrange for
the evaluation of the Board to be externally facilitated at
least every three years, and our last external evaluation
was carried out by Caroline Lien of Lien Consulting
Limited in 2021.
Our evaluation of the Board and its Committee was
conducted internally this year. The evaluation of the
main Board was facilitated by the Chair of the Board
with support from the Company Secretary and was
based on a set of formal questions designed to assess
the performance of the Board, including the Chair and
individual Directors, against the priorities identified
during last year’s evaluation, and a selection of other
areas of particular priority to the Board. The questions
were provided to all Board members in advance and
then formed the basis of a formal but open and wide-
ranging round-table discussion.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
86
Nomination Committee Report
continued
The results of the evaluation discussions were collated
and reviewed by the Chair and the Company Secretary
and an action plan was subsequently presented to
the Board with which to address areas where it was
considered that the Board’s effectiveness could be
improved, as well as recognising the strengths of the
Board. The review found that some good progress had
been made against the areas which last year’s evaluation
had identified for further work. A summary of the key
action points arising from the 2022 evaluation is as
follows:
•
The Board’s usual practice in recent years has been
to receive regular management presentations from
senior management teams (below executive level) in
different areas of the business. The Board recognised
that, during the COVID-19 pandemic, the frequency
of these presentations had reduced. These events
are a valuable way to assist the Board in gaining an
increased understanding of progress in the business
at a more detailed level, and an appreciation of
successes and challenges arising in the Group’s key
departments. They also provide key members of the
senior management teams with the opportunity to
gain experience of presenting to the Board and to
understand the Board’s work which, in turn, is good
for the development of talent and for succession
planning generally within the business. The Board
agreed to re-establish these regular updates, and
intends during 2023 to hold a strategy day at one
of the Group’s offices outside London to focus on
a number of these key business areas in greater
depth. The agenda will be built around a series of
presentations from these management teams.
•
The Board agreed to relaunch the programme under
which Executive and Non-Executive Directors provide
formal mentorship to senior managers around the
Group. This programme has operated successfully in
the past and was highly valued by those taking part,
and the Board considers that there is an opportunity
to broaden the scope of the programme to include
individuals who have not previously participated.
The Board intends to review progress against the action
plan on an ongoing basis through 2023.
Each of the Board’s principal Committees evaluated its
own effectiveness using a similar process, either by the
completion of questionnaires (using both scoring and
free-text questions) by Committee members, or the
circulation of a list of key questions and topics used as the
basis of a formal discussion, according to the preference
of each Committee Chair. The results of each Committee’s
evaluation were then presented to the Board.
Peter Whiting, as the Senior Independent Director, led
a review of the Chair of the Board’s performance in
discussion with the other Non-Executive Directors.
Independence and effectiveness
As recommended by the 2018 Code, all the current
Directors will be standing for re-election at the AGM
in 2023. Having reviewed the independence and
contribution of the Directors, the Committee confirms
that the performance of each of the Directors continues
to be effective and each demonstrates commitment
to their roles, including independence of judgement,
commitment of time for the Board and (where relevant)
Committee meetings and their other duties. Accordingly,
the Committee has recommended to the Board that all
current Directors of the Company be proposed for re-
election at the forthcoming AGM. As noted above, Peter
Whiting does not intend to stand for re-election at the
AGM to be held in 2024.
David Lister
Chair of the Nomination Committee
14 March 2023
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
87
Strategic Report
Governance
Remuneration Report
Statement from the Chair of the
Remuneration Committee
On behalf of the Board, I am pleased to present our
Remuneration Report for the year ended 31 December
2022. In addition to this Statement from the Chair of
the Remuneration Committee, this report contains two
further sections: the Annual Report on Remuneration
which sets out the remuneration earned by Directors
in 2022, followed by an extract of the Directors’
Remuneration Policy approved by shareholders at
the 2021 AGM; the full approved policy is available on
our website. A summary of how the Remuneration
Committee proposes to implement the Policy in 2023
is set out in this statement.
Our performance in 2022
Elsewhere in this Annual Report the Board reports on
the progress which the Group has made during 2022,
delivering a strong operational and financial performance.
On behalf of the Board,
I am pleased to present
our Remuneration Report
for the year ended
31 December 2022.
The Group continued to invest in the recruitment
of both Consultants and internal staff, and in our
complementary development programmes for our Sales
and Academy teams, enabling the business to respond
to high client demand during the year and strengthening
the infrastructure of the business to support future
growth. The number of Consultants trained during
the year is the highest in the Group’s history, and
the continued development of our accreditation
programmes and certifications will help to ensure that
Consultants have the best possible preparation for
their careers in technology, bringing job-ready skills
which are most valued by employers in tech. The strong
performance of the business during the year is reflected
in the extent to which bonuses were earned by the
Executive Directors against the profit and Consultant
revenue targets; further information in relation to this
is set out below.
The Remuneration Committee aims to set bonus metrics
for the Executive Directors which are aligned to the
culture of the Group, and are capable of being cascaded
down to managers throughout the organisation. Non-
financial metrics forming part of the Executive Directors’
bonus were applied to elements of the bonuses for some
senior managers in 2022. This will apply to a broader
group of senior managers in 2023. The Committee has
encouraged further progress with the Group’s social
and environmental agenda this year, which is reflected
in the Social Mobility, Employee Satisfaction and Carbon
Reduction targets which now form part of the significant
non-financial element of the Executive Directors’ bonus
opportunity. The Group has made advances in these
areas, in particular in reducing carbon emissions in line
with the Group’s medium-term Carbon Reduction Plan,
which was validated by SBTi during the year.
Remuneration in 2022 and implementation of the
approved Directors’ Remuneration Policy in 2023
Our Directors’ Remuneration Policy was approved at the
2021 AGM, with over 96% of the votes cast in favour. As
in previous years, a similarly high level of shareholder
support was given to the Directors’ Remuneration
Report at the 2022 AGM. The table below summarises
the principal decisions in 2022 in relation to Directors’
Remuneration, along with the proposed implementation
in respect of 2023.
When taking decisions in relation to the Executive
Directors’ remuneration, we always have regard to the
remuneration arrangements for the wider workforce. In
the 2021 Directors’ Remuneration Report, we reported
that the Group had introduced salaries for UK trainees
from the start of their training programme. In 2022,
the Group introduced other enhancements for trainees
and Consultants (both financial and non-financial),
including reducing the expectation that Consultants
will be geographically flexible in the UK and Ireland,
and removing the expectation that UK Consultants will
contribute to the cost of the training which FDM has
provided to them if they leave FDM before completing
their two-year employment commitment to us. In
response to the increases in the cost of living for our
employees during the year, we also increased salary
packages for Consultants across all regions.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
88
Remuneration Report
continued
Decisions in respect of 2022
Proposed implementation for 2023
Salary and
fees
Executive Director salaries
As I explained in my statement in the 2021 Directors’ Remuneration Report, the Committee
confirmed that the continued performance of the Group justified the implementation of the
second stage of our phased increase to Executive Directors’ salaries. These increases reflected
that prior to 2020, the salaries of the Executive Directors had not been fundamentally reviewed
since the Company’s IPO in June 2014 and that there was a gap between the salaries and market
competitive rates. The second increase, which applied from 1 April 2022, was set out in last year’s
report. For 2023, the Executive Directors’ salaries will be increased with effect from 1 April 2023 in
line with our usual timing for salary increases across the business. The increases for the Executive
Directors have not yet been determined, but will be within or below the range of increases
awarded to the wider workforce, and will be confirmed in next year’s report.
Board Chair and Non-Executive Director fees
The Chair’s fee was increased by c.3%, in line with the range of salary increases awarded to the
wider workforce, with effect from 1 April 2022, as reported last year, with no change made to the
additional fee for Chairing the Nomination Committee. Information in relation to the Committee’s
approach to the review of the Chair’s fee in 2023 is set out on page 98.
The approach to Non-Executive Directors’ fees is not a matter for the Remuneration Committee. In
the 2021 Directors’ Remuneration Report, we set out the Board’s approach with effect from 1 April
2022, which is summarised on pages 102 to 107 of this report The Board’s approach to the fees of
the Non-Executive Directors for 2023 is set out on page 98.
Bonus
Each Executive Director was eligible to earn a
bonus in respect of 2022 up to 120% of salary.
Bonuses were calculated by reference to the
salary earned in the year, and not solely by
reference to the rate of salary applying at the
end of the 2022 financial year. The bonus was
subject to stretching performance measures
based on:
•
Adjusted Profit Before Tax: up to 40% of
salary
•
Consultant Revenue: up to 40% of salary
•
Employee Engagement and Satisfaction: up
to 10% of salary
•
Client Diversification: up to 10% of salary
•
Social Mobility: up to 10% of salary
•
Reduction in Greenhouse Gas Emissions: up
to 10% of salary
Details of the performance against the
measures is set out beginning on page 94. Each
Executive Director earned a bonus of 105.95%
of salary (88% of the maximum) by reference
to the performance achieved. The Committee
considers that the outturn is reflective of the
overall performance of the Group in the year
and is appropriate. The bonus will be paid part
in cash and part in shares deferred for two
years, as set out on page 96.
The maximum bonus that may be earned for
2023 will remain 120% of salary. The bonus will
be subject to performance measures weighted
as follows.
•
Adjusted Profit Before Tax: up to 40% of
salary
•
Consultant Revenue: up to 40% of salary
•
Employee Engagement and Satisfaction: up
to 10% of salary
•
Client Diversification: up to 10% of salary
•
Social Mobility: up to 10% of salary
•
Reduction in Greenhouse Gas Emissions: up
to 10% of salary
The targets are commercially sensitive and
further information will be disclosed in the 2023
Directors’ Remuneration Report.
As for 2022, bonuses will be calculated by
reference to the salary earned in the year, and
not solely by reference to the rate of salary
applying at the end of the financial year.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
89
Strategic Report
Governance
Decisions in respect of 2022
Proposed implementation for 2023
PSP
PSP awards vesting by reference to
performance over the period 2020 – 2022
The awards granted to the Executive Directors
in 2020 under the Company’s Performance
Share Plan were subject to a performance
condition based on Earnings Per Share over
the performance period 2020 - 2022. As we
explained in the 2020 Directors’ Remuneration
Report, given the impact of the pandemic,
targets were set on a final year basis rather
than a growth basis The awards vested at
100% of the maximum, reflecting the strong
performance of the Company as summarised
below; further information is given on page
96. Although the awards vested in March 2023,
they remain subject to a two year holding
period and so will not be released to the
Executive Directors so that they can acquire the
shares until Spring 2025.
2022
EPS targets
Vesting
2022 EPS
outturn
33.7 pence
25%
Greater than
33.7 pence but
less than 35.0
pence
Determined on
a straight-line
basis between
25% and 100%
37.3 pence
35.0 pence
100%
Consistent with the approach in respect of
previous years, the Committee has, in its
discretion, assessed performance based upon
adjusted EPS (as defined in note 12 in the
Consolidated Financial Statements).
In addition to the EPS targets, the extent
to which each award vested was subject to
the Committee’s assessment of the overall
financial performance of the Company during
the performance period. The Committee
considered this performance and concluded
that vesting at 100% was reflective of the overall
financial performance of the Company such
that vesting at that level should be approved.
The Committee considered in particular
whether there was any risk of a “windfall gain”
in relation to the vesting of these awards.
However, since the share price at vesting
was lower than the price when those awards
were granted, and having regard to the fact
that FDM does not determine the number of
shares subject to PSP awards by reference to a
percentage or multiple of salary, the Committee
was clear that this risk does not arise.
PSP awards to be granted in respect of 2023
will be subject to performance conditions based
on FDM’s earnings per share assessed over a
three-year performance period commencing
with FDM’s 2023 financial year. Details of the
performance conditions and targets will be
announced at the time the awards are granted,
in addition to being included in the 2023
Directors’ Remuneration Report.
In line with FDM’s usual practice, it is proposed
that each Executive Director will receive an
award over the same number of shares.
The number of shares will have a value not
exceeding 100% of the lowest Executive
Director’s salary.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
90
Remuneration Report
continued
Decisions in respect of 2022
Proposed implementation for 2023
PSP
continued
PSP awards granted in 2022
PSP awards were granted in March 2022 with
vesting subject to stretching adjusted EPS
performance conditions. Details of the awards
and performance measures are set out on page
97. Consistent with our usual approach, the
awards were determined as a number of shares
rather than a percentage of base salary. The
Directors’ Remuneration Policy permits awards
of up to 150% of salary, but the actual awards
as a percentage of salary were as set out below:
Rod Flavell
64%
Mike McLaren
91%
Andy Brown
89%
Sheila Flavell
89%
The Committee and Board remain committed to a responsible approach to executive pay and believe the Policy
operated as intended during 2022. We recognise the importance of engagement with shareholders in relation to
executive remuneration and I would be pleased to answer any questions you may have on our approach, including at
the 2023 AGM where I will be available to discuss this report with shareholders. We hope that we continue to receive
your support at the AGM.
Peter Whiting
Chair of the Remuneration Committee
14 March 2023
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
91
Strategic Report
Governance
Alignment of the Directors’ Remuneration Policy with the Corporate Governance Code
Clarity:
remuneration arrangements
should be transparent and
promote effective engagement with
shareholders and the workforce
Our remuneration arrangements are clear and simple, and we fully
disclose performance outturns and associated vestings in the Directors’
Remuneration Report. We follow a standard UK listed company approach
to Directors’ remuneration with established incentive schemes that
operate on a clear and consistent basis. We operate our share plans
on a wide basis to broaden the scope and benefits of employee share
ownership, which is fundamental to the Company’s culture.
Simplicity:
remuneration structures
should avoid complexity and their
rationale and operation should be
easy to understand
Risk:
remuneration arrangements
should ensure reputational and
other risks from excessive rewards,
and behavioural risks that can arise
from target-based incentive plans,
are identified and mitigated
Malus and clawback provisions apply to all Executive Director variable
remuneration and reflect the Code. The Committee has discretion to
override formulaic vesting outturns in order that any risks associated
with targets can be mitigated. Bonus deferral, the holding period for
PSP awards and the in-employment and post-employment shareholding
requirements mean that Executive Directors’ interests are further aligned
with the longer-term interests of shareholders.
P
redictability:
the range of possible
values of rewards to individual
Directors and other limits or
discretions should be identified and
explained
Variable remuneration opportunities are clearly expressed as a percentage
of base salary. When approval was sought for the Directors’ Remuneration
Policy, the 2020 Directors’ Remuneration Report clearly set out the
amounts that could be earned under the Directors’ Remuneration Policy by
the Executive Directors in 2021. Discretions reserved to the Committee are
set out in the Directors’ Remuneration Policy.
Proportionality:
the link between
individual awards, the delivery
of strategy and the long-term
performance of the Company
should be clear. Outcomes should
not reward poor performance
Variable remuneration for Executive Directors is subject to the
achievement of performance targets. The Committee has discretion
to override formulaic outturns to ensure that poor performance is
not rewarded, and delivery of a significant proportion of the variable
remuneration in shares means that the overall reward is strongly aligned
with the interests of shareholders. The application of strategic measures
to part of the annual bonus means that overall reward is linked to the
delivery of key strategic measures, in addition to financial performance.
Alignment to culture:
incentive
schemes should drive behaviours
consistent with the Company’s
purpose, values and strategy
A high proportion of the workforce participates in an annual bonus award.
The Committee aims to choose bonus metrics for the Executive Directors
which are capable of being cascaded down to managers throughout the
organisation. Accordingly, some of the non-financial metrics forming part
of the Executive Directors’ bonus were applied to elements of the bonuses
for some senior managers in 2022. This approach will be expanded
amongst the senior management team in 2023. This means that the wider
workforce remuneration is also aligned with overall performance with a
consistent approach to performance assessment across the leadership
team, and that members of the wider workforce are also able to benefit
from their contribution to the overall success of the Group.
Employee share ownership is fundamental to the Company’s culture
and this is reflected in the level of direct share ownership and the broad
extension of our Performance Share Plan and Buy-As-You-Earn plan
through the Group’s workforce. For the first time in 2022, we operated
bonus deferral (in respect of part of the bonuses earned for 2021) for
some below-Board senior managers, further aligning their interests with
the longer-term interests of shareholders. The group of senior managers
to whom this bonus deferral applies will be expanded for 2023.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
92
Remuneration Report
continued
Stakeholder engagement
The Remuneration Committee recognises the importance of engagement with our stakeholders in relation to
executive remuneration.
We have an established investor relations function, the work of which is discussed in the Corporate Governance
Report. Additional engagement takes place with investors in advance during years when a new remuneration policy
is to be put to shareholders for approval, or when the Committee is seeking feedback on any other more significant
matters concerning executive remuneration. Although there was no such requirement in 2022, our programme
of shareholder engagement included discussion of executive remuneration with the Chair of the Committee, and
executive remuneration is always a topic available for discussion in any of these meetings. Feedback from investors
is taken into account in finalising our approach to executive remuneration. During 2023, we will consult with
shareholders on our approach to the Directors’ Remuneration Policy, which will be subject to shareholder approval
at the 2024 AGM in line with the usual three year timetable.
As in previous years, the Remuneration Committee did not formally consult with employees in relation to executive
remuneration and remuneration was not raised as a priority by employees with whom the Board engaged
throughout the year. However, as noted above, elements of the Executive Directors’ bonus metrics are being
cascaded down to managers in the organisation, and bonus deferral has been introduced for an increasing number
of senior managers. Engagement with the relevant populations takes place to explain how Executive Director
remuneration and wider workforce remuneration are aligned in this regard, and how these arrangements align
remuneration with the interests of shareholders and the overall strategy.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
93
Strategic Report
Governance
Annual Report on Remuneration
Audited Section
The Audited section of this report comprises only the following sections:
•
Single figure table
•
Annual bonus for 2022
•
Long-term incentives vesting in respect of 2022
•
Payments to former Directors
•
Payments for loss of office
•
Directors’ shareholding and share interests
•
Performance Share Plan awards and deferred bonus shares awarded in 2022
Single figure table
The table below details the total remuneration receivable by each Director for the financial years ended 31 December
2022 and 31 December 2021. Where necessary, further explanation of the values provided is included in the notes
to the table or the additional information that follows it in relation to the 2022 annual bonus and the long-term
incentives vesting in respect of 2022.
The figures in the single figure table are derived from the following:
Salary and fees
The total salaries and fees paid in respect of the year.
Benefits
The value of benefits received in the year, comprising private medical insurance and car
allowance.
Annual bonus
The value of the bonuses earned in respect of the year. For 2022, bonuses were calculated
by reference to the salary earned in the year, and not solely by reference to the rate of salary
applying at the end of the financial year.
Long-term incentives
The value of the Executive Directors’ long-term incentives vesting by reference to performance
in the relevant year.
Pension
The cash value of a salary supplement paid to the Executive Director in lieu of company
pension contributions to the Company’s defined contribution scheme. No Director participates
in a defined benefit pension arrangement in respect of their service with FDM.
Salary
and fees
£000
Benefits
£000
Annual
bonus
£000
Long-term
incentives
£000
Pension
1
£000
Total
£000
Total
fixed
£000
Total
variable
£000
Executive Directors
Rod Flavell
2022
490.0
19.6
519.2
243.0
23.1
1,294.9
532.7
762.2
2021
446.1
19.6
501.8
–
15.0
982.5
480.7
501.8
Sheila Flavell
2022
339.0
13.7
359.2
243.0
16.3
971.2
369.0
602.2
2021
322.6
13.5
362.9
–
10.9
709.9
347.0
362.9
Mike McLaren
2022
337.8
14.7
357.8
243.0
16.1
969.4
368.6
600.8
2021
315.9
14.8
355.4
–
10.7
696.8
341.4
355.4
Andy Brown
2022
339.0
13.8
359.2
243.0
16.3
971.3
369.1
602.2
2021
322.6
13.6
362.9
–
10.9
710.0
347.1
362.9
Non-Executive Directors
David Lister
2022
173.8
–
–
–
–
173.8
173.8
–
2021
170.0
–
–
–
–
170.0
170.0
–
Peter Whiting
2022
81.3
–
–
–
–
81.3
81.3
–
2021
76.8
–
–
–
–
76.8
76.8
–
Alan Kinnear
2022
68.9
–
–
–
–
68.9
68.9
–
2021
65.2
–
–
–
–
65.2
65.2
–
Michelle Senecal de Fonseca
2022
56.5
–
–
–
–
56.5
56.5
–
2021
53.8
–
–
–
–
53.8
53.8
–
Jacqueline de Rojas
2022
61.5
–
–
–
–
61.5
61.5
–
2021
57.5
–
–
–
–
57.5
57.5
–
1
The payment made to each Executive Director in 2022 in lieu of company pension contributions to the Company’s defined contribution scheme includes a one-off
amount paid to correct an underpayment in respect of previous years. The proportion of the total for each Executive Director which relates to 2022 is as follows:
Rod Flavell £16,708; Sheila Flavell £11,560; Andy Brown £11,560; Mike McLaren, £11,517.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
94
Remuneration Report
continued
Annual Report on Remuneration
continued
Annual bonus for 2022
As described in the Committee Chair’s statement on page 88 each Executive Director earned a bonus of 105.95% of
salary for 2022, out of a maximum of 120% of salary. Details of the performance against the applicable targets is set out
below.
While the Remuneration Policy permits a payment of 20% of the maximum payable upon achieving a threshold level
of performance, the Committee decided not to set such a target.
Weighting
Threshold
(20% of
maximum
payable)
Target
(50% of
maximum
payable)
Stretch
(100% of
maximum
payable)
Actual
performance
Bonus earned
(percentage
of maximum
payable)
Adjusted profit before tax
33.33%
(40% of salary)
n/a
£50.2m
£51.7m
£52.0m
100.0%
Consultant revenue
33.33%
(40% of salary)
n/a
£292.7m
£295.7m
£330.0m
100.0%
Employee engagement and satisfaction
8.33%
(10% of salary)
Performance for these elements was assessed
by reference to the achievements delivered
in the year relative to the measures, as
described below.
75.0%
Client base diversification
8.33%
(10% of salary)
14.5%
Social mobility
8.33%
(10% of salary)
70.0%
Reduction in greenhouse gas
emissions
8.33%
(10% of salary)
100.0%
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
95
Strategic Report
Governance
Strategic measures
The achievements in respect of the strategic measures are described below.
Strategic measure
Achievements
Employee engagement
and satisfaction
Achievement in respect of this measure was based on responses from staff to
questions asked of internal staff and Consultants about recommending FDM as a
place to work and providing opportunity for learning and career development. Each of
the four results accounted for 2.5% of the 10% weighting achievable for this measure.
The targets for each question were based on an average of the scores achieved across
the responses in the survey.
Achievement against these targets was that the target level of responses were met or
achieved for three of the four questions; a more granular description of the outturn
is not given as the Committee considers the details to be commercially sensitive. This
resulted in a bonus achievement of 75% of maximum (7.5% of salary).
Client base diversification
– this measure was
split into two separate
elements
Element A –Specific Emerging Strategic Sectors (75% weighting)
Achievement in respect of this measure was based on the number of Consultants
placed in various emerging sectors, with both a base target and a stretch target set.
The target numbers and sector details will not be disclosed as they are commercially
sensitive and would give competitors insight into our strategy and plans.
The base target was not achieved, therefore no bonus was earned in respect of this
element. A more granular description of the outturn is not given as the Committee
considers the details to be commercially sensitive.
Element B – General Client Diversification (25% weighting)
Achievement in respect of this measure was based on the number of Consultants
placed in sectors outside the Group’s core financial services client base, with both a
base target and a stretch target set. The target numbers and sector details are not
disclosed as they are commercially sensitive and would give competitors insight into
our strategy and plans.
The number of Consultants placed with clients outside the financial services sector
was between the base target and the stretch target; a more granular description of
the outturn is not given as the Committee considers the details to be commercially
sensitive. A bonus of 1.45% of salary was payable for Element B (out of a maximum
2.5% of salary available for Element B)
The overall bonus achievement for the Client-base Diversification metric was 14.5% of
maximum (1.45% of salary).
Social mobility
Achievement in respect of this measure was based on increasing the headcount in
the Group’s global apprenticeship programme (which includes apprentices in the UK,
Technology Trainees in Australia and community college applicants in the US), with
both a base target and a stretch target set, as follows:
Base Target
At year end, 50 Apprentices employed
Stretch Target
At year end, 65 Apprentices employed
5% of the total 10% available was payable on achieving the base target, and the other
5% was payable on achieving the stretch target. The amount payable was calculated
on a straight-line basis for performance between base and stretch.
The actual number of Apprentices employed at the end of the year was 56. This
resulted in a bonus achievement of 70% of maximum (7.0% of salary).
Reduction in greenhouse
gas emissions
Achievement in respect of this measure was based on the product of i) the Group’s
Scope 1 and Scope 2 emissions; and ii) the Group’s Scope 3 emissions per employee
(the “Emissions Product”). Both a base target and a stretch target were set, as follows.
Base Target
Reduce the 2021 Emissions Product by 15.7% or more
Stretch Target
Reduce the 2021 Emissions Product by 21.1% or more
5% of the total 10% available was payable on achieving the base target, and the other
5% was payable on achieving the stretch target. The amount payable was calculated
on a straight-line basis for performance between base and stretch.
Performance against this measure was that the Emissions Product had reduced by
46%. This resulted in a bonus achievement of 100% of maximum (10% of salary).
FDM Group (Holdings) plc
Annual Report and Accounts 2022
96
Remuneration Report
continued
Annual Report on Remuneration
continued
Accordingly, each Executive Director earned a bonus equal to 105.95% of their salary in respect of 2022, which will be
paid in cash and deferred shares as set out below.
Executive Director
Bonus earned
Bonus paid in cash
Bonus to be deferred
into shares (after tax)
Rod Flavell
£519,155
£432,629
£86,526
Sheila Flavell
£359,171
£299,309
£59,862
Mike McLaren
£357,846
£298,205
£59,641
Andy Brown
£359,171
£299,309
£59,862
The deferred share awards will vest after two years, are not subject to any further performance condition and are
subject to the terms of the Directors’ Remuneration Policy in relation to continued employment.
Long-term incentive awards vesting in respect of 2022
Each Executive Director was granted an award under the Company’s Performance Share Plan on 30 December 2020
over 29,000 shares. The grant of the awards in 2020 was moved towards the end of the year given the economic
uncertainty arising from the COVID-19 pandemic. The Committee’s usual practice, resumed in 2021, is to grant
awards earlier in the year. Each award was subject to a performance condition based on the adjusted EPS in the final
financial year of the performance period (2022) in accordance with the following table.
Adjusted EPS
1
in 2022
Percentage of the award that will vest
Performance outcome
(2022 adjusted EPS)
Vesting outcome
33.7 pence
25%
37.3 pence
100%
Greater than 33.7 pence but
less than 35.0 pence
Determined on a straight-line
basis between 25% and 100%
35.0 pence or more than
35.0 pence
100%
1
The Committee has discretion to assess the performance outcome based on adjusted EPS (as defined in note 12 in the Consolidated Financial Statements).
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 EPS performance 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. The vested awards remain subject to a
two-year holding period and will not be released, so that the shares can be acquired, until the end of that period, over
which they will accrue “dividend equivalents”.
In the single figure table on page 93, the value for the PSPs is calculated by multiplying the number of shares in
respect of which each award vested (29,000) by £8.38 (being the mid-market closing share price of £8.39 on 13 March
2023, the day before the vesting date, less the exercise price of £0.01 per share).
The price at vesting is lower than the value of a share the grant of the awards was approved (£9.943), and accordingly
none of the value is attributable to the growth in the value of share between the date of grant and the date of vesting.
Payment to former Directors
During the year, no payments were made to any former Director of the Company.
Payment for loss of office
During the year, no payments were made in respect of loss of office.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
97
Strategic Report
Governance
Directors’ shareholding and share interests
The Company’s formal shareholding guideline for Executive Directors is that each Executive Director should hold
shares with a value equal to at least 200% of salary. The current Executive Directors have shareholdings with
values significantly in excess of this guideline, reflecting the Company’s historic culture of share ownership and
entrepreneurialism. The interests as at 31 December 2022 were as follows:
Ordinary shares as at
31 December 2022
Number
1
Ordinary shares value
as at 31 December
2022 £000
2
Value
(multiple of
base salary
3
)
Executive Directors
Rod Flavell
7,344,743
55,012
110.0
Sheila Flavell
7,339,620
54,974
160.7
Mike McLaren
488,752
3,661
10.7
Andy Brown
4,033,115
30,208
88.3
Non-Executive Directors
David Lister
–
–
–
Peter Whiting
10,453
78
1.0
Michelle Senecal de Fonseca
5,523
41
0.7
Alan Kinnear
–
–
–
Jacqueline de Rojas
–
–
–
1
Including the interests of persons closely associated with the Director, other than in the case of Rod Flavell and Sheila Flavell whose interests are reported separately,
interests in shares acquired pursuant to bonus deferral arrangements, and the net of assumed tax number of shares subject to any PSP awards which are in a holding
period, including the 2020 PSP awards which vested by reference to performance in the period ended 31 December 2022.
2
Calculated based on the closing share price of 749 pence on 31 December 2022.
3
Calculated on base salary and fees at 31 December 2022.
There have been no changes in the Directors’ holdings in the share capital of the Company between 31 December
2022 and the date the financial statements were approved.
Each Executive Director also holds awards under the Company’s PSP as set out below. Each Executive Director holds
the same awards.
Date of award
Number at
1 January
2022
Granted in
2022
Lapsed in
2022
Exercised in
2022
Number at
31 December
2022
Status
17 April 2019
29,000
–
29,000
–
–
Lapsed
4
30 December 2020
29,000
–
–
–
29,000
Vested
5
21 April 2021
30,000
–
–
–
30,000
Unvested and subject to
performance condition
22 March 2022
6
–
30,000
–
–
30,000
Unvested and subject to
performance condition
4
The awards granted in 2019 lapsed on 16 March 2022.
5
The awards granted in 2020 vested on 14 March 2023 as described on the prior page.
6
The details of the awards granted in 2022 are set out below.
Performance Share Plan awards granted in 2022
Each Executive Director was granted an award under the Company’s PSP on 22 March 2022 as set out below.
Award
Number of shares
Exercise price per share
Face value of award
PSP award
30,000
£0.01
£295,098
The face value of the award is calculated by multiplying the number of shares subject to the PSP award (30,000) by
£9.8366 being the average share price over the three business days preceding the grant of the awards. The awards
are subject to a two-year post-vesting holding period. Each award was granted in the form of an option with a per
share exercise price of £0.01.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
98
Remuneration Report
continued
Annual Report on Remuneration
continued
The awards will vest based on adjusted
1
EPS in the final financial year of the three-year performance period ending
31 December 2024, in line with the following schedule:
Adjusted
1
EPS in the final financial year of the performance period
Percentage of the award that will vest
38.5 pence
25%
Greater than 38.5 pence but less than 41.7 pence
Determined on a straight-line basis between 25% and 100%
41.7 pence or more than 41.7 pence
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.
Approach to Directors’ remuneration for 2023
Base salary and fees
With effect from 1 April 2023, Executive Director salaries will be increased as described in the Chair of the
Committee’s statement on page 88.
The Board Chair’s fee and the fees of the Non-Executive Directors are currently under review (by the Committee
in the case of the Board Chair and by the Board in the case of the Non-Executive Directors) having regard to the
time commitments required for the roles and the competitive positioning of those fees. Any changes have yet to
be determined, but are proposed to take effect from 1 April 2023 and will be reported on in the 2023 Directors’
Remuneration Report.
Annual bonus and long-term incentives for 2023
The maximum annual bonus opportunity for all Executive Directors for 2023 is 120% of salary, as set out in the
statement from the Chair of the Committee on page 88. Information in relation to the performance measures,
weightings and approach to deferral is also set out in that statement.
The Committee proposes to grant awards under the PSP in respect of 2022, as discussed in the statement from the
Committee Chair.
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 250 Index; the FTSE 250 Index was chosen as the Company was a constituent of that index
during the year.
Total Shareholder Return (rebased to 100)
300
Dec
2014
Jun
2015
Dec
2015
Jun
2016
Dec
2016
Jun
2017
Dec
2017
Jun
2018
Dec
2018
Jun
2019
Dec
2019
Jun
2020
Dec
2020
Dec
2021
Jun
2021
Dec
2022
Jun
2022
Jun
2014
600
200
100
0
400
500
FDM
FTSE 250
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
99
Strategic Report
Governance
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 ten 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.
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total remuneration (£000)
547.7
658.5
668.1
764.5
1,134.1
995.0
802.0
750.5
982.5 1,294.9
Annual bonus as a % of maximum
opportunity
68%
55%
82%
100%
80%
58%
50%
65%
94%
88%
Long-term incentives as a % of
maximum opportunity
n/a
n/a
n/a
n/a
100%
100%
100%
0%
0%
100%
Change in Directors’ remuneration in relation to the wider workforce
The table below shows the percentage change in each Director’s salary/ fees, benefits and annual bonus between
the financial years 2019–2020, 2020–2021 and 2021–2022. The applicable regulations require us to show the
average change in the same elements of remuneration for the employees of FDM Group (Holdings) plc on a full-time
equivalent (“FTE”) basis. FDM Group (Holdings) plc has no employees other than the Directors. Accordingly, in order to
provide a meaningful comparison, we have shown the change based on a wider workforce comparator group which,
consistent with previous years, includes all UK employees other than Consultants.
Wider
workforce
Rod
Flavell
Sheila
Flavell
Mike
McLaren
Andy
Brown
David
Lister
Peter
Whiting
Alan
Kinnear
1
Michelle
Senecal
de
Fonseca
Jacqueline
de Rojas
Salary/
fees
2021 – 2022
11.5%
9.8%
5.1%
6.9%
5.1%
2.2%
5.9%
5.7%
5.0%
7.0%
2020 – 2021
9.0%
10.3%
7.4%
9.4%
7.4%
0%
9.7%
15.0%
7.6%
15.0%
2019 – 2020
7.5%
0%
0%
0%
0%
14.2%
0%
n/a
0%
0%
Annual
bonus
2021 – 2022
4.2%
3.5%
-1.0%
0.7%
-1.0%
n/a
n/a
n/a
n/a
n/a
2020 – 2021
57.8%
59.2%
55.0%
57.8%
55.0%
n/a
n/a
n/a
n/a
n/a
2019 – 2020
-6.8%
56.6%
56.6%
56.6%
56.6%
n/a
n/a
n/a
n/a
n/a
Taxable
benefits
2021 – 2022
12.1%
0.0%
1.5%
-0.7%
1.5%
n/a
n/a
n/a
n/a
n/a
2020 – 2021
-6.8%
-4.4%
0.0%
-1.3%
-0.7%
n/a
n/a
n/a
n/a
n/a
2019 – 2020
3.5%
-0.5%
-1.5%
-1.3%
-2.1%
n/a
n/a
n/a
n/a
n/a
1
Alan Kinnear was appointed to the Board with effect from 1 January 2020 and, accordingly, there is no change shown in relation to his fees for the period 2019 – 2020.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
100
Remuneration Report
continued
Annual Report on Remuneration
continued
CEO pay ratio
The following table sets out the ratio of the CEO’s total remuneration in respect of the 2022 financial year (taken from
the single figure table on page 93) to the 25th percentile, 50th percentile (i.e. the median) and the 75th percentile FTE
of the Company’s UK employees. In line with the applicable regulations, the corresponding ratios for 2018, 2019, 2020
and 2021 are also included. For consistency with the “change in CEO remuneration in relation to the wider workforce”
disclosure, the table below also provides the same ratio in respect of the Company’s UK FTE employees excluding
Consultants. This reflects the fact that Consultants’ remuneration is not subject to the same annual review process as
the rest of the UK workforce.
Year
Method
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
Including
Consultants
Excluding
Consultants
Including
Consultants
Excluding
Consultants
Including
Consultants
Excluding
Consultants
2018
Option A
43:1
36:1
40:1
23:1
31:1
14:1
2019
Option A
32:1
27:1
29:1
19:1
21:1
13:1
2020
Option A
28:1
29:1
22:1
19:1
17:1
14:1
2021
Option A
42:1
35:1
34:1
23:1
25:1
17:1
2022
Option A
54:1
46:1
49:1
33:1
34:1
20:1
The Company adopted “Option A” in the regulations for the purposes of calculating the pay ratios as it considers this
to be the most accurate method. Remuneration for other employees for the purposes of the calculations was as at 31
December in each year. In calculating the ratio for all UK employees in the above table, the Company has determined
the total FTE remuneration for all its UK employees for the financial year and has then ranked those employees based
on their total FTE remuneration from low to high. The employees whose remuneration places them at the 25th, 50th
(median) and 75th percentile points in this ranking have then been identified. Consultants were then excluded, and
the process was repeated to calculate the ratio for all UK employees excluding Consultants.
In line with the applicable regulations, we have set out below for the same employee percentiles (and for the CEO)
their total remuneration for each relevant year and the salary component of that remuneration.
Year
CEO total
remuneration
(salary
component
of total
remuneration)
25th percentile employee total
remuneration (salary component
of total remuneration)
Median employee total
remuneration (salary component
of total remuneration)
75th percentile employee total
remuneration (salary component
of total remuneration)
Including
Consultants
Excluding
Consultants
Including
Consultants
Excluding
Consultants
Including
Consultants
Excluding
Consultants
2018
£995,000
(£395,100)
£23,015
(£19,500)
£27,627
(£25,838)
£24,722
(£19,500)
£43,596
(£41,349)
£32,157
(£23,902)
£72,100
(£48,500)
2019
£801,968
(£404,250)
£24,911
(£20,000)
£29,682
(£24,982)
£27,339
(£20,000)
£42,150
(£36,000)
£37,305
(£20,000)
£63,498
(£55,000)
2020
£750,509
(£404,250)
£27,210
(£24,750)
£26,037
(£25,638)
£34,775
(£20,000)
£39,089
(£25,000)
£44,483
(£49,115)
£53,280
(£53,280)
2021
£982,538
(£446,062)
£23,607
(£20,000)
£28,100
(£25,500)
£28,765
(£20,000)
£42,970
(£35,870)
£39,779
(£20,000)
£57,500
(£50,000)
2022
£1,294,894
(£490,000)
£23,902
(£23,417)
£28,173
(£26,173)
£26,626
(£25,636)
£39,643
(£31,333)
£37,641
(£26,250)
£63,448
(£48,006)
A significant proportion of the Executive Directors’ remuneration is performance-related. The ratios will therefore vary
depending upon the extent to which performance conditions are satisfied and the Executive Directors’ performance-
related remuneration is earned. The changes in the ratios between 2021 and 2022 are principally attributable to the
second phase of the CEO’s planned salary increases taking effect in April 2022 and the vesting of the 2020 PSP awards
(which are included in the 2022 single total figure of remuneration notwithstanding that they are not released for a
further two years) compared to the position in 2020 and 2021 when the 2018 and 2019 PSP awards (respectively) did
not vest. The Committee considers that the median ratio for 2022 is consistent with the pay, reward and progression
policies for employees as a whole.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
101
Strategic Report
Governance
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 organisation).
Year ended
31 December
2022
£000
Year ended
31 December
2021
£000
Percentage change
Total dividends paid
1
38,153
32,674
+17%
Overall expenditure on pay to employees
257,202
203,815
+26%
1
The dividends for the year ended 31 December 2021 are calculated on the same basis as in the 2021 Directors’ Remuneration Report and, accordingly, exclude the
second interim dividend in respect of 2020 of 13.0 pence per share which was paid on 26 February 2021 at a total cost of £14.1m.
Shareholder approval of our Directors’ Remuneration Policy and Directors’ Remuneration Report
The Company’s Directors’ Remuneration Policy and the Company’s 2021 Directors’ Remuneration Report were
approved at the AGM held on 28 April 2021 and 24 May 2022 respectively. The results of the votes are set out below:
Resolution
Votes for
% of votes for
Votes against
% of votes against
Votes withheld
Approve the Directors’
Remuneration Policy
90,648,379
96.49%
3,298,797
3.51%
2,678,296
Approve the Directors’
Remuneration Report
86,234,517
96.64%
3,002,766
3.36%
524,008
Membership of and Advisors to the Remuneration Committee
During the financial year the Committee’s membership was Peter Whiting (Chair), Michelle Senecal de Fonseca, and
Alan Kinnear. The attendance of members at Remuneration Committee meetings is set out on page 65.
During the financial year, the Committee received independent advice from Deloitte LLP (“Deloitte”), which
was appointed by the Committee, in relation to the Committee’s consideration of matters relating to Directors’
remuneration. Deloitte was appointed in 2014 following a formal tender process. Fees for advice provided to the
Remuneration Committee during the year were £5,225. Fees were charged on a time and disbursements basis.
Deloitte is a member of the Remuneration Consultants Group and voluntarily operates under its code of conduct in
its dealings with the Remuneration Committee.
Deloitte also provides advice to the Company on the operation of its employee share plans and employee benefit
trust. The Committee took this work into account as part of its ongoing review of the appointment of Deloitte and,
due to the nature and extent of the work performed, concluded that it did not impair Deloitte’s ability to advise the
Committee objectively and free from influence. Accordingly, it is the view of the Committee that the advice it receives
from Deloitte is objective and independent.
The Board Chair, 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 2022 are set out on page 65.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
102
Remuneration Report
continued
Directors’ Remuneration Policy
The Company’s Directors’ Remuneration Policy was approved by shareholders at the AGM held on 28 April 2021.
Since we are not seeking approval for a revised policy at the 2023 AGM, we have set out below just the “policy tables”,
but with certain date-specific references updated. The full policy as approved at the 2021 AGM is available on the
Company’s website at
www.fdmgroup.com
.
Executive Directors
Purpose and link to
strategy
Operation
Maximum opportunity
Performance measures
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.
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.
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.
Not applicable.
Benefits
To provide benefits
as part of a broadly
market competitive
total remuneration.
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.
Not applicable.
Retirement benefits
To provide an
appropriate level of
retirement benefit
(or cash allowance
equivalent) as part
of a broadly market
competitive total
remuneration package.
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.
Company pension contribution
(or cash allowance equivalent)
not exceeding the contribution
available to the majority of the
workforce (currently 4%).
Not applicable.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
103
Strategic Report
Governance
Purpose and link to
strategy
Operation
Maximum opportunity
Performance measures
Annual bonus
Rewards Executive
Directors for achieving
financial, strategic
and/ or individual
targets in the relevant
year, to provide an
incentive for achieving
the Group’s strategy.
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 including
in circumstances where any formulaic
outcome does not reflect the Committee’s
assessment of overall performance or is
not considered appropriate in the context
of circumstances that were unexpected or
unforeseen at the start of the relevant year.
Ordinarily, 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. The Committee
may require, or permit the deferral of higher
levels of bonus. The Committee may pay the
whole of any bonus earned in cash 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.
Maximum bonus opportunity
for Executive Directors is 150%
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.
Subject to the
Committee’s
discretion to override
formulaic outturns,
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.
There is ordinarily
straight-line vesting
between each of the
points.
At least 50% 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. Any
balance of the bonus
may be assessed
against non-financial
strategic measures
and/ or individual
performance.
Buy As You Earn (“BAYE”) Plan
To create staff
alignment with the
Group and encourage
share ownership.
Participants may acquire up to £12,000
of shares each year from their after-tax
remuneration (“Purchased Shares”).
Provided the Purchased Shares are
retained in the plan and subject, ordinarily,
to continued employment, additional
“Matching Shares” are awarded on the
basis of a 1 for 3 match following the end
of each of the first, third and fifth years
following the year in respect of which
the purchased shares were acquired. For
example, if 900 shares are purchased by
a participant in respect of 2022, they will
receive an additional 300 Matching Shares
following the end of each of 2022, 2024 and
2026 (giving a total of 900 Matching Shares
against the 900 shares purchased in 2022).
Recovery
Recovery provisions apply to Matching
Shares as summarised below the table.
Maximum value of Purchased
Shares that may be acquired in
respect of any year is £12,000.
The maximum ratio of
Matching Shares to Purchased
Shares is as described in the
“Operation” column.
Not subject to
performance
measures in line
with typical market
practice.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
104
Remuneration Report
continued
Purpose and link to
strategy
Operation
Maximum opportunity
Performance measures
Performance Share Plan (“PSP”)
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.
The Committee has discretion to reduce
the formulaic vesting outturn including
in circumstances where the formulaic
outcome does not reflect the Committee’s
assessment of overall performance or is
not considered appropriate in the context
of circumstances that were unexpected or
unforeseen at the date of grant.
Awards are 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 Committee may at its discretion
structure awards as Approved
Performance Share Plan (“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
below the table.
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.
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 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 apply to
the tax-favoured
option as apply to
the PSP award.
Directors’ Remuneration Policy
continued
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
105
Strategic Report
Governance
Information supporting the policy table
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 annual bonus can be assessed against financial, strategic and/ or individual targets determined by the Committee
with at least 50% 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. Strategic measures will be aligned to the
Company’s strategy in order that Executive Directors are appropriately rewarded for taking decisions which reflect
the overall direction of the Group.
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
performance 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, BAYE and 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, BAYE and deferred bonus plan may be settled in cash (or
granted as a cash award over a notional number of shares). However, the Committee would only settle or grant an
Executive Director’s award in cash where the particular circumstances made that appropriate – for example in the
event of a regulatory restriction on the delivery of shares, or in respect of the tax arising on the vesting or release
of the award.
Shareholding guidelines
To align the interests of Executive Directors with those of shareholders, the Committee has adopted shareholding
guidelines which apply in employment and after cessation of employment.
In employment
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.
After cessation of employment
Shares are subject to this requirement only if they are acquired from share plan awards (PSP, BAYE Matching Shares
and deferred bonuses) granted after 1 January 2022. The Executive Director must retain: (a) until the audit sign-off
of the financial statements for the year in which they leave the business, such of those shares as are subject to this
requirement as have a value equal to the in-employment guideline; and (b) until the audit sign-off of the financial
statements for the following year, such of those shares as have a value equal to 50% of the in-employment guideline,
or in either case and if fewer, all of those shares. The vesting of relevant share awards granted from 1 January 2022
onwards will be conditional upon the Executive Director agreeing to the shares being held in a nominee arrangement
to enable the effective monitoring and implementation of this policy.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
106
Remuneration Report
continued
Directors’ Remuneration Policy
continued
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, dishonesty
leading to a material misstatement of financial results, serious reputational damage, or material corporate failure.
PSP and BAYE
At the discretion of the Committee, unvested PSP awards and unvested BAYE matching 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;
•
A material miscalculation of any performance measure;
•
Serious reputational damage; or
•
Material corporate failure.
For up to three years following the vesting of an award, the Committee may require the repayment (which may be
affected by the cancellation or forfeiture of a vested but unreleased PSP award) of some or the entire award in the
event of fraud, dishonesty leading to a material misstatement of financial results, serious reputational damage, or
material corporate failure.
Non-Executive Directors
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 Chair is paid a basic Chair fee
and additional fees for chairing of any
Board committees.
Non-Executive Directors receive a basic
fee and additional fees for chairing
any Board committees or for other
responsibilities or time commitments.
The Chair’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.
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.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
107
Strategic Report
Governance
Service contracts
FDM’s policy is that Executive Directors’ service agreements should have a notice period of up to 12 months, and
each Executive Director has a service contract which may be terminated by the Company or Director by giving twelve
months’ notice. 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. Details of the Directors’ service contracts (or letter of
appointment in the case of a Non-Executive Director), notice periods and, where applicable, expiry dates are set out
below:
Name
Commencement
Expiry
Notice period
Rod Flavell
16 June 2014
–
12 months
Sheila Flavell
16 June 2014
–
12 months
Mike McLaren
16 June 2014
–
12 months
Andy Brown
16 June 2014
–
12 months
Peter Whiting
16 June 2014
–
3 months
Michelle Senecal de Fonseca
15 January 2016
–
3 months
David Lister
9 March 2016
–
3 months
Jacqueline de Rojas
1 October 2019
–
3 months
Alan Kinnear
1 January 2020
–
3 months
Approval
This Report was approved by the Board on 14 March 2023 and signed on its behalf by:
Peter Whiting
Chair of the Remuneration Committee
14 March 2023
FDM Group (Holdings) plc
Annual Report and Accounts 2022
108
Directors’ Report
The Directors present the Directors’ Report and audited
Consolidated Financial Statements of FDM Group
(Holdings) plc, registered number 07078823, for the year
ended 31 December 2022.
Principal activities, business review and
future developments
The Group is a global professional services provider
with a focus on Information Technology. The Group’s
principal business activities involve recruiting, training
and deploying its own permanent IT and business
Consultants to clients, either on site or remotely. The
Strategic Report on pages 1 to 58 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
£34.9 million (2021: £31.8 million). Results for the year
are set out in the Consolidated Income Statement on
page 121.
The Directors propose a final dividend of 19.0 pence
per share for the year to 31 December 2022. Subject
to shareholder approval, this dividend will be paid on
30 June 2023 to shareholders on the register on 9 June
2023. An interim dividend of 17.0 pence per share was
declared by the Directors on 27 July 2022 and was paid
on 30 September 2022 to shareholders on the register
on 26 August 2022.
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:
David Lister
Non-Executive Chair
Roderick Flavell
Chief Executive Officer
Sheila Flavell
Chief Operating Officer
Michael McLaren
Chief Financial Officer
Andrew Brown
Chief Commercial Officer
Peter Whiting
Non-Executive Director
Michelle Senecal de Fonseca
Non-Executive Director
Jacqueline de Rojas
Non-Executive Director
Alan Kinnear
Non-Executive Director
The biographies of the currently serving Directors are
provided on pages 59 to 61.
Director share interests
Details of the interests of Directors in the shares of the
Company are provided on page 109.
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 87. 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. 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 27 to the Consolidated Financial Statements. The
principal risks that the Group faces are set out on pages
24 to 31 of the Strategic Report.
Controls in place over consolidation of
financial results
The Group’s Consolidated Financial Statements are
prepared by the Group’s Finance team. The team is
based in one central location, where all the individual
entity general ledgers are also maintained. The
consolidation process involves preparation and separate
reviews of the results by qualified and experienced
finance staff.
Corporate governance
For details of the Corporate Governance Report see page
62. The Corporate Responsibility report, on pages 32 to
58, includes information about the Group’s employment
policies and greenhouse gas emissions. The Corporate
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.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
109
Strategic Report
Governance
Substantial shareholders
As at 31 December 2022 and as at 6 March 2023, the Company had been advised, in accordance with the Disclosure
Guidance 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
Direct/ indirect
interest
As at 31 December 2022
As at 6 March 2023
Number of shares
% of issued share
capital
Number of shares
% of issued share
capital
Baillie Gifford & Co
Indirect
14,164,314
13.0%
14,164,314
13.0%
Rod Flavell
Direct
7,329,373
6.7%
7,329,373
6.7%
Sheila Flavell
Direct
7,324,250
6.7%
7,324,250
6.7%
abrdn Standard Life
Investments
Indirect
5,497,037
5.0%
5,497,037
5.0%
Artemis Investment
Management
Indirect
5,491,747
5.0%
5,491,747
5.0%
Majedie Asset
Management
Indirect
5,435,803
5.0%
5,435,803
5.0%
Ameriprise Financial,
Inc. and its group
Direct and indirect
5,314,856
4.9%
5,314,856
4.9%
Invesco Ltd
Indirect
5,497,082
5.0%
5,497,082
5.0%
BlackRock
Indirect
5,210,213
4.8%
5,210,213
4.8%
Andy Brown
Direct
4,017,745
3.7%
4,017,745
3.7%
Political donations
The Group made no political donations in the year (2021: £nil).
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.
The Directors therefore have a reasonable expectation that the Company and the Group will have adequate
resources to continue in operational existence for at least 12 months. Accordingly, the Directors continue to adopt
the going concern basis for preparing the financial statements.
UK Streamlined Energy and Carbon Reporting (“SECR”)
In accordance with SECR requirements, a summary of UK and worldwide energy consumption and emissions for
2022 and 2021 is presented on page 54. Details of the Group’s compliance with legislation relating to greenhouse gas
emissions reporting are set out on page 52 and in the Corporate Responsibility report.
Employee engagement
How the Directors have engaged with employees and have regard to their interests is detailed on pages 67 and 68.
We use a number of methods to consult our employees regularly so that their views can be taken into account in
making decisions that are likely to affect their interests, and we encourage our staff to become involved in FDM
Group’s performance through our discretionary Performance Share Plan and our all-employee Buy As You Earn share
plan. Further information on these initiatives to engage with our employees is set out on page 40 of the Corporate
Responsibility report.
Engagement with other stakeholders
Information on the Directors’ engagement with other stakeholders can be found on pages 67 to 68.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
110
Directors’ Report
continued
Employee information
Information on the Group’s employee policies is included
on page 43 in the Corporate Responsibility report.
Information on the Group’s policies in respect of persons
that become disabled during their employment, and
the training, career development and promotion of
disabled persons, is set out on page 39 in the Corporate
Responsibility report.
Capital structure
The Group’s capital structure is detailed in note 21 to
the Consolidated Financial Statements. The number of
ordinary shares in issue was unchanged during the year.
Investment in own shares
During the AGM held on 24 May 2022, the shareholders
approved that up to 10% of the Company’s shares could
be purchased by the Company and held as own shares,
renewing the authority agreed on 28 April 2021. The
authority expires at the conclusion of the Company’s
next Annual General Meeting after the passing of this
resolution or, if earlier, 23 August 2023.
During 2018, the FDM Group Employee Benefit Trust was
established to purchase shares sold by option holders
upon exercise of options under the FDM Performance
Share Plan. The Group accounts for its own shares held
by the Trustee of the FDM Group Employee Benefit Trust
as a deduction from shareholders’ funds.
Change of control
The Group has agreements in place with certain of its
banking customers that give those customers the right to
terminate the contract on a change of control following a
takeover bid for 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 are no post balance sheet events.
Related party transactions
The Group’s related party transactions are detailed in
note 26 to the Consolidated Financial Statements.
Independent auditors
In accordance with Section 487 of the Companies
Act, a resolution for the reappointment of
PricewaterhouseCoopers LLP as auditors 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 financial statements
in accordance with UK-adopted international accounting
standards and the Company financial statements in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 101 “Reduced Disclosure
Framework”, and applicable law).
Under company law, 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 Company and of the profit or loss of
the Group 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 UK-adopted international
accounting standards have been followed for the
Group financial statements and United Kingdom
Accounting Standards, comprising FRS 101 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 safeguarding the
assets of the Group and Company and hence for taking
reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group’s 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.
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.
Financial Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
111
Strategic Report
Governance
Directors’ confirmations
The Directors consider that the FDM Group (Holdings)
plc Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Group’s and Company’s
position and performance, business model and strategy.
Each of the Directors, whose names and functions are
listed in Directors’ Report confirm that, to the best of
their knowledge:
•
the Group financial statements, which have
been prepared in accordance with UK-adopted
international accounting standards, give a true and
fair view of the assets, liabilities, financial position
and profit of the Group;
•
the Company financial statements, which have
been prepared in accordance with United Kingdom
Accounting Standards, comprising FRS 101, give
a true and fair view of the assets, liabilities and
financial position of the Company; and
•
the Strategic Report in the Annual Report includes
a fair review of the development and performance
of the business and the position of the Group and
Company, 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’s 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’s 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 14 March 2023
and signed on its behalf by:
Rod Flavell
Mike McLaren
Chief Executive Officer
Chief Financial Officer
14 March 2023
14 March 2023
112
Financial Statements
Page
Independent auditors’ report to the members of FDM Group (Holdings) plc
113
Consolidated Income Statement
121
Consolidated Statement of Comprehensive Income
122
Consolidated Statement of Financial Position
123
Consolidated Statement of Cash Flows
124
Consolidated Statement of Changes in Equity
125
Notes to the Consolidated Financial Statements
126
Parent Company Statement of Financial Position
152
Parent Company Statement of Changes in Equity
153
Notes to the Parent Company Financial Statements
154
Shareholder Information
159
FDM Group (Holdings) plc
Annual Report and Accounts 2022
113
Strategic Report
Financial Statements
Governance
Independent auditors’ report to the
members of FDM Group (Holdings) plc
Report on the audit of the financial statements
Opinion
In our opinion:
•
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 2022 and of the group’s profit and the group’s cash flows for the year then ended;
•
the group financial statements have been properly prepared in accordance with UK-adopted international
accounting standards as applied in accordance with the provisions of the Companies Act 2006;
•
the parent company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 101 “Reduced
Disclosure Framework”, and applicable law); and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts 2022 (the “Annual
Report”), which comprise: the Consolidated Statement of Financial Position and the Parent Company Statement
of Financial Position as at 31 December 2022; the Consolidated Income Statement, the Consolidated Statement of
Comprehensive Income, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity
and the Parent Company Statement 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.
Other than those disclosed in Note 7, we have provided no non-audit services to the parent company or its controlled
undertakings in the period under audit.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
114
Our audit approach
Overview
Audit scope
•
The group financial statements are a consolidation of 19 reporting units
•
We performed full scope audits of the UK, USA and Canadian reporting units
•
We also audited property leases and the associated property, plant and equipment, in the Australian reporting unit
•
Our full scope audits covered 78% of revenue and 84% of absolute profit before tax
Key audit matters
•
Share option plan expenses (group and parent)
Materiality
•
Overall group materiality: £2,280,000 (2021: £2,070,000) based on approximately 5% of profit before tax.
•
Overall parent company materiality: £700,000 (2021: £620,000) based on approximately 1% of total assets.
•
Performance materiality: £1,700,000 (2021: £1,550,000) (group) and £525,000 (2021: £465,000) (parent company).
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.
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.
Independent auditors’ report to the
members of FDM Group (Holdings) plc
FDM Group (Holdings) plc
Annual Report and Accounts 2022
115
Strategic Report
Financial Statements
Governance
The key audit matters below are consistent with last year.
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 24 to the
Financial statements for the directors’
disclosures of the related accounting
policies, judgements and estimates, and
page 80 (‘Significant financial reporting
items’) within the Audit Committee Report.
During 2015, the group implemented a
share option plan for management and
senior employees. We focussed on this area
because 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 pages 97 and 98 (‘Annual Report
on Remuneration’) for details on the share
option plan).
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 it 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 it to historical leavers from the
scheme and found it to be appropriate.
We evaluated management’s assumption of the performance
conditions based on compound earnings per share (“EPS”) growth,
assessing the assumed future compound EPS growth against board
approved budgets and management’s history of forecasting, and
found them 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, we noted no
material exceptions in our testing.
We also considered the disclosures made in note 24 to the financial
statements and determined that they are consistent with the
requirements of relevant accounting standards.
Based on the results of our work we found that the share option
payment expense falls within a reasonable range of estimates.
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, USA, and Canada, and further smaller
reporting units in locations across Europe, Asia, Oceania and South Africa. The group financial statements are a
consolidation of 19 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 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 three
reporting units, comprising the UK, USA and Canadian trading reporting units. We also included in our audit scope the
property leases and associated Property, Plant and Equipment in the Australian reporting unit, which we performed
in the UK, where the accounting is administered.
As a result, full scope audit procedures were conducted on reporting units representing 78% of revenue and 84% of
absolute profit before tax.
In addition, we performed a full scope audit of the FDM Group (Holdings) plc entity.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
116
The impact of climate risk on our audit
The impact of climate change has been an area of focus for the group, as further explained in the Strategic Report.
The group is mindful of its impact on the environment and focussed on ways to reduce climate related impacts as
they continue to work through their “Carbon reduction plan”. As set out further in the Strategic Report, the group
is committed to carbon emissions targets consistent with reductions required to keep global warming down to
1.5°C. The group is in the process of calculating and formalising precise targets, through approval by the Science
Based Targets Initiative, with 2020 to be adopted as the baseline. As part of our audit we have made enquiries of
management to understand the process they have adopted to assess the extent of the potential impact of climate
change risk on the group’s financial statements. Management consider that the impact of climate change does not
give rise to a material financial statement impact. We have used our knowledge of the group and sustainability
experts to evaluate the group’s risk assessment process in respect of climate change. We assessed there was no
significant impact to our audit nor our Key Audit Matters. We discussed with management and the Audit Committee
that the estimated financial reporting impacts of climate change will need to be frequently reassessed, as well as the
ways in which disclosures in respect of climate change should evolve as the group continues to develop its response
to the impact of these risks. We also considered the consistency of the disclosures in relation to climate change made
in the other information within the Annual Report with both the financial statements and the knowledge we obtained
from our audit.
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:
Financial statements – group
Financial statements – parent company
Overall materiality
£2,280,000 (2021: £2,070,000).
£700,000 (2021: £620,000).
How we
determined it
Approximately 5% of profit before tax
Approximately 1% of total assets
Rationale for
benchmark applied
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.
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 £1,700,000 and £2,160,000. Certain
components were audited to a local statutory audit materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality
in determining the scope of our audit and the nature and extent of our testing of account balances, classes of
transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2021:
75%) of overall materiality, amounting to £1,700,000 (2021: £1,550,000) for the group financial statements and
£525,000 (2021: £465,000) for the parent company financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end
of our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
£114,000 (group audit) (2021: £103,000) and £35,000 (parent company audit) (2021: £31,000) as well as misstatements
below those amounts that, in our view, warranted reporting for qualitative reasons.
Independent auditors’ report to the
members of FDM Group (Holdings) plc
FDM Group (Holdings) plc
Annual Report and Accounts 2022
117
Strategic Report
Financial Statements
Governance
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s and the parent company’s ability to continue to adopt the
going concern basis of accounting included:
•
agreeing the underlying cash flow projections to board approved forecasts, assessing how these forecasts are
compiled, and assessing the accuracy of management’s forecasts;
•
evaluating the key assumptions applied within management’s forecasts;
•
considering liquidity and available financial resources;
•
assessing whether the stress testing performed by management appropriately considered the principal risks
facing the business; and
•
evaluating the feasibility of management’s mitigating actions in the stress testing scenarios.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the group’s and the parent company’s
ability to continue as a going concern for a period of at least twelve months from when the financial statements are
authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the
group’s and the parent company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the directors’ statement in the financial statements about whether
the directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
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 and Directors’ Report, we also considered whether the disclosures required by
the UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
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 2022 is consistent with the financial statements and has been
prepared in accordance with applicable legal requirements.
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 the Strategic report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
118
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and
that part of the corporate governance statement relating to the parent company’s compliance with the provisions
of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the
corporate governance statement as other information are described in the Reporting on other information section of
this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
corporate governance statement is materially consistent with the financial statements and our knowledge obtained
during the audit, and we have nothing material to add or draw attention to in relation to:
•
The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
•
The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being managed or mitigated;
•
The directors’ statement in the financial statements about whether they considered it appropriate to adopt the
going concern basis of accounting in preparing them, and their identification of any material uncertainties to the
group’s and parent company’s ability to continue to do so over a period of at least twelve months from the date of
approval of the financial statements;
•
The directors’ explanation as to their assessment of the group’s and parent company’s prospects, the period this
assessment covers and why the period is appropriate; and
•
The directors’ statement as to whether they have a reasonable expectation that the parent company will be able
to continue in operation and meet its liabilities as they fall due over the period of its assessment, including any
related disclosures drawing attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group and parent company was
substantially less in scope than an audit and only consisted of making inquiries and considering the directors’ process
supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK
Corporate Governance Code; and considering whether the statement is consistent with the financial statements and
our knowledge and understanding of the group and parent company and their environment obtained in the course of
the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the corporate governance statement is materially consistent with the financial statements and our
knowledge obtained during the audit:
•
The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary for the members to assess the group’s and parent
company’s position, performance, business model and strategy;
•
The section of the Annual Report that describes the review of effectiveness of risk management and internal
control systems; and
•
The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when 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.
Independent auditors’ report to the
members of FDM Group (Holdings) plc
FDM Group (Holdings) plc
Annual Report and Accounts 2022
119
Strategic Report
Financial Statements
Governance
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities in respect of the financial statements, 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with
laws and regulations related to local employment laws, and we considered the extent to which non-compliance
might have a material effect on the financial statements. We also considered those laws and regulations that
have a direct impact on the financial statements such as the Companies Act 2006, tax regulation and the Listing
rules. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial
statements (including the risk of override of controls), and determined that the principal risks were related to posting
inappropriate journal entries to increase revenue or reduce expenditure, and management bias in accounting
estimates. Audit procedures performed by the engagement team included:
•
Discussions with management, internal audit and the company’s legal advisors, including consideration of known
or suspected instances of non-compliance with laws and regulation, and fraud;
•
Evaluating and testing journal entries which may be indicative of fraud, for example journal entries posted with
unusual account combinations;
•
Review of any employment disputes or litigation to ensure there were no broader non-compliance issues with
employment laws and regulations;
•
Review of the financial statement disclosures to underlying supporting documentation;
•
Challenging assumptions and judgements made by management in their significant accounting estimates; and
•
Review of internal audit reports in so far that they related to the financial statements.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that are not closely related to events and transactions
reflected in the financial statements. Also, 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.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using
data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than
testing complete populations. We will often seek to target particular items for testing based on their size or risk
characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population
from which the sample is selected.
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.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
120
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.
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 obtained 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 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 March 2013 to
audit the financial statements for the year ended 31 December 2013 and subsequent financial periods. The period of
total uninterrupted engagement is 10 years, covering the years ended 31 December 2013 to 31 December 2022.
Other matter
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial
statements form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the
Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’
report provides no assurance over whether the annual financial report has been prepared using the single electronic
format specified in the ESEF RTS.
Katharine Finn (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
14 March 2023
Independent auditors’ report to the
members of FDM Group (Holdings) plc
FDM Group (Holdings) plc
Annual Report and Accounts 2022
121
Strategic Report
Financial Statements
Governance
Note
2022
£000
2021
£000
Revenue
6
Cost of sales
(174,353 )
(140,641 )
Gross profit
Administrative expenses
(109,772 )
(84,700 )
Operating profit
7
Finance income
10
Finance expense
10
(604 )
(650 )
Net finance expense
(186 )
(592 )
Profit before income tax
Taxation
11
(10,753 )
(9,594 )
Profit for the year
2022
pence
2021
pence
Earnings per ordinary share
Basic
12
Diluted
12
The results for the year shown above arise from continuing operations.
The notes on pages 126 to 151 are an integral part of these Consolidated Financial Statements.
Consolidated Income Statement
for the year ended 31 December 2022
FDM Group (Holdings) plc
Annual Report and Accounts 2022
122
2022
£000
2021
£000
Profit for the year
Other comprehensive income/ (expense)
Items that may be subsequently reclassified to profit or loss
Exchange differences on retranslation of foreign operations (net of tax)
(47 )
Total other comprehensive income/ (expense)
(47 )
Total comprehensive income for the year
The notes on pages 126 to 151 are an integral part of these Consolidated Financial Statements.
Consolidated Statement of
Comprehensive Income
for the year ended 31 December 2022
FDM Group (Holdings) plc
Annual Report and Accounts 2022
123
Strategic Report
Financial Statements
Governance
Consolidated Statement of Financial
Position
as at 31 December 2022
Note
2022
£000
2021
£000
Non-current assets
Right-of-use assets
13
Property, plant and equipment
14
Intangible assets
15
Deferred income tax assets
17
Current assets
Trade and other receivables
18
Cash and cash equivalents
19
Total assets
Current liabilities
Trade and other payables
20
Lease liabilities
13
Current income tax liabilities
Non-current liabilities
Lease liabilities
13
Total liabilities
Net assets
Equity attributable to owners of the parent
Share capital
21
Share premium
All Other reserves
23
Retained earnings
Total equity
The notes on pages 126 to 151 are an integral part of these Consolidated Financial Statements.
The financial statements on pages 121 to 151 were approved by the Board of Directors on 14 March 2023 and were
signed on its behalf by:
Rod Flavell
Mike McLaren
Chief Executive Officer
Chief Financial Officer
14 March 2023
14 March 2023
FDM Group (Holdings) plc
Annual Report and Accounts 2022
124
Consolidated Statement of Cash Flows
for the year ended 31 December 2022
Note
2022
£000
2021
£000
Cash flows from operating activities
Group profit before tax for the year
Adjustments for:
Depreciation and amortisation
7
Loss on disposal of non-current assets
Finance income
10
(418 )
(58 )
Finance expense
10
Share-based payment charge (including associated social security costs)
Increase in trade and other receivables
(11,334 )
(5,123 )
Increase in trade and other payables
Cash flows generated from operations
Interest received
Income tax paid
(13,665 )
(10,606 )
Net cash inflow from operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment
(1,204 )
(368 )
Net cash used in investing activities
(1,204 )
(368 )
Cash flows from financing activities
Proceeds from sale of shares from EBT
Principal elements of lease payments
13
(5,470 )
(5,294 )
Interest elements of lease payments
13
(472 )
(564 )
Proceeds from sale of own shares
Finance costs paid
(132 )
(85 )
Dividends paid
22
(38,153 )
(46,820 )
Net cash used in financing activities
(43,719 )
(52,263 )
Exchange gains/ (losses) on cash and cash equivalents
(573 )
Net decrease in cash and cash equivalents
(7,597 )
(11,605 )
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
19
The notes on pages 126 to 151 are an integral part of these Consolidated Financial Statements.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
125
Strategic Report
Financial Statements
Governance
Consolidated Statement of Changes
in Equity
for the year ended 31 December 2022
Share
capital
£000
Share
premium
£000
All Other
reserves
(Note 23)
£000
Retained
earnings
£000
Total
equity
£000
Balance at 1 January 2022
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Share-based payments (note 24)
Transfer to retained earnings
(454 )
Own shares sold
(353 )
Recharge of net settled share options
(182 )
(182 )
Dividends (note 22)
(38,153 )
(38,153 )
Total transactions with owners, recognised directly in
equity
(38,234 )
(31,983 )
Balance at 31 December 2022
Share
capital
£000
Share
premium
£000
All Other
reserves
(Note 23)
£000
Retained
earnings
£000
Total
equity
£000
Balance at 1 January 2021
(57 )
Profit for the year
Other comprehensive expense for the year
(47 )
(47 )
Total comprehensive income for the year
(47 )
Share-based payments (note 24)
Transfer to retained earnings
(1,530 )
Own shares sold
(938 )
Recharge of net settled share options
(618 )
(618 )
Dividends (note 22)
(46,820 )
(46,820 )
Total transactions with owners, recognised directly in equity
(46,846 )
(41,616 )
Balance at 31 December 2021
The notes on pages 126 to 151 are an integral part of these Consolidated Financial Statements.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
126
Notes to the Consolidated Financial
Statements
The Company is limited by shares, incorporated and domiciled in the UK public limited company
in England and Wales with a Premium Listing on the London Stock Exchange. The Company’s registered office is
The Consolidated Financial Statements consolidate those of the Company and its subsidiaries. Subsidiaries and their
countries of incorporation are presented in note 4 to the Parent Company Financial Statements.
Financial Statements were approved by Rod Flavell and Mike McLaren on behalf of the Board of Directors on 14
The Group’s business activities, together with the factors likely to affect its future development, performance and
position are summarised in the Strategic Report. The principal risks and uncertainties, our assessment of the impact
of climate change, 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. The Group’s
forecasts and projections show that it will continue to operate with adequate cash resources.
The Directors therefore have a reasonable expectation that the Company and the Group will have adequate
resources to continue in operational existence for at least twelve months. Accordingly, the Directors continue to
The principal accounting policies applied in the preparation of these Consolidated Financial Statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
The financial statements of the Group have been prepared in accordance with UK-adopted International Accounting
Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under
those standards.
The Consolidated Financial Statements have been prepared on a historical cost basis. The Consolidated Financial
Statements are presented in Pounds Sterling and all values are rounded to the nearest thousand (£000), except
The Consolidated Financial Statements comprise the financial statements of the Group and its subsidiaries for the
year ending 31 December 2022.
Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control,
and continue to be 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 and losses resulting from intra-group transactions and dividends are
eliminated in full.
Details of the subsidiaries owned by the Group are presented in Note 4 to the Parent Company Financial Statements.
3.3 Summary of significant accounting policies
Revenue is recognised under IFRS 15 and is measured at the fair value of the consideration received or receivable and
excluding sales taxes.
Rendering of services
Revenue from the provision of Consultants to third-party customers is recognised as follows:
•
The revenue is recognised in the period in which the Consultants perform the work at the contracted rates for
each Consultant. Revenue is based on timesheets from our Consultants which are authorised by the Group’s
customers detailing the hours and service provided;
•
If advance payments are made by customers, these are deferred and the income recognised in the period in
which the Consultants perform the work;
•
Revenue in respect of outstanding timesheets is accrued based upon estimates at the contract value; and
•
Volume rebates are accrued in the period in which the revenue is recognised, with the value of the rebate offset
against revenue. They are calculated with regard to specific threshold levels of revenue recognised for certain
customers in a contractual period. To the extent the volume rebates are material, amounts are disclosed along
with any significant judgements made in their estimation.
Sales invoices are issued following fulfilment of FDM’s performance obligation, confirmed by receipt of approved
environment in which the Company operates (its functional currency). Foreign exchange gains and losses resulting
from the settlement of such transactions, and from the translation of monetary assets and liabilities denominated in
foreign currencies at year end exchange rates, are generally recognised in profit or loss.
For the purpose of the Consolidated Financial Statements, the results and financial position of each entity are
expressed in Pounds Sterling (£), which is the functional currency of the Parent Company and the presentation
currency for the Consolidated Financial Statements.
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 and goodwill denominated in foreign currencies are retranslated at the
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 rates at the date when the fair value was determined.
For the purpose of presenting Consolidated Financial Statements, the assets and liabilities of the Group’s foreign
operations are 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 other comprehensive income and transferred to the Group’s
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted 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. Management periodically evaluates positions taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax is provided in full, using the liability method, on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: goodwill not deductible for tax purposes; and the initial recognition of
assets or liabilities that affect neither accounting nor taxable profit. 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
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.
of an item of property, plant and equipment. The estimated useful lives are as follows:
Plant and equipment
4 years
Fixtures and fittings
4 years
Leasehold improvements
Length of lease
The assets’ residual values, useful lives and methods of depreciation are reviewed each financial year end and
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
Software and software licence costs are recognised as an expense as incurred. Development costs that are directly
attributable to the design and testing of identifiable and unique software controlled by the Group are recognised
as intangible assets and amortised over the useful economic life of the software. Directly attributable costs that are
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses, and is revalued
based on the prevailing foreign exchange rates at the end of the reporting period. For the purposes of impairment
testing, goodwill is allocated to the Group’s cash-generating units.
Goodwill is reviewed at least annually or more regularly 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 unit is less than the carrying value of the cash-generating unit
to which the goodwill has been allocated, an impairment loss is recognised. Impairment losses relating to goodwill
Trade receivables are recognised initially at fair value. They are subsequently measured at amortised cost using
an expected credit loss model in line with IFRS 9 which uses a lifetime expected loss allowance for all trade
receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk
characteristics. Shared credit risk characteristics include current and forward-looking information on macroeconomic
factors affecting the sector in which the debtor operates.
When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables.
Subsequent recoveries of amounts previously written off are credited against administrative expenses in the
Cash and cash equivalents comprise cash at banks and on hand and short-term deposits with a maturity of three
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of
financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the
reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using
Non-derivative financial instruments
The Group’s non-derivative financial instruments comprise trade receivables, trade payables, and cash and cash equivalents.
j) 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.
Provisions for legal claims are recognised when the Group has a present legal or constructive obligation as a result
of a past event, it is probable that an outflow of resources will be required to settle the obligation, and the amount
can be reliably estimated. If the effect is material, provisions are determined by discounting the expected, risk
adjusted, future cash flows at a pre-tax risk-free rate. Provisions are measured at management’s best estimate
of the expenditure required to settle the Group’s liability. These estimates are reviewed each year and updated
as necessary.
FDM is a people business and, in the ordinary course, we receive legal claims from time to time, most commonly
employment-related. Our in-house legal team deals promptly with these claims where appropriate, but we engage
specialist external lawyers when it is required for us to access additional expertise or resource and we think it
prudent to do so. We are confident in our employment practices and it is our policy to defend these claims and our
business model robustly. We will also take a commercial approach and from time to time may choose to settle claims
if we consider it pragmatic and in the Group’s best interests to do so, particularly having regard to the time and effort
management need to dedicate to a given claim. The Directors evaluate the possibility of an outflow of resources to
determine if it is either remote, possible or probable. In each circumstance either adequate provisions are established
l) Equity
options are shown in equity as a deduction, net of tax, from the proceeds. The share premium reflects the extra paid
Other reserves represent the cost of equity on settled share-based payments until such share options are exercised
or lapse. Own shares reserve represents those Company shares held by the Trustee of the FDM Group Employee
Benefit Trust and are a deduction from shareholders’ funds (see note 25).
The translation reserve comprises all foreign exchange differences arising from the translation of the financial
statements of foreign operations. The capital redemption reserve arose from the purchase by the Company in 2015
of 5,200,392 deferred shares, which had a nominal value of £0.01 each.
Employees of the Group receive remuneration in the form of share-based payments, whereby employees render
services as consideration for equity instruments (equity-settled transactions).
Equity-settled transactions
The cost of equity-settled transactions is recognised, together with a corresponding increase in other reserves in
equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense
recognised for equity-settled 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 between 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 upon a market or non-vesting condition. These are treated as vesting irrespective of whether
or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions
are satisfied.
When the terms of an equity-settled transaction award are modified, the minimum expense recognised is the
expense as if the terms had not been modified, if the original terms of the award are met. An additional expense
is recognised for any modification that 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.
Included within the results for the year ending 31 December 2022 is a charge relating to a portion of the Directors’
bonus earned during 2022, the balance will be settled via issue of shares equal to the amount which would have been
Operating segments are reported in a manner consistent with the internal reporting to the Board of Directors. The
Dividends are recognised as a liability in the period in which they are approved such that the Company is obligated to
p) Employee Benefit Trust
FDM Group (Holdings) plc has an established Employee Benefit Trust (“EBT”) to which it is the sponsoring entity.
Notwithstanding the legal duties of the Trustee, the Company considers that it has “de facto” control. The EBT is
included in the Parent Company Financial Statements and the Consolidated Financial Statements.
No gain or loss is recognised in profit or loss or other comprehensive income on the purchase, sale or cancellation of
the Company’s own equity held by the EBT. For further information, see note 25.
Under IFRS 16 ‘Leases’, a liability and an asset are recognised at the inception of the lease, the lease liability being the
present value of future lease payments. A right-of-use asset is recognised as the same amount adjusted for any initial
direct costs, lease incentives received, or lease payments made at or before the commencement date, as applicable.
The charge to the Income Statement comprises i) an interest expense on the lease liability (included within finance
expense) and ii) a depreciation expense on the right-of-use asset (included within operating costs). The right-of-use
asset is depreciated straight-line over the term of the lease.
The liabilities are measured at the present value of the remaining lease payments, discounted using the lessee
company’s estimated incremental borrowing rate at the date of lease inception. Lease payments are presented as
cash flows from financing activities, split between principal and interest elements, on the Statement of Cash Flows.
For short-term leases and leases of low-value assets, the Group has chosen to recognise the associated lease
Government grants are recognised at fair value when there is reasonable assurance that conditions attached to the
grant will be complied with and the grant will be received. Income is offset against the expenses the grant is intended
to support. The grant is recognised as income over the period necessary to match them with the related costs, for
The preparation of the Group’s financial statements requires management to make 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 is considered to be the Group’s significant estimate:
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. In estimating the number of shares likely to vest,
the Directors have based their assessment of the adjusted EPS growth in the forecasts contained within the Group’s
three-year plan, adjusted for the impact of potential scenarios that could potentially impact EPS growth. 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 24.
The International Accounting Standards Board (“IASB”) and IFRS IC have issued the following new standards
and amendments which were effective during the year and were adopted by the Group in preparing the
financial statements.
The adoption of these amendments has not had a material impact on the Group’s financial statements in the year:
Effective in 2022
Effective for
accounting
periods
beginning on
or after
Endorsed by
the UK
Endorsement
Board (UKEB)
Amendments
Annual Improvements to IFRS Standards 2018–2021
1 January 2022
Yes
Onerous Contracts – Cost of Fulfilling a Contract – Amendments to IAS 37
1 January 2022
Yes
Amendments to Property, Plant and Equipment: Proceeds before intended
use – Amendments to IAS 16
1 January 2022
Yes
Reference to the Conceptual Framework (Amendments to IFRS 3)
1 January 2022
Yes
The following standards and interpretations had been issued but were not mandatory for annual reporting periods
ending on 31 December 2022, and were not adopted in the Group’s financial statements for the year and are not
expected to have a material impact on the Group when adopted:
Effective after 31 December 2022
Effective for
accounting
periods
beginning on
or after
Endorsed by
the UK
Endorsement
Board (UKEB)
IFRS 17, ‘Insurance contracts’
1 January 2023
Yes
Amendments
Deferred Tax related to Assets and Liabilities arising from a Single transaction –
Amendments to IAS 12 Transaction (Amendments to IAS 12)
1 January 2023
Yes
Definition of Accounting Estimates – (Amendments to IAS 8)
1 January 2023
Yes
Disclosure of Accounting policies (Amendments to IAS 1 and IFRS Practice Statement 2)
1 January 2023
Yes
Classification of Liabilities as Current or Non-current – Amendments to IAS 1
Deferred until
not earlier than
1 January 2024
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’.
As of 31 December 2022, the Board of Directors consider that the Group is organised on a worldwide basis into four
core geographical operating segments:
(1)
UK;
(2)
North America;
(3)
Europe, Middle East and Africa, excluding UK (“EMEA”); and
(4)
Asia Pacific (“APAC”).
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 professional services provider with a focus on IT.
For the year ended 31 December 2022
UK
£000
North
America
£000
EMEA
£000
APAC
£000
Total
£000
Revenue
139,560
116,937
19,665
53,810
329,972
Depreciation and amortisation
2,599
1,698
291
1,835
6,423
Segment operating profit
25,856
14,111
2,039
3,841
45,847
Finance income¹
515
152
2
5
674
Finance costs¹
(196)
(59)
(86)
(519)
(860)
Profit before income tax
26,175
14,204
1,955
3,327
45,661
As at 31 December 2022
Total assets
69,706
26,915
11,983
21,626
130,230
Total liabilities
(8,602)
(9,775)
(4,906)
(23,744)
(47,027)
1
Finance income and finance costs include intercompany interest which is eliminated upon consolidation
Included in total assets above are non-current assets (excluding deferred tax) as follows:
UK
£000
North
America
£000
EMEA
£000
APAC
£000
Total
£000
31 December 2022
23,124
1,654
1,112
7,578
33,468
The following foreign entities, which are 100% owned subsidiaries, are material by their size at 31 December 2022:
Entity Name
Country of registration
FDM Group
Inc.
USA
£000
FDM Group
Canada Inc.
Canada
£000
FDM Group
Australia Pty
Ltd
Australia
£000
Revenue
63,512
53,425
23,552
Non-current assets (excluding deferred tax)
890
764
5,532
For the year ended 31 December 2021
UK
£000
North
America
£000
EMEA
£000
APAC
£000
Total
£000
Revenue
121,846
81,387
24,963
39,160
267,356
Depreciation and amortisation
2,489
1,714
241
1,716
6,160
Segment operating profit
24,570
12,215
3,237
1,993
42,015
Finance income
1
159
174
–
4
337
Finance costs
1
(231)
(60)
(88)
(550)
(929)
Profit before income tax
24,498
12,329
3,149
1,447
41,423
As at 31 December 2021
Total assets
75,995
21,038
11,937
17,772
126,742
Total liabilities
(13,053)
(8,669)
(6,193)
(20,697)
(48,612)
1
Finance income and finance costs include intercompany interest which is eliminated upon consolidation
Included in total assets above are non-current assets (excluding deferred tax) as follows:
UK
£000
North
America
£000
EMEA
£000
APAC
£000
Total
£000
31 December 2021
24,839
2,144
1,030
7,284
35,297
The following foreign entities, which are 100% owned subsidiaries, are material by their size at 31 December 2021 :
Entity Name
Country of registration
FDM Group
Inc.
USA
£000
FDM Group
Canada Inc.
Canada
£000
FDM Group
Australia Pty
Ltd
Australia
£000
Revenue
45,551
35,876
14,815
Non-current assets (excluding deferred tax)
927
1,217
6,213
Information about major customers
Customers A and B represent 10% or more of the Group’s 2022 and 2021 revenues. Revenue from customer A is
attributed across all four operating segments, revenue from customer B is attributed to North America.
2022
£000
2021
£000
Revenue from customer A
40,297
35,942
Revenue from customer B
37,227
Operating profit for the year has been arrived at after (crediting)/charging:
2022
£000
2021
£000
Net foreign exchange differences
(415)
39
Loss on disposal of property, plant and equipment
95
–
Depreciation of right-of-use assets
4,533
4,294
Depreciation of property, plant and equipment and amortisation
of software and software licences
1,890
1,866
Expense relating to short-term leases
13
78
During the year the Group (including its overseas subsidiaries) obtained the following services from the
Group’s auditors:
2022
£000
2021
£000
Fees payable to the Group’s auditors for the audit of the Parent Company and Consolidated
Financial Statements
95
85
Fees payable to the Group’s auditors for other services:
– The audit of the Group’s subsidiaries
160
140
– Audit-related assurance services- Interim review
55
50
310
analysed by category, was as follows:
2022
Number
2021
Number
Consultants and trainees
5,916
4,730
Administration
769
634
6,685
The aggregate payroll costs of these persons were as follows:
2022
£000
2021
£000
Wages and salaries
222,862
176,300
Social security costs
20,836
17,379
Other pension costs
7,148
4,875
Share-based payments
6,356
5,261
257,202
203,815
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 2022 were
Details of the Directors’ (who also represent the key management personnel of the Group) remuneration in respect of
the year ended 31 December 2022 and 2021 is set out below:
2022
£000
2021
£000
Short-term employee benefits
3,612
3,475
Post-employment benefits
72
47
Share-based payments
977
711
4,661
4,233
Included within Short-term employee benefits in 2022 is £266,000 relating to annual bonus which was deferred into
shares for two years (2021: £264,000). For further information on this and Directors’ remuneration, see the audited
£000
2021
£000
Bank interest
418
58
Finance income
418
£000
2021
£000
Interest on lease liabilities
(472)
(564)
Finance fees and charges
(132)
(86)
Finance expense
(604)
The major components of income tax expense for the years ended 31 December 2022 and 2021 are:
2022
£000
2021
£000
Current income tax:
Current income tax charge
11,699
9,904
Adjustments in respect of prior periods
(592)
(418)
Total current income tax
11,107
9,486
Deferred tax:
Relating to origination and reversal of temporary differences (note 17)
(354)
108
Total deferred tax
(354)
108
Total tax expense reported in the income statement
10,753
9,594
The standard rate of corporation tax in the UK is 19% (2021: 19%). Accordingly, the profits for 2021 and 2022 are
taxed at 19%. The tax charge for the year is higher (2021: higher) than the standard rate of corporation tax in the UK.
The differences are set out below:
2022
£000
2021
£000
Profit before income tax
45,661
41,423
Profit before income tax multiplied by UK standard rate of corporation
tax of 19% (2021: 19%)
8,676
7,870
Effect of different tax rates on overseas earnings
2,090
1,695
Effect of expenses not deductible for tax purposes
579
143
Adjustments in respect of prior periods
(592)
(418)
Effect of unused tax losses not recognised for deferred tax assets
–
304
Total tax charge
10,753
9,594
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.
The Finance Act 2021 confirmed an increase of UK corporation tax rate from 19% to 25% with effect from 1 April
2023 and this was substantively enacted by the statement of financial position date and therefore included in these
Basic earnings per share are 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.
2022
2021
Profit for the year
£000
34,908
31,829
Average number of ordinary shares in issue (thousands)
109,192
109,192
Basic earnings per share
Pence
32.0
29.1
Adjusted basic earnings per share are 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.
2022
2021
Profit for the year (basic earnings)
£000
34,908
31,829
Share-based payment expense (including social security costs) (note 24)
£000
6,356
5,261
Tax effect of share-based payment expense
£000
(522)
(837)
Adjusted profit for the year
£000
40,742
36,253
Average number of ordinary shares in issue (thousands)
109,192
109,192
Adjusted basic earnings per share
Pence
37.3
33.2
Diluted earnings per share
Diluted earnings per share are 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.
2022
2021
Profit for the year (basic earnings)
£000
34,908
31,829
Average number of ordinary shares in issue (thousands)
109,192
109,192
Adjustment for share options (thousands)
594
1,386
Diluted number of ordinary shares in issue (thousands)
109,786
110,578
Diluted earnings per share
Pence
31.8
i) Right-of-use assets
Properties
2022
£000
2021
£000
Cost
At 1 January
37,006
36,651
Additions
2,697
1,465
Disposals
(4,217)
(762)
Effect of movements in foreign exchange
1,725
(348)
At 31 December
37,211
37,006
Accumulated depreciation
At 1 January
25,375
21,877
Depreciation charge for the year
4,533
4,294
Disposals
(3,971)
(752)
Effect of movements in foreign exchange
1,201
(44)
At 31 December
27,138
25,375
Net book value at 31 December
10,073
11,631
ii) Lease liabilities
2022
£000
2021
£000
Current lease liabilities
4,643
5,413
Non-current lease liabilities
8,250
9,817
12,893
15,230
Movement in lease liabilities in the year
2022
£000
2021
£000
At 1 January
15,230
19,488
New leases
2,697
1,465
Interest expense
472
564
Cash payments
(5,942)
(5,858)
Termination of leases
(211)
(12)
Effect of movements in foreign exchange
647
(417)
At 31 December
12,893
15,230
Contractual maturities of lease liabilities:
At net present value
Not discounted
2022
£000
2021
£000
2022
£000
2021
£000
Less than one year
4,643
5,413
4,738
5,505
Between 1 and 2 years
2,964
3,268
3,147
3,444
Between 2 and 5 years
4,198
4,564
4,737
5,101
Over 5 years
1,088
1,985
1,398
2,514
Total lease liabilities
12,893
15,230
14,020
16,564
The total cash outflow for leases was £5,942,000 (2021: £5,858,000), see also the Consolidated Statement of Cash
Flows on page 124.
Extension and termination options are included in a number of property leases across the Group. These are used
to maximise operational flexibility in terms of managing the assets used in the Group’s operations. All extension
and termination options held are exercisable only by the Group and not by the respective lessor. Where there
is reasonable certainty that an option to extend a lease will be exercised, lease liabilities have been recognised
accordingly. During 2022, three leases were exited early (2021: one lease). The impact of termination of these lease
liabilities was £211,000 (2021: £12,000) and the disposal of the right-of-use assets, by net book value, was £246,000
(2021: £10,000), as disclosed in note 13(i).
iii) Amounts recognised in the Income Statement
The Income Statement shows the following amounts relating to leases:
2022
£000
2021
£000
Depreciation of right-of-use assets – properties
4,533
4,294
Loss/ (profit) on disposal of right-of-use asset
35
(2)
Interest expense (included in finance cost)
472
564
Expense relating to short-term leases
13
2022
Leasehold
improvements
£000
Fixtures and
fittings
£000
Plant and
equipment
£000
Total
£000
Cost
At 1 January 2022
8,266
1,706
4,161
14,133
Additions
2
7
1,195
1,204
Disposals
–
(150)
(1,162)
(1,312)
Effect of movements in foreign exchange
315
77
178
570
At 31 December 2022
8,583
1,640
4,372
14,595
Accumulated depreciation
At 1 January 2022
5,297
1,604
3,163
10,064
Depreciation charge for the year
888
86
693
1,667
Disposals
–
(149)
(1,068)
(1,217)
Effect of movements in foreign exchange
210
73
132
415
At 31 December 2022
6,395
1,614
2,920
10,929
Net book value at 31 December 2022
2,188
26
1,452
3,666
2021
Leasehold
improvements
£000
Fixtures and
fittings
£000
Plant and
equipment
£000
Total
£000
Cost
At 1 January 2021
8,355
1,706
4,101
14,162
Additions
–
6
362
368
Disposals
–
–
(292)
(292)
Effect of movements in foreign exchange
(89)
(6)
(10)
(105)
At 31 December 2021
8,266
1,706
4,161
14,133
Accumulated depreciation
At 1 January 2021
4,312
1,489
2,807
8,608
Depreciation charge for the year
996
117
649
1,762
Disposals
–
–
(288)
(288)
Effect of movements in foreign exchange
(11)
(2)
(5)
(18)
At 31 December 2021
5,297
1,604
3,163
10,064
Net book value at 31 December 2021
2,969
102
998
2022
Software and
software
licences
£000
Goodwill
£000
Total
£000
Cost
At 1 January 2022
697
19,374
20,071
Additions
–
–
–
Effect of movements in foreign exchange
10
355
365
At 31 December 2022
707
19,729
20,436
Accumulated amortisation
At 1 January 2022
474
–
474
Amortisation for the year
223
–
223
Effect of movements in foreign exchange
10
–
10
At 31 December 2022
707
–
707
Net book value at 31 December 2022
–
19,729
19,729
2021
Software and
software
licences
£000
Goodwill
£000
Total
£000
Cost
At 1 January 2021
698
19,557
20,255
Additions
–
–
–
Effect of movements in foreign exchange
(1)
(183)
(184)
At 31 December 2021
697
19,374
20,071
Accumulated amortisation
At 1 January 2021
370
–
370
Amortisation for the year
104
–
104
Effect of movements in foreign exchange
–
–
–
At 31 December 2021
474
–
474
Net book value at 31 December 2021
223
19,374
19,597
The amortisation charge is recognised in administrative expenses in the income statement. The amortisation
period of the software and software licences is four 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:
UK
£000
North
America
£000
EMEA
£000
APAC
£000
Total
£000
Cost and NBV at 31 December 2022
14,843
1,848
3,038
–
19,729
Cost and NBV at 31 December 2021
14,843
1,651
2,880
–
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. In setting those
budgets and forecasts the Board also considered the risks to the business (including the risk of climate change which
was considered low). 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; and
•
The growth rate used to extrapolate the cash flows beyond the three-year forecast period was 2% up to a period
of 15 years in total.
The pre-tax (nominal) discount rates used in the calculations were as follows:
2022
%
2021
%
UK
19.47
11.98
North America
18.75
13.92
EMEA
13.43
9.91
The review found that the present value of future cash flows was significantly higher than the value of goodwill. 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
Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so. The following is
the analysis of the deferred tax balances (after offset) for financial reporting purposes:
2022
£000
2021
£000
Non-current:
Non-current temporary differences
2,316
2,484
Deferred tax asset
2,316
2,484
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 2022:
1 January
2022
£000
Recognised
in income
statement
£000
Recognised
in other
reserves
£000
Transferred
to retained
earnings
£000
Exchange
difference
£000
31 December
2022
£000
Share-based payments
2,012
517
(594)
(8)
44
1,971
Right-of-use assets
135
(7)
–
–
1
129
Property, plant and equipment
66
(102)
–
–
7
(29)
Other
271
(54)
–
–
28
245
2,484
354
(594)
(8)
80
2,316
Movement in deferred tax during 2021:
1 January
2021
£000
Recognised
in income
statement
£000
Recognised
in other
reserves
£000
Transferred
to retained
earnings
£000
Exchange
difference
£000
31 December
2021
£000
Share-based payments
986
541
496
(20)
9
2,012
Right-of-use assets
206
(71)
–
–
–
135
Property, plant and equipment
(61)
127
–
–
–
66
Other
992
(705)
–
–
(16)
271
2,123
(108)
496
(20)
(7)
2,484
The Group has unused tax losses for which no deferred tax asset has been recognised totalling £5,458,000 (2021:
£7,931,000) with a potential tax benefit of £1,637,000 (2021: £2,306,000), no asset has been recognised as the losses
have been generated in regions where the Group does not expect to generate profits in the short term. The losses
Due to their short-term nature, the Directors consider that the carrying amount of trade receivables approximates to
their fair value. The standard credit terms are 30 days.
£000
2021
£000
Trade receivables
34,892
26,727
Prepayments and accrued income
9,389
5,650
Tax receivables
3,450
1,997
Other receivables
1,192
1,467
48,923
35,841
31 December 2022
Expected
loss rate
Gross trade
receivable
£000
Loss
allowance
£000
Not overdue
1%
31,760
447
Not more than three months past due
1%
3,630
51
More than three months but not more than six months past due
0%
–
–
35,390
498
31 December 2021
Expected
loss rate
Gross trade
receivable
£000
Loss
allowance
£000
Not overdue
3%
22,925
616
Not more than three months past due
3%
4,542
133
More than three months but not more than six months past due
0%
9
–
27,476
749
The movement in the allowance for expected credit loss is as below:
2022
£000
2021
£000
At 1 January
749
1,029
Unused amount reversed
(251)
(280)
At 31 December
498
749
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped
based on shared credit risk characteristics. Shared credit risk characteristics include current and forward-looking
information on macro-economic factors affecting the sector in which the debtor operates and those affecting the
ability of the customer to settle the receivables. The Group has identified relevant factors including the GDP and the
unemployment rate of the countries in which it trades, and accordingly adjusts the loss rates based on expected
changes in these factors. The Group assessed and decreased its loss allowance in 2022 and 2021, following an
2022
£000
2021
£000
Cash at bank and in hand
45,523
53,120
The Group has issued guarantees in favour of the Swiss Office of Labour and Economy for CHF150,000.
The credit quality of financial assets can be assessed by reference to external credit ratings issued by credit ratings
agencies registered in the EU. Cash at bank is held with banks with the following ratings:
Cash at bank by credit rating
2022
£000
2021
£000
A
45,360
37,949
BB
23
15,042
BBB
140
129
45,523
Due to their short-term nature, the Directors consider that the carrying amount of trade payables approximates to
their fair value.
£000
2021
£000
Trade payables
2,184
1,113
Other payables
1,856
1,725
Other taxes and social security
9,309
8,444
Accruals
19,613
19,953
32,962
31,235
Included within accruals are volume rebates of £3,183,000 (2021: £3,305,000) and payroll accruals of £4,734,000
(2021: £4,661,000). No significant judgements were made in the estimation of the volume rebate accrual. Any volume
rebates, where the rebate period is non-coterminous with the financial period, are accrued based on forecast
Authorised, called-up, allotted and fully-paid share capital
2022
Number of
shares
2022
£000
2021
Number of
shares
2021
£000
Ordinary shares of £0.01 each
At 1 January and 31 December
109,191,669
1,092
109,191,669
1,092
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.
2022
£000
2021
£000
Dividends paid
Paid to shareholders
38,153
46,820
2022
An interim dividend of 17.0 pence per ordinary share was declared by the Directors on 27 July 2022 and was paid on
30 September 2022 to holders of record on 26 August 2022; the amount payable was £18,533,000.
The Board is proposing a final dividend of 19.0 pence per share in respect of the year to 31 December 2022,
for approval by shareholders at the AGM on 16 May 2023; the amount payable will be £20,720,000. Subject to
shareholder approval the dividend will be paid on 30 June 2023 to shareholders of record on 9 June 2023.
This brings the Company’s total dividend for the year to 36.0 pence per share (2021: 33.0 pence per share).
The Board continues to operate its 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.
2021
An interim dividend of 15.0 pence per ordinary share was declared by the Directors on 27 July 2021 and was paid on
3 September 2021 to holders of record on 6 August 2021; the amount payable was £16,327,000.
The Board paid a final dividend of 18.0 pence per share on 10 June 2022, to shareholders of record on 20 May 2022;
Capital
redemption
reserve
£000
Own
shares
reserve
£000
Translation
reserve
£000
Other
reserves
£000
Total of
All Other
reserves
£000
Balance at 1 January 2022
52
(2,355)
243
7,186
5,126
Other comprehensive income for the year
–
–
2,148
–
2,148
Total comprehensive income for the year
–
–
2,148
–
2,148
Share-based payments (note 24)
–
–
–
5,844
5,844
Transfer to retained earnings
–
–
–
(454)
(454)
Own shares sold
–
861
–
–
861
Total transactions with owners, recognised
directly in equity
–
861
–
5,390
6,251
Balance at 31 December 2022
52
(1,494)
2,391
12,576
13,525
Capital
redemption
reserve
£000
Own
shares
reserve
£000
Translation
reserve
£000
Other
reserves
£000
Total of
All Other
reserves
£000
Balance at 1 January 2021
52
(3,795)
290
3,396
(57)
Other comprehensive expense for the year
–
–
(47)
–
(47)
Total comprehensive expense for the year
–
–
(47)
–
(47)
Share-based payments (note 24)
–
–
–
5,320
5,320
Transfer to retained earnings
–
–
–
(1,530)
(1,530)
Own shares sold
–
1,440
–
–
1,440
Total transactions with owners, recognised
directly in equity
–
1,440
–
3,790
5,230
Balance at 31 December 2021
52
(2,355)
243
7,186
Recognised in Income Statement
2022
£000
2021
£000
Expenses arising from equity-settled share-based payment transaction
6,196
4,472
Social security accrued thereon
160
789
Expenses arising from bonus deferred as shares
371
347
Expenses arising from equity-settled share-based payment transaction
6,727
5,608
Recognised in Equity
2022
£000
2021
£000
Expenses arising from equity-settled share-based payment transaction
6,567
4,819
Deferred tax recognised in other reserves arising from equity-settled
share-based payment transaction (note 17)
(594)
496
Transfer to retained earnings – Deferred tax
(8)
(20)
Transfer to retained earnings – Recharge
(446)
(1,500)
Transfer to retained earnings – Lapsed options
–
(10)
Currency difference on retranslation
(129)
5
5,390
3,790
Expenses arising from equity-settled share-based payment transactions in 2022 are higher than in 2021 following
the award of 923,500 options on 23 March 2022. During 2022, the share options issued in 2019 lapsed, 7,311 options
were exercised, and 2,309 linked shares lapsed (linked shares which were not required to fund the price at date of
exercise). The share options exercised were satisfied primarily via sale of shares from the FDM Group Employee
Benefit Trust, with 8,686 shares released. For detail of the shares held in the FDM Group Employee Benefit Trust see
note 25. A transfer of £446,000 was made from ‘Other reserves’ to ‘Retained earnings’ in respect of the exercise of
share options during the period (2021: transfer of £1,500,000).
As disclosed in the Directors’ Remuneration Report, the Company granted awards on 23 March 2022, in the form of
nominal cost options over ordinary shares in the Company under the PSP. As with the awards made in 2015 to 2021,
the vesting of the awards is subject to the achievement of a three-year performance condition relating to earnings
per share.
Options are exercisable no later than the tenth anniversary of the date of grant.
The table below summarises the outstanding share options:
2022
2021
Number of
shares
Weighted
average
exercise price
Number of
shares
Weighted
average
exercise price
Outstanding at 1 January
2,211,572
8p
2,156,467
82p
Granted during the year
923,500
1p
948,125
1p
Forfeited during the year
(188,000)
1p
(266,875)
5p
Exercised during the year
(7,311)
340p
(33,155)
151p
Lapsed during the year
(544,601)
1p
(592,990)
261p
Outstanding at 31 December
2,395,160
6p
2,211,572
8p
Exercisable at the end of the year
37,660
302p
47,280
314p
Weighted average remaining contractual life (years)
8.24
n/a
8.32
n/a
The weighted average share price at the date of exercise of options exercised during the year ended 31 December
2022 was 893 pence (2021: 1165 pence).
The fair values of the PSP Share options made were determined using the Black-Scholes valuation model. The
significant inputs to the model were as follows:
Date of grant
23 March
2022
21 April
2021
30 December
2020
17 April
2019
Share price at date of grant
1000p
1038p
1116p
937p
Exercise price
1p
1p
1p
1p
Dividend yield
3.2%
3.0%
2.7%
3.3%
Expected volatility
30%
30%
30%
28%
Risk free interest rate
1.684%
0%
0%
0.88%
Expected life
4 years
4 years
4 years
4 years
Fair value at date of grant
880p
921p
999p
820p
The expected volatility applied in the Black-Scholes models reflects the assumption that the historical volatility is
indicative of future trends, which may not necessarily be the actual outcome.
Buy As You Earn
The Group operates a Buy As You Earn Plan, participants may acquire up to £12,000 of shares each year from their
after tax remuneration (“Purchased Shares”). Provided the Purchased Shares are retained in the plan and subject,
ordinarily, to continued employment, additional “Matching Shares” are awarded on the basis of a 1 for 3 match
following the end of each of the first, third and fifth years following the year in respect of which the purchased shares
were acquired. The fair values of grants under the Buy As You Earn Plan were determined using the Black-Scholes
During the AGM held on 24 May 2022, the shareholders approved that up to a maximum of 10% of the Company’s
shares could be purchased by the Company and held as own shares, renewing the authority agreed on 28 April
2021. The authority expires at the conclusion of the Company’s next Annual General Meeting after the passing of this
resolution or, if earlier, at 23:59 on 23 August 2023.
Established in 2018, the FDM Group Employee Benefit Trust was used to purchase shares sold by option holders
upon exercise of options under the FDM Performance Share Plan and sell shares to the members of the FDM Group
Buy As You Earn Plan. The Group accounts for the Company’s shares held by the Trustee of the FDM Group Employee
Benefit Trust as a deduction from shareholders’ funds.
The administrative costs of running the Trust have been consolidated in the results of FDM Group (Holdings) plc.
31 December
2022
31 December
2021
Number of shares in the Company owned by the EBT
151,894
239,505
Nominal value of shares held
£1,519
£2,395
Cost price of shares held
£1,493,907
£2,355,512
Prevailing valuation per share
£7.49
£12.72
Total market value of shares
£1,137,686
£3,046,504
Minimum number of shares in the Company owned by EBT during the year
151,894
239,505
Maximum number of shares in the Company owned by EBT during the year
239,505
Eight family members of Directors are employed by the Group, each at market rate on an arm’s length basis. The total
remuneration relating to these staff in aggregate, including the fair value of share options issued, was £1,569,000 in
2022 (2021: seven individuals, aggregate remuneration of £1,281,000).
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.
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 for expected credit losses of £498,000 (2021: £749,000).
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. For new customers we obtain and review credit ratings and set credit
limits based upon our past experience.
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 is limited as
the Group had no debt 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.
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 debt from third parties at the year end and therefore liquidity risk is not considered a significant
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
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. There are no assets or liabilities measured at fair value through profit and loss, no derivatives used for hedging,
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, Hong Kong Dollar and Euro. The
Cash and cash equivalents
The Group’s cash and cash equivalents are denominated in the following currencies:
2022
£000
2021
£000
Pounds Sterling
27,100
36,184
Euro
6,233
6,556
US Dollar
1,940
2,620
Canadian Dollar
3,580
2,255
Australian Dollar
1,983
1,345
Chinese Renminbi
2,025
1,265
Hong Kong Dollar
459
979
Singapore Dollar
771
750
Swiss Franc
325
493
Polish Zloty
725
323
South African Rand
247
271
New Zealand Dollar
135
79
45,523
53,120
Trade receivables
The carrying amounts of the Group’s trade receivables are denominated in the following currencies:
2022
£000
2021
£000
Pounds Sterling
15,932
14,132
US Dollar
7,560
4,126
Euro
1,979
2,017
Canadian Dollar
2,717
1,733
Hong Kong Dollar
1,763
1,401
Australian Dollar
1,972
1,391
Singapore Dollar
2,566
1,364
Chinese Renminbi
441
766
Swiss Franc
141
254
Polish Zloty
277
238
South African Rand
42
54
35,390
27,476
Trade and other payables
The carrying amounts of the Group’s trade and other payables are denominated in the following currencies:
2022
£000
2021
£000
Pounds Sterling
17,690
18,403
Euro
2,626
3,050
US Dollar
2,436
3,008
Canadian Dollar
5,247
2,886
Australian Dollar
2,491
2,093
Singapore Dollar
1,366
754
Hong Kong Dollar
450
401
Swiss Franc
42
226
Polish Zloty
353
170
Chinese Renminbi
158
167
South African Rand
54
54
New Zealand Dollar
49
23
32,962
FDM Group (Holdings) plc
Annual Report and Accounts 2022
152
Position
as at 31 December 2022
Note
2022
£000
2021
£000
Fixed assets
Investments
4
12,572
6,588
12,572
6,588
Current assets
Trade and other receivables
5
57,709
55,437
Cash and cash equivalents
6
33
53
Creditors
Trade and other payables
7
(56)
(47)
Net assets
70,258
62,031
Equity
Called up share capital
8
1,092
1,092
Share premium account
9,705
9,705
Capital redemption reserve
52
52
Own shares reserve
9
(1,494)
(2,355)
Other reserves
12,572
6,588
Retained earnings
48,331
46,949
Total equity
70,258
62,031
The Parent Company made a profit for the year of £39,624,000 (2021: profit of £36,648,000). 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 154 to 158 are an integral part of the Parent Company Financial Statements (Registered
Company 07078823).
These financial statements on pages 152 to 158 were approved by the Board of Directors on 14 March 2023
and were signed on its behalf by:
Rod Flavell
Mike McLaren
Chief Executive Officer
Chief Financial Officer
14 March 2023
14 March 2023
Parent Company Statement of Changes
in Equity
for the year ended 31 December 2022
Share
capital
£000
Share
premium
£000
Capital
redemption
reserve
£000
Own
shares
reserve
£000
Other
reserves
£000
Retained
earnings
£000
Total
equity
£000
Balance at 1 January 2022
1,092
9,705
52
(2,355)
6,588
46,949
62,031
Profit for the year
–
–
–
–
–
39,624
39,624
Total comprehensive income for the year
–
–
–
–
–
39,624
39,624
Share-based payments (note 4)
–
–
–
–
6,430
–
6,430
Transfer to retained earnings (note 4)
–
–
–
–
(446)
446
–
Recharge of net settled share options
–
–
–
–
–
(182)
(182)
Own shares sold
–
–
–
861
–
(353)
508
Dividends paid (note 11)
–
–
–
–
–
(38,153)
(38,153)
Total transaction with owners, recognised
directly in equity
–
–
–
861
5,984
(38,242)
(31,397)
Balance at 31 December 2022
1,092
9,705
52
(1,494)
12,572
48,331
70,258
Share
capital
£000
Share
premium
£000
Capital
redemption
reserve
£000
Own shares
reserve
£000
Other
reserves
£000
Retained
earnings
£000
Total
equity
£000
Balance at 1 January 2021
1,092
9,705
52
(3,795)
3,277
57,177
67,508
Profit for the year
–
–
–
–
–
36,648
36,648
Total comprehensive income for the year
–
–
–
–
–
36,648
36,648
Share-based payments (note 4)
–
–
–
–
4,811
–
4,811
Transfer to retained earnings (note 4)
–
–
–
–
(1,500)
1,500
–
Recharge of net settled share options
–
–
–
–
–
(618)
(618)
Own shares sold
–
–
–
1,440
–
(938)
502
Dividends paid (note 11)
–
–
–
–
–
(46,820)
(46,820)
Total transaction with owners, recognised
directly in equity
–
–
–
1,440
3,311
(46,876)
(42,125)
Balance at 31 December 2021
1,092
9,705
52
(2,355)
6,588
46,949
62,031
FDM Group (Holdings) plc
Annual Report and Accounts 2022
154
1 General information
The Company is limited by shares, incorporated and domiciled in the UK and registered as a public limited company
in England and Wales with a Premium Listing on the London Stock Exchange. The Company’s registered office is 3rd
Floor, Cottons Centre, Cottons Lane, London, SE1 2QG and its registered number is 07078823.
2 Going concern
The Directors have a reasonable expectation that with the continued support of its Subsidiaries, the Company
will have adequate resources to continue in operational existence as a holding company for at least 12 months.
Accordingly, the Directors continue to adopt the going concern basis for preparing the financial statements.
3 Accounting policies
The separate financial statements of the Company have been prepared in accordance with Financial Reporting
Standard 101 ‘Reduced disclosure framework’ (FRS 101) and the requirements of the Companies Act 2006 as
applicable to companies using FRS101.
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 £39,624,000 (2021: profit of £36,648,000).
The financial information has been prepared on a historical cost basis and is presented in Pounds Sterling and all
values are rounded to the nearest thousand (£000), except where otherwise indicated.
The following exemptions available under FRS 101 have been applied:
•
The following paragraphs of IAS 1 ‘Presentation of financial statements’
–
10(d) (statement of cash flows);
–
16 (statement of compliance with all IFRS);
–
38A (requirement for minimum of two primary statements, including cash flow statements);
–
38 B-D (additional comparative information);
–
40 A-D (requirements for a third statement of financial position);
–
111 (cash flow statement information); and
–
134-136 (Capital management disclosures)
•
IAS 7 ‘Statement of cashflows’;
•
Paragraph 30 and 31 of IAS 8 ‘Accounting policies, changes in accounting estimates and errors’ (requirement
for the disclosure of information when an entity has not applied a new IFRS that has been issued but is not
yet effective); and
•
The requirements in IAS 24 ‘Related party disclosures’ to disclose related party transactions entered into between
two or more members of a group.
As permitted by section 408(3) of the Companies Act 2006, the income statement of the Company is not presented in
this Annual Report.
These separate financial statements are not intended to give a true and fair view of the profit or loss or cash flows
of the Company. The Company has not published its individual cash flow statement as its liquidity, solvency and
financial adaptability are dependent on the Group rather than its own cash flows.
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 the adoption of FRS101 as outlined
above and that the Company has no policy in respect of consolidation. Investments in subsidiaries are carried at
historical cost, share options transactions flow through parent company investments as required under IFRS2.
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 131.
No individual judgements have been made that have a significant impact on the financial statements (2021: none).
Notes to the Parent Company Financial
Statements
FDM Group (Holdings) plc
Annual Report and Accounts 2022
155
Strategic Report
Financial Statements
Governance
4 Investments
2022
£000
2021
£000
At 1 January
6,588
3,277
Additions
6,430
4,811
Recharge of IFRS 2 investment
(446)
(1,500)
At 31 December
12,572
6,588
The investments balance represents costs associated with the investment in subsidiary undertakings and with
the PSP.
Share-based payment
The Group operates an equity-settled share-based payment plan for the employees of subsidiaries using the
Company’s equity instruments. The fair value of the compensation given in respect of the share-based payment plan
is recognised as a capital contribution to the Company’s subsidiaries over the vesting period. The capital contribution
is reduced by any payments received from subsidiaries in respect of these share-based payments. The Company
currently uses a number of equity-settled share plans to grant options and shares to the Directors and employees
of its subsidiaries. At 31 December 2022, the Company had 2,395,160 share options outstanding (2021: 2,211,572
shares outstanding). During the year ended 31 December 2022, the total capital contribution arising from share-
based payments was £6,430,000 (2021: £4,811,000), with payments of £446,000 (2021: £1,500,000) received from
subsidiaries. Full details of share-based payments and share plans are disclosed in note 24 to the Consolidated
Financial Statements.
Investment in subsidiary undertakings
The total cost of investments in subsidiaries is £2 (2021: £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 Company holds the following investments in its subsidiaries:
Company
Country of incorporation
Class of share held
Direct/ indirect
Ownership
Astra 5.0 Limited
Great Britain
Ordinary
Direct
100%
FDM Group Limited
Great Britain
Ordinary
Indirect
100%
FDM Astra Ireland Limited
Ireland
Ordinary
Indirect
100%
FDM Group Inc.
USA
Ordinary
Indirect
100%
FDM Group Canada Inc.
Canada
Ordinary
Indirect
100%
FDM Group NV
Belgium
Ordinary
Indirect
100%
FDM Group GmbH
Germany
Ordinary
Indirect
100%
FDM Switzerland GmbH
Switzerland
Ordinary
Indirect
100%
FDM Luxembourg S.A.
Luxembourg
Ordinary
Indirect
100%
FDM South Africa (PTY) Limited
South Africa
Ordinary
Indirect
100%
FDM Singapore Consulting PTE Limited
Singapore
Ordinary
Indirect
100%
FDM Technology (Shanghai) Co. Limited
China
Ordinary
Indirect
100%
FDM Group HK Limited
Hong Kong
Ordinary
Indirect
100%
FDM Group Australia Pty Ltd
Australia
Ordinary
Indirect
100%
FDM Group Austria GmbH
Austria
Ordinary
Indirect
100%
FDM Group BV
The Netherlands
Ordinary
Indirect
100%
FDM Grupa Polska
Poland
Ordinary
Indirect
100%
FDM Group New Zealand Limited
New Zealand
Ordinary
Indirect
100%
FDM Group (Holdings) plc
Annual Report and Accounts 2022
156
4 Investments
continued
The registered address for each subsidiary of the Company as at 31 December 2022 is listed below. The principal
place of business of each company is considered the same as the registered office.
Company
Registered address
Astra 5.0 Limited
3rd Floor, Cottons Centre, Cottons Lane, London SE1 2QG, UK
FDM Group Limited
3rd Floor, Cottons Centre, Cottons Lane, London SE1 2QG, UK
FDM Astra Ireland Limited
3 Dublin Landings, North Wall Quay, Dublin 1, Ireland
FDM Group Inc.
199 Water Street, 34th Floor, New York, NY, 10038, USA
FDM Group Canada Inc.
1 Place Ville Marie, 37th Floor, Montreal, QC H3B 3P4, Canada
FDM Group NV
Rue Medori 99, B-1020 Brussels, Belgium
FDM Group GmbH
6th Floor, MainzerLandstrasse 41, 60329 Frankfurt am Main, Germany
FDM Switzerland GmbH
Lavaterstrasse 40, Zurich, CH 8002, Switzerland
FDM Luxembourg S.A.
Office No. 17, 12c Rue Guillaume Kroll, L-1882, 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, Singapore 068896
FDM Technology (Shanghai) Co. Limited
C33, 22/F Jing’an Kerry Centre Office Tower 3, 1228 Middle Yan An Road, Jing
An, Shanghai, 200040, China
FDM Group HK Limited
6/F, The Annex, Central Plaza, 18 Harbour Road, Hong Kong
FDM Group Australia Pty Ltd
Level 21, Tower Three, International Towers, 300 Barangaroo Avenue,
NSW 2000, Sydney, Australia
FDM Group Austria GmbH
Handelskai 92/Gate 2/7A, 1200 Wien, Austria
FDM Group BV
Westerdoksdijk 423, 1013 BX, Amsterdam, Nederland
FDM Grupa Polska
ul. Grzybowska nr 2 lok. 29, Warsaw, 00-131, Poland
FDM Group New Zealand Limited
Grant Thornton New Zealand Ltd, L4, 152 Fanshawe Street, Auckland, 1010,
New Zealand
5 Trade and other receivables
2022
£000
2021
£000
Amounts owed by subsidiary undertakings
57,549
55,423
Other receivables
147
2
Prepayments and accrued income
13
12
57,709
55,437
All trade and other receivables are receivable in Pounds Sterling and are fully performing. The amounts owed by
subsidiary undertakings are unsecured, non-interest bearing and repayable on demand. There is a regular flow of
funds between FDM Group (Holdings) plc and FDM Group Limited, primarily to facilitate the payment of dividends by
FDM Group (Holdings) plc to its shareholders.
6 Cash and cash equivalents
2022
£000
2021
£000
Cash at bank and in hand
33
53
The Company’s cash is held with a financial institution with a credit rating of A at the date of signing the financial
statements.
Notes to the Parent Company Financial
Statements
continued
FDM Group (Holdings) plc
Annual Report and Accounts 2022
157
Strategic Report
Financial Statements
Governance
7 Trade and other payables
2022
£000
2021
£000
Trade payables
2
2
Other payables
4
4
Accruals
49
40
Payables due to subsidiaries
1
1
56
47
8 Share capital
Authorised, called up, allotted and fully paid share capital
2022
Number of
shares
2022
£000
2021
Number of
shares
2021
£000
Ordinary shares of £0.01 each
At 1 January and 31 December
109,191,669
1,092
109,191,669
1,092
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.
9 Own shares reserve
During the AGM held on 24 May 2022, the shareholders approved that up to a maximum of 10% of the Company’s
shares could be purchased by the Company and held as own shares, renewing the authority agreed on 28 April
2021. The authority expires at the conclusion of the Company’s next Annual General Meeting after the passing of this
resolution or, if earlier, at 23:59 on 23 August 2023.
Established in 2018, the FDM Group Employee Benefit Trust was used to purchase shares sold by option holders
upon exercise of options under the FDM Performance Share Plan and sell shares to the members of the FDM Group
Buy As You Earn Plan. The Group accounts for the Company’s shares held by the Trustee of the FDM Group Employee
Benefit Trust as a deduction from shareholders’ funds.
The administrative costs of running the Trust have been consolidated in the results of FDM Group (Holdings) plc.
31 December
2022
31 December
2021
Number of shares in the Company owned by the EBT
151,894
239,505
Nominal value of shares held
£1,519
£2,395
Cost price of shares held
£1,493,907
£2,355,512
Prevailing valuation per share
£7.49
£12.72
Total market value of shares
£1,137,686
£3,046,504
Minimum number of shares in the Company owned by EBT during the year
151,894
239,505
Maximum number of shares in the Company owned by EBT during the year
239,505
385,777
10 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 149 to 151.
FDM Group (Holdings) plc
Annual Report and Accounts 2022
158
11 Dividends
2022
£000
2021
£000
Dividends received
Received from subsidiaries
40,000
37,000
Dividends paid
Paid to shareholders
38,153
46,820
2022
An interim dividend of 17.0 pence per ordinary share was declared by the Directors on 27 July 2022 and was paid on
30 September 2022 to holders of record on 26 August 2022; the amount payable was £18,533,000.
The Board is proposing a final dividend of 19.0 pence per share in respect of the year to 31 December 2022, for
approval by shareholders at the AGM to be held on 16 May 2023; the amount payable will be £20,720,000. Subject to
shareholder approval the dividend will be paid on 30 June 2023 to shareholders of record on 9 June 2023.
This brings the Company’s total dividend for the year to 36 pence per share (2021: 33.0 pence per share).
The Board continues to operate 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.
2021
An interim dividend of 15.0 pence per ordinary share was declared by the Directors on 27 July 2021 and was paid on
3 September 2021 to holders of record on 6 August 2021; the amount payable was £16,327,000.
The Board paid a final dividend of 18.0 pence per share on 10 June 2022 to shareholders on record on 20 May 2022;
the amount payable was £19,620,000.
12 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 135.
13 Auditors’ remuneration
Auditors’ remuneration of £10,000 was charged in relation to 2022 (2021: £8,500), the fees were paid by FDM Group
Limited in both the current and prior year and no recharge was made to the Company.
14 Employees
The Company had no employees during the current or prior year.
Notes to the Parent Company Financial
Statements
continued
FDM Group (Holdings) plc
Annual Report and Accounts 2022
159
Strategic Report
Financial Statements
Governance
Directors
David Lister
Rod Flavell
Sheila Flavell
Mike McLaren
Andy Brown
Peter Whiting
Michelle Senecal de Fonseca
Jacqueline de Rojas
Alan Kinnear
Non-Executive Chair
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
Mark Heather
Registered office
3rd Floor
Cottons Centre
Cottons Lane
London
SE1 2QG
Independent Auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
Bankers
HSBC Bank plc
8 Canada Square
London
E14 5HQ
Registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Stockbrokers (joint)
Investec Bank plc
30 Gresham Street
London
EC2V 7QP
HSBC Bank plc
8 Canada Square
London
E14 5HQ
Shore Capital
Cassini House
St James’s Street
London
SW1A 1LD
Legal advisors
Taylor Wessing LLP
5 New Street Square
London
EC4A 3TW
Shareholder Information
FDM Group (Holdings) plc
Annual Report and Accounts 2022
160
Printed by a carbon balanced, FSC®-recognised printer, certified to ISO
14001 environmental management system using 100% renewable energy.
This product has been made of material from well-managed, FSC®-certified
forests and other controlled sources. Both paper and production are
measured and carbon balanced, based on a third party, audited, calculation.
100% of the inks used are HP Indigo ElectroInk which complies with RoHS
legislation and meets the chemical requirements of the Nordic Ecolabel
(Nordic Swan) for printing companies, 95% of press chemicals are recycled
for further use and, on average 99% of any waste associated with this
production will be recycled and the remaining 1% used to generate energy.
The printer contributes to the World Land Trust’s ‘Conservation Coast’
project in Guatemala. This scheme supports many landowners and local
communities to register and obtain their own land and thereby protect
thousands of acres of threatened coastal forest. The local organisation
FUNDAECO works with over 3000 families to help transform local livelihoods
through job creation and ecotourism.
FSC logo
FDM Group (Holdings) plc
3rd Floor, Cottons Centre,
Cottons Lane, London SE1 2QG
Tel: +44 (0) 20 3056 8240
Fax: +44 (0) 870 757 7634
Email: enquiries@fdmgroup.com
UK
USA
Canada
Germany
Switzerland
Austria
Ireland
The Netherlands
Poland
Luxembourg
South Africa
Hong Kong
Singapore
China
Australia
New Zealand